We are delighted to have Merck here at TD Cowen's 44th Annual Healthcare Conference, representing the company, Joe Romanelli, who is President of Human Health International. Also joining us here on stage, Peter Dannenbaum, who is Head of Investor Relations. So thank you so much for making the effort to be with us today. Lots to talk about. Obviously, OUS, Merck is a big business, diverse business, lots going on. So we wanna dig into all these topics in the next 30 minutes or so. Let me start out by asking about one of Merck's biggest successes, and that is GARDASIL. And, you know, Merck has this ambition that it's going to achieve roughly $11 billion in 2030. But we, in our models, show the product pretty much achieving that just in international, and then, of course, the U.S.
So, tell me why $11 billion is the cap and why it can't be a whole lot larger and maybe that much just in your territory?
Yeah. So thanks, Steve. And good afternoon to everyone. Great to see everyone. And Steve, always great to see you. And knowing that you're gonna put out a great giant report, looking forward to reading it. But yeah, I would say, you know, look, if you look at our business, we have we're held to two fundamental standards. First is how many people can you reach and what impact you have on those people. And if you look at GARDASIL, we've had a phenomenal time over the past 18 years, really launching in new markets. And then as we entered into this decade, we looked at how big could GARDASIL be internationally and then globally. And then we put out that guidance. And what we said is we anticipate by 2030, we'd be more than $11 billion.
I think we've made steady progress since, you know, putting that outlook out there. We continue to see as an opportunity, we continue to view that by 2030, we'd be greater than $11 billion. If I look at how we've done internationally, last year, we were able to reach about 45 million patients or consumers in international markets. Now, that's great. But unfortunately, we still have about 1,000 people per year who are dying of cervical cancer. So we still have a lot of opportunity. Now, there are really, for us in international, there are three things that we focus on. So if you look at our three different business segments, we have the reimbursed business or the NIPs and the tenders. We have the private market business.
And then we have our low-middle-income business where we partner with Gavi, WHO, PAHO. If you look at the reimbursed or NIP business, we have for GARDASIL 9 roughly 40 NIPs. Our goal there is, first and foremost, is to increase the vaccine coverage rate, so the VCR rate. If you look at WHO, they want, you know, 90% VCRs. If you can achieve 90% VCRs in 15-year-olds, you can potentially reach elimination. So that's our number one goal. Second is expanding the coverage in those NIPs, so starting with cohorts that are traditionally adolescent, trying to go into teens or older teens, and then going into mid-adult women. So that's our second priority in the reimbursed market. Third would be conversion to gender-neutral, right?
And so all these if we look at all of those markets, we've made steady progress to try to get a gender-neutral program up and running to make sure that we're not only vaccinating young women and mid-adult women but also males. And then in those reimbursed markets, for the cohorts that fall outside of reimbursement, we look to try to build a private market, right? So this is patients going out of pocket to a vaccination center to pay for the vaccine. Now, if we think about that private market in international, it's roughly 60%-70% of our business is out-of-pocket private market. So the goal there is to identify who the consumers are that would benefit, so typically nine- to 45-year-olds. But mostly in the out-of-pocket market, it's the 20- to 45-year-olds that are gonna go pay.
Number one is working with partners or influencers to make sure that they're aware of HPV. Second is to work with partners to make sure not only are they aware, but can they identify where they need to go to be vaccinated. Third is working with partners, whether it's diagnostic centers, aesthetic centers, or private hospitals, to get them vaccinated. We've made steady progress there. Our largest market is China, of course, where it's now it's, you know, GARDASIL is the number one product in China. And, you know, for sure, if we look at kind of how we're expanding in the developing markets, we're seeing other developed markets that continue to grow. In fact, Vietnam is my fifth-largest market, despite not having reimbursement. And then lastly, we look at, you know, the opportunity. I've talked a little bit about that 1,000.
A lot of that 1,000 per day is in, you know, kind of the low-middle-income segment. So how do we work with a Gavi, WHO, PAHO to reach that low-middle-income segment? And, you know, tremendous credit to the team in our manufacturing organization who have increased capacity over the past couple of years to a point where next year, we should not be constrained by manufacturing capacity. So, that was a great investment in Sanat, who leads our manufacturing division. He's done a great job to make sure that, you know, we can reach those other markets that we haven't yet reached, not only low-middle-income, but there are markets where we yet to launch GARDASIL 9. We still work with our, our four-valent, GARDASIL. So made steady progress and committed to that greater than $11 billion by 2030.
Great. I should have mentioned at the outset, should any of you have questions along the way, just raise your hand. We'll call upon you and get your question answered. So let's move to another very successful Merck product, that being KEYTRUDA. And interestingly, one of your competitors, Roche, has basically told analysts not to expect much growth out of TECENTRIQ because they claim the market is saturated. Now, I guess saturation could occur either because the markets are truly saturated or KEYTRUDA's giving them no opportunity to grow. So, what is the outlook for KEYTRUDA in OUS markets, both in metastatic and early-stage settings?
Yeah. So I think at a very high level, we continue to see KEYTRUDA as an opportunity for growth in 2024. And I give Dean, who runs our research labs, and Eliav, who runs our clinical development group, a tremendous amount of credit because of the, you know, the programs that they put together. If you look at our business internationally, 80% of the business is metastatic. Within that 80%, roughly 50% of that is in lung. And if I look particularly in Europe, we have around 60%-80% market share across the markets. Now, in 2023, that metastatic business continued to grow. And albeit not the primary driver of growth, our early-stage business continues to be in 2023. And in 2024, the primary driver of growth.
You know, what I talk about quite often to my teams is, you know, we've done a phenomenal job of reaching patients but and focusing on treatment. But we're still launching in some markets and, and trying to make sure that we continue to grow our metastatic business. So in addition to lung, head and neck, RCC, melanoma, and even triple-negative breast, there's still a percentage of that business that's coming from metastatic. But certainly an area where, you know, if I think about Dean's strategy for oncology, it really was expand, extend, and deepen. So expand into new tumor types. We've done that metastatic. Extend into new lines of business or extend into earlier treatment, which is the early-stage setting. And then deepen the impact we have by working with partners and working within our pipeline to expand coformulations and build combinations.
In the earlier-stage setting, we've done a really nice job. It's about 20%. We follow the U.S. by about 12-18 months in terms of time of launch. So generally, they're gonna be slightly ahead of us, a couple of basis points, in terms of where they are with their percentage. But for us, last year, if we look at triple-negative breast, it was roughly 50% of our growth. And, you know, I would say probably the best opportunity we have because, you know, we talk a lot about screening. Triple-negative breast, there's very robust screening programs in the world. So, women are identified, they're screened, they're diagnosed, and we can get them on treatment early, which is fantastic. In addition to triple-negative breast, cervical, RCC, and melanoma are kind of three other tumor types where we're in early stage. We anticipate growth this year.
Now, if I compare us to the U.S., the U.S. is launching KEYNOTE-671 in lung and KEYNOTE-091. We, you know, the launch for KEYNOTE-671 will probably be the latter part of this year in Europe into next year. We were happy that we got a positive opinion from the CHMP. Look forward to that. I will say that the screening opportunity in OUS, particularly Europe, is even lower than the U.S. And we talk about 6% screening in the U.S. for lung cancer. Outside of the U.S., you know, if I look across Europe, we really don't have any screening programs in major European markets outside of what we're experimenting with or what the U.K. government is experimenting with for screening. So there is an opportunity. I know that a lot of other companies are trying to build screening.
You know, there are new diagnostic companies that are out there trying to build programs that'll help screen in Europe. But if I look at kind of where we are, 80% metastatic, 20% early-stage, excited about the opportunities, you know, for coformulations. I think Dean actually, Rob, setting the strategy, Dean, executing with the internal pipeline and looking for great assets externally, and then Caroline, making sure we have the right valuation on those deals, have done a fantastic job, whether it's ADCs, neoantigen therapy, or other coformulations that we can have to try to deepen the impact of KEYTRUDA. It's been pretty outstanding.
Do you expect that metastatic lung ex-U.S. will continue to grow?
So, I would just say metastatic. We anticipate metastatic will continue to grow. But the majority of our growth will come from the early-stage setting.
Of course, Merck's working on subcutaneous formulation. We analysts kind of look at it and say, "That's interesting," and think about the U.S. market. But couldn't it really be a major opportunity OUS where they don't have quite the same facilities we have in the U.S. for infusing drugs? So what is the opportunity for subcu KEYTRUDA outside the U.S.?
Yeah. We're watching closely. We're seeing, obviously, TECENTRIQ is the first one to have that conversion. What we're seeing, it depends on the market. In, you know, places like the U.K., you're gonna see probably a faster adoption. And what we're seeing today is the majority of that adoption is happening within the product itself. So converting that IV to the subcu to get the patient out of, as you talk about, the bolus of patients that are coming into the IV centers or to the hospitals. But not every market is built the same. So there will be some markets where they'll continue to wanna bring the patient into the hospital. We see subcu as an opportunity, especially as we transition from the metastatic business to the early-stage business to help patients, you know, kind of improve that process. These are younger patients.
These are generally patients that want to have treatment outside of the hospital. So if we can do that with a subcu formulation, I think that's, you know, kind of it will improve care, will improve the ability for the hospitals to manage for patients who are going in for IV. And certainly, I think hopefully, from a duration perspective, keep patients on these assets longer period of time to make sure they reap the benefits of OS and others.
Great. Questions from the audience? Before we leave KEYTRUDA, you know, one of the things that investors think about is, of course, the LOE. And there are, of course, LOEs outside the U.S., China 28, EU 31, Japan 32. So we know kind of what the contours are for LOEs in the U.S., even for biologics. But what should we expect in these markets? Is there anything unique? Could the tail be longer than people think? Tell us about the LOE in each of these markets.
Yeah. So I think when you kind of talked about the timing, when we look at, you know, some markets, if you think about the traditional curve, that curve could be a slightly different tail. So the slope of the tail could be different. We think about places like China, right? So we have, KEYTRUDA in China is out-of-pocket. So it's not on the NRDL. We roughly have 15 other products, PD-1 antibodies, in China. As products go through, and you think about, Herceptin and the experience of Herceptin in China was very different than probably Herceptin in the U.S. So there will be markets where there will be a different curve. Obviously, we want patients to have access to care irrespective of branded or unbranded.
As you look at, I think Rob, Dean have done a tremendous job to make sure that we continue to deepen the impact of KEYTRUDA. So KEYTRUDA is the backbone. You know, as we think about the ADCs, INT, and other assets, you know, you know, having a more affordable KEYTRUDA and then adding in the new product, if we think about comparative effectiveness and clinical benefit that you would demonstrate with payers, you'd wanna make sure that that has an opportunity for reimbursement in those markets. So, I think the team has done a really nice job of, you know, positioning KEYTRUDA so that we can continue to benefit, you know, and patients benefit over time. And if we can lower the burden and improve access, that's something we wanna do.
One of the products that we in the U.S. are focused on, of course, is that sotatercept should be a fairly near-term approval. We're looking for multibillion-dollar potential. But it does come up for approval in the EU in the second half of the year. What's your level of confidence that that approval will come? And what should we expect after that?
Yeah. So, everyone at Merck is extremely excited about sotatercept. This is a great opportunity because of the impact sotatercept can have on PAH patients. So if we look at kind of the international, you know, opportunity and focus in on the EU and Japan, there are about 50,000 patients that have been identified with PAH. Those are the kind of the first tranche of patients that we're gonna be going after. And if you zero in on Europe, again, can't say what the regulators are gonna do, but we anticipate in the second half of this year, we'll get approval. You know, the interesting thing about this particular market opportunity is, number one, we have the STELLAR data, right?
So there are very few products in fact, no, you know, we haven't seen any products in PAH that, you know, have an impact on six-minute walk, which is the real efficacy outcome, that have an 84% reduction in time to clinical worsening. So when you think about the opportunity for patients who have been on therapy for seven to eight years to get a new therapy that's going to improve their quality of life, I think that is something that you wanna include in that dossier, whether it's in Germany or in France, so that patients have access. We feel very confident in that process. Likewise, from a go-to-market perspective, you know, this is very different from a traditional, you know, kind of a primary care product where you'd have to go to all the primary care physicians in a market.
For sotatercept and PAH, you know, these are managed in COEs. If I look across Europe, we know exactly where these COEs are. We have in Germany, we have 70 or 71 COEs. In France and in Italy, there are around 25 centers of excellence. In Spain, there are 15. And in the U.K., there are 7. So we know exactly who is treating. In those centers, they have a registry for the patients. They know these. They've been monitoring these patients for years. So they know which patients they wanna target. And currently today, patients are on dual and triple therapy. And over time, we continue to, you know, we have a great lifecycle management program.
Our next two studies, the ZENITH study, which is gonna be looking at functional class 2 and 3, higher-risk patients who are at risk for morbidity and mortality, then HYPERION, which we read out after that, is more of the moderate-risk patients in functional class 2 or 3. Sorry. I think I said functional class 2 or 3 for ZENITH. It's actually 3 and 4. So we feel really comfortable with kind of our go-to-market strategy because we have a great asset, right? And the data that's come out of STELLAR, I think, is gonna have an impact on care, not just in Europe but also Japan and other parts of the world.
So with 50,000 identified patients and centers of excellence already established, we should be thinking in terms of a pretty darn good launch here. I mean, this is gonna take off pretty quickly. Would you agree with that?
Yeah. I mean, I think when we look at the excitement around sotatercept and we already gave guidance of what we believe the cardiovascular business could be in the mid-2030s, we said, you know, roughly $15 billion, not risk-adjusted. We're excited, right? And so I think this is a great opportunity because, number one, it's focused on the right thing. This is a product with unambiguous promotable advantages. And, you know, what we found is when we have products that have unambiguous promotable advantages, they get utilization quickly. KEYTRUDA was a great exemplar of that. And I look at sotatercept as another product where, you know, if you look at the current standard of care, you know, patients are getting prostacyclins, ERAs, and vasodilators, PDE5s.
So there's an opportunity for us to come with great data, assuming it gets approved, that can have an impact on patients. And, you know, we're looking forward to this launch.
Merck has a very kind of thoughtful strategy to approach the new pneumococcal market.
Yeah.
But when we speak with doctors, the conversation kind of begins and ends with Prevnar. They don't really need to hear about anything else. We have a vaccines panel this afternoon. I don't know what will be said on that panel, but that's what we've heard in the past. So, how can Merck break this mindset that doctors really need to be open-minded to new pneumococcal vaccines beyond Prevnar?
Yeah. So I think we've taken a slightly different approach. So we follow the science in looking at population dynamics to say, is there a vaccine for a pediatric patient and a vaccine for an adult patient? And so what we've developed or what the team in MRL developed is VAXNEUVANCE, which is for the pediatric segment. And for VAXNEUVANCE, you know, we felt really good because if you look at the disease severity, particularly in the first year of life and serotype 3, there's strong coverage there. And so as we went out to the market and I'll talk about ex-U.S. for a moment, you know, we launched in 20 markets. In those 20 markets, we had a 30% share exiting 2023.
As we fast-forward into 2024, every market is operating differently because in some markets, you're, you know, kind of in the account, you're trying to, you know, position your product vis-à-vis either but not PCV20 yet but Prevnar. And so when we look at that, particularly in markets like Germany, we have slightly higher share. And then for markets like Spain and Italy, where we have to win regional tenders, we're seeing actually winning tenders above that 30%-40% share. So our goal is really to be at 50/50 in ex-U.S. If you look at the size of the Prevnar business, I don't know what specifically how much the pediatric is, roughly 70%. But we feel, you know, really good about the progress to date. We anticipate launching in another 20 markets this year. So we feel good about VAXNEUVANCE.
In terms of V116, we've, you know, our approach is really looking at what are the serotypes that cause disease, IPD, in adult patients? In V116, we've developed an asset that has eight of the serotypes that are responsible for 30% of the disease. If you look at the study, you know, our phase III study, we cover 83% of the disease, right? So we feel very good about the health economics. So as I have to go to payers, I feel like I can really identify the patients who would benefit. If you, you know, often, if you go to a payer and there's a very broad patient population, it's harder to prove out the health economics of that, dossier. For us, looking at, you know, ex-U.S., you know, certainly, I feel like we have an opportunity to have an impact.
You know, I think we'll obviously have to see what happens with PCV20, both in the pediatric space as well as in the adult space. We don't know if it's a 2 + 1 in the pediatric space or a 3 + 1. We'll have to wait to see how that plays out. And then certainly, irrespective of which company, we want patients to be vaccinated. The other benefit I think we have is our experience with GARDASIL in the private market. We understand how to activate consumers, how to get those consumers into a vaccination center. And, you know, thankfully for us, for V116, it's a single shot. So we don't have to worry about trying to get them back for a second dose. So I think we have, you know, GARDASIL affords us a lot of experience in that regard.
Great. Questions from the audience? Moving to another vaccine, Dean talks a lot about dengue.
Yeah.
Our only, you know, experience with dengue with a competitor wasn't so good. So.
Yeah.
Tell us about the opportunity for dengue, assuming it gets through the regulatory process.
Yeah. So and Dean's spot on. I'm very excited about dengue. In fact, in earlier conversations, I talked a lot about, you know, what I see as an opportunity for dengue, particularly in the southern hemisphere. If we look at the southern hemisphere, we have four billion people who are potentially at risk. There are about 105 million infections per year with dengue. You know, we partnered with Instituto Butantan out of São Paulo, Brazil. They put out phase III data. This is a quadrivalent vaccine. So it hits all four serotypes for dengue. They had 80% efficacy, so 90% efficacy on serotype 1 and 70% on serotype 2. With that data, we are doing a phase II bridging study. And then ultimately, we'll launch our own phase III study. Butantan is responsible for Brazil. We're responsible for all other markets.
As I think about the impact that dengue can have and, you know, we just, you talked a lot about China. But if you think about Guangzhou and, like, that greater Bay Area above Hong Kong and the risk of dengue all the way through Southeast Asia into Africa and I live in Switzerland. I live in Europe. If you're now starting to see dengue in Europe, right, because of the migration from Africa and other parts of the world, the Middle East. So, you know, making sure that we have a solution for what could be, you know, a pandemic-type situation, certain markets. I lived in Southeast Asia when we had an issue in Singapore. And it caused disruption to travel, schools, work, workforce, etc. So having a solution that covers 80% efficacy and covers the four serotypes is outstanding.
When could this be available in foreign markets?
I think I would probably, you know, I obviously, the bridge to phase II and then phase III, it's gonna take some time. So I'd probably put it at the end, you know, kind of towards the end of this decade into the early part of next decade.
Okay. VAXELIS, what do we know about VAXELIS? How's it going? What's your share, and so forth?
Yeah. So VAXELIS, we're in a partnership with Sanofi. This is a hexavalent vaccine which covers DTaP, polio, flu, and HPV. And I think the benefit here is, can you reduce the, you know, the shots versus a you know kind of two-three shots for the other competitor vaccine? So if we can do that, we can continue to demonstrate kind of that differentiation. We think we can continue to build volume. We don't report the revenue. It goes through equity income. So I would just say, I think we've been making steady progress, an important, important vaccine that covers a lot of different diseases.
Questions from the audience? What's the OUS opportunity for doravirine/islatravir combination? How do you foresee the outlook for that?
Yeah. When I look so for those, you know, for HIV, so when you look at the work that the team has done to get islatravir back on track with doravirine, we're very excited for this opportunity, given the fact that, you know, there's still a tremendous need out there. We've launched three studies, two are switch studies. One is a naive patient study. So hopefully, we're gonna get the data for those three studies over the next two years, so in 2025, 2026. And this is a head-to-head with Biktarvy. So this is an opportunity for us to really demonstrate differentiation. And, you know, certainly, if we look at, you know, the standard of care has changed quite a bit from when we originally launched CRIXIVAN. You probably remember CRIXIVAN in 1990s. I joined Merck in 1996.
That's right around the time we launched our first direct-acting antiviral against HIV. You know, today, patients live longer. Patients have comorbidities. There are issues around weight and other side effects. So is there an opportunity with this combination, to differentiate on some of those AEs? That's one area where we're focused on. We also have combination with lenacapavir for Gilead. There'll be data out tomorrow at CROI. So that's another opportunity. If I look at islatravir, so that's a you know, once daily. If I look at you know, further combinations, we're looking at you know, once weekly and then ultimately into PrEP in the future.
Great. Questions from the audience? Joe, you lived, you've lived in China for five years. When we listen to pharmaceutical executives talk about China, it's kind of all good. Lots of people, great, you know, unmet need, rising standard of care.
Also has great culture and great.
Great culture, good food, you know, rising standard of care in the middle class. But you can't pick up the newspaper without, you know, having shivers run up and down your spine about the unrest and tension and so forth. So you've lived there. What's the reality?
Yeah. So, I don't wanna speak on behalf of all countries. But, you know, what I would say is, you know, we've had a business in China for, you know, more than 30 years. And, you know, that business started as a JV. And over time, we transitioned to wholly owned and operated in China. And, you know, through that time, we've been able to introduce new products. And right around 2016, we really started to pivot to innovation when the government recognized back in 2013 that the healthcare standards in China weren't up to par with the West. So they launched Healthy China 2030. And through that, we saw the NRDL was opened back up in 2017. We were, you know, amongst our peers. We negotiated to get onto the NRDL for some of our products.
We're able to get access to, you know, all the hospitals in China, which helped to drive growth. You know, the government continues to focus on, how can we help more patients? And I think that's a mindset that I don't see. So we talk about all the, you know, the geopolitical issues. And certainly, we're mindful of those. But I also know that anytime I go to China, it's always, they're always focused on solutions. So how can we reach more patients? Is there a product that you can bring earlier? And I think that if we continue to focus on that, you know, ultimately, what we're gonna do is have an impact on patients' lives.
Obviously, from a supply chain perspective, as a company, we wanna diversify to make sure that we have strong supply chains around the world that are independent of actions that can happen in one particular market. That's one area that we focus on as a company. Likewise, we also wanna take advantage of the great science that's happening in China. We have a partnership with a company called Kelun-Biotech for three ADCs. That's a great partnership. And Dean works, you know, very closely with that organization to make sure that we have the right studies in place that we can benefit the most patients through that, and we're not alone in that regard. Many companies have partnerships with different companies in China, whether it's BeiGene, Innovent Biologics, others. So that's another area where we're taking advantage of, you know, kind of great science that's happening in China.
To your earlier point, from a growth perspective, you know, we're now the number one company in China by revenue. A lot of that is built around the launch of GARDASIL back in 2017, which ultimately, we launched GARDASIL 9 in 2018. It has become, you know, the largest product in China. And quite honestly, we work with a partner, Chongqing Zhifei Biological Products. And anytime that we've wanted to work with any one of the provinces, we always get an open door to try to come in because their goal is, again, to save lives. So as long as we have the right attitude, we're focused on the right thing, which is the patient, I think good things have happened. And obviously, we need to make sure that we're mindful of supply chains and anything that could change.
Great. We're out of time. But let me conclude with the final question. And that is that, you, you probably have a good understanding of how investors view Merck, specifically the ex-U.S. business. What is the one thing that we will realize in the next five to, say, seven years that we don't appreciate now about the Merck ex-U.S. business?
You know, I would follow the fact that I think our competitive advantage is our labs. I think Dean under Dean's leadership, I think they've done a fantastic job. This year, we have more phase III studies than any time in our prior history. And I think if those phase III studies play out, whether it's oral PCSK9 or other studies that are happening, I think, you know, kind of many people focused on 2028. I think the work that Rob, Dean, Caroline have done in BD, you know, we're kind of changing that concept of a cliff to more of a concept of a hill. And the more that we can do that work in BD, the more that 2028 takes care of itself. And then we can really focus on, you know, kind of 2030 and what we're doing to help patients beyond.
Great. Sounds like an exciting future. Thank you for being with us. Thank you, everyone, for joining.