Merck & Co. has upped its capital expenditure plans through 2022 to increase manufacturing capacity in areas including oncology and vaccines.

At the beginning of the year, tax changes in the US led to a wealth of potential investment promises by Big Pharma looking to benefit from lower corporate rates and to repatriate cash from overseas.

Merck & Co. (known as MSD outside North America) was one such firm, and in its February earnings call it announced plans to invest $12 billion (€10.5 billion) over five years on capital projects, with $8 billion of that to be spent in the US.

Merck & Co. says it will invest $16 billion in its network by 2022. Image: iStock/bankrx

But the firm is now looking to further this investment, spending roughly $16 billion on capital projects through 2022, CFO Robert Davis announced on its third quarter 2018 financial call.

“Our primary focus through these projects is to increase manufacturing capacity across our key businesses, including Oncology, Vaccines and Animal Health, where demand continues to be higher than originally projected, as well as to invest in our discovery and development operations and IT infrastructure.”

Details of all the projects are yet to have been divulged, but since January the firm’s announced expansions have focused in Ireland, and not the US.

In February, Merck announced plans to build a plant at its Swords, Dublin site to manufacture top selling cancer drug Keytruda (pembrolizumab), creating 350 jobs. And earlier this month, the firm said it is constructing a vaccine and biologics production at a site in County Carlow.

HPV vaccine demand

Davis said some of the areas where capacity expansion is needed is around Keytruda, as well as Gardasil, a vaccine for use in the prevention of certain strains of human papillomavirus (HPV).

For the third quarter 2018, Keytruda pulled in sales of $1.9 billion, up 80% year-on-year, while Gardasil/Gardasil 9 was up 55% on last year’s Q3, making Merck $1.05 billion.

“We really are seeing unprecedented increase in worldwide demand for the HPV vaccines,” Adam Schechter, Merck’s president of Global Human Health added on the call. “And it’s doubled in the last year alone in terms of demand necessarily. A lot of the increase in demand is driven by the policy change for Gavi countries. And many countries are moving from demonstration programs to multi-age cohorts.” (Gavi is an international organization aimed at improving access to new and underused vaccines for children living in the world’s poorest countries.)

“The demand will continue to grow. And after nine years in the market to see the growth that we’re seeing is really unprecedented. And I believe that that growth will continue to be very, very strong.”