FORTUNE — There’s a liquid drug that women can get injected into a layer of muscle — three separate times over a six-month period — that can protect them from a kind of cancer. From a scientific perspective, that’s amazing. In terms of public health, it’s a breakthrough.
But four years after Merck (MRK, Fortune 500) released this would-be top-seller, called Gardasil, it has proven to be a marketplace dud. In Merck’s second quarter, the company reported an 18% year-over-year drop in sales to $219 million and its stock is down nearly 3% to date. Analysts are pointing to Gardasil not as a savior, but as a risk for investors.
The answer is complicated and carries lessons for both drug makers and investors. Gardasil ran into two major roadblocks: consumer inertia and politics. The science, and market demand — two areas that have tripped up drug makers in the past — weren’t issues. “The awareness went out pretty quickly as to what this was and what they accomplished,” says Bert Hazlett, an analyst at BMO Capital Markets.
First, the science: human papilloma virus, or HPV, is an incredibly common sexually transmitted disease. There are over 100 different strains of the virus, most of which the body can fight off without any symptoms. But some it can’t. Two of these strains cause about 70% of cervical cancers in women.
In 1991, a student of the German scientist who won a Nobel for linking HPV and cervical cancer started working with a partner to get an HPV vaccine they’d developed to market. Merck and GlaxoSmithKline (GSK) bit. Merck’s Gardasil protected women against four high-risk strains of HPV. It hit the market in 2006, before GlaxoSmithKline could come out with a similar product, called Cervarix, three years later.