Merck & Co shares have taken a bashing amid fears that sales of Gardasil, a big earner for the New Jersey-based drugmaker, are slowing down while the safety of the cervical cancer vaccine is once again under the spotlight.

Merck stock ended the day down 4.8% at $36.60, hurt by a downgrade to neutral from buy by UBS. Analyst Roopesh Patel, who also cut his 12-month price target to $40 from $43, said that second-quarter US sales of Gardasil will be around $300 million, below his previous forecast of $380 million.

Mr Patel wrote in a research note that “a near-term focus on Gardasil is relevant” because, for the past two quarters, sales of the jab have fallen short of expectations, and Merck has claimed that the declines were “seasonality related”. He added that the second quarter should be a seasonally stronger so if sales are flat from the first quarter, “we believe this will be viewed with disappointment”.

Mr Patel also noted that Gardasil is not likely to be approved for use in adult women before 2009, and the firm has faced a number of setbacks of late. These include manufacturing problems with other vaccines, a 25%-30% decline in US sales of the cholesterol drugs Vytorin (simvastatin/ezetimibe) and Zetia (ezetimibe) sales and the rejection of MK-0524A (extended-release niacin/laropiprant) by the US Food and Drug Administration.

Meantime, the latest report based on the Vaccine Adverse Event Reporting System (VAERS), run by the US Centers for Disease Control and Prevention and the FDA, notes that 7,802 cases of adverse events in patients on Gardasil have been presented since its launch in June 2006 up to April 2008.

The review, which is dated June 16, notes that of the total number of adverse events, less than 7% reported serious side effects, about half of the average for vaccines overall. There were 31 reported cases of Guillain-Barre syndrome following vaccination, including 10 confirmed cases and VAERS also noted that of the 15 deaths reported following Gardasil, just 10 “contained the level of information adequate for further analysis”.

The CDC noted that after careful review of those 10 reports “we could not establish the causal relationship between vaccination and death”.