(Reuters) - Merck & Co Inc MRK.N on Tuesday reported better-than-expected profit in the first quarter as surprisingly strong demand for animal health products, vaccines and its hepatitis C treatment offset nearly $700 million in lower sales from drugs that lost patent protection.

FILE PHOTO: The logo of Merck is pictured in this illustration photograph in Cardiff, California April 26, 2016. REUTERS/Mike Blake/Illustration/File Photo

The U.S. drugmaker said its fast-growing immuno-oncology drug Keytruda is gaining market share and sees future sales opportunities across multiple types of cancer, despite first quarter sales of $584 million falling just shy of analysts’ estimates.

The company said Keytruda has become “the most prescribed” product for previously untreated, or first-line, lung cancer and it is looking to expand its use in second-line lung therapy.

Merck is awaiting a potential U.S. approval next week for Keytruda in combination with chemotherapy.

“The approval could meaningfully boost sales of Keytruda given the size of the lung cancer market,” said Edward Jones analyst Ashtyn Evans of by far the largest oncology market.

Research chief Roger Perlmutter called the combination “a major opportunity to establish Keytruda further as a real preferred treatment therapy.”

Keytruda use is also growing in head and neck cancers, with 15 percent of U.S. sales for that indication now compared with 40 percent from lung.

Merck slightly raised its 2017 adjusted earnings forecast to a range of $3.76 to $3.88 per share from its prior view $3.72 to $3.87, due to a favorable foreign exchange environment.

It now expects full-year revenue of $39.1 billion to $40.3 billion, up from $38.6 billion-$40.1 billion.

Total revenue rose 1.3 percent to $9.43 billion in the quarter, beating analysts’ average estimate of $9.25 billion, despite the loss of U.S. patent exclusivity on cholesterol drug Zetia, antibiotic Cubicin, Nasonex nasal spray, and new competition for rheumatoid arthritis drug Remicade in Europe. Merck’s blockbuster cholesterol drug Vytorin will also face competition from cheap generic rivals going forward.

“In addition to Keytruda, we’ve got multiple other launches that are showing good growth and we’ve got a strong portfolio of vaccines” to help offset loss of exclusivities, said Adam Schechter, Merck’s head of global human health.

Merck’s hepatitis C treatment Zepatier had sales of $378 million, topping analysts’ estimates of $269 million, while sales of $532 million for Gardasil vaccine against human papillomavirus also sailed past Wall Street forecasts. Animal health sales grew 13 percent to $939 million.

The company cautioned that animal health growth would be “more measured in subsequent quarters.”

Excluding items, Merck earned 88 cents per share, beating analysts’ average estimate by 5 cents, according to Thomson Reuters I/B/E/S.

Merck shares were up 10 cents at $62.48.