Merck tops quarterly estimates, posts modest 2026 guidance as generic competition looms

Merck on Tuesday reported fourth-quarter earnings and income that topped estimates on robust demand for its most cancers immunotherapy Keytruda and a few newer merchandise. 

However the firm posted a modest 2026 outlook that fell in need of Wall Avenue’s expectations as it prepares for a couple of medicine to lose patent safety later this yr and face generic competition. That features Kind 2 diabetes medicine, Januvia and Janumet, and Bridion, a remedy that helps restore muscle operate that was blocked throughout surgical procedure. 

Whereas these medicines aren’t top-selling merchandise like Keytruda, their mixed decrease gross sales will seemingly stress the corporate. 

The pharmaceutical big anticipates its 2026 income will are available between $65.5 billion and $67 billion. Analysts anticipated income of $67.6 billion, in line with LSEG. 

Merck additionally expects adjusted earnings to be between $5 and $5.15  per share. That compares with analysts’ estimate of $5.36 per share, in line with LSEG.

That vary features a one-time cost of roughly $9 billion, or round $3.65 per share, associated to Merck’s acquisition of Cidara, a biotech firm that’s creating a flu prevention drug. 

The guidance consists of “manageable impacts” from the drug pricing deal Merck struck with President Donald Trump in December, as nicely as his administration’s current transfer to pare again the pediatric vaccine schedule within the U.S., in line with an organization spokesperson.

Underneath that “most-favored-nation” deal, Merck will voluntarily promote its current remedies to Medicaid sufferers on the lowest worth provided in different developed nations and assure that pricing for brand new drugs, amongst different efforts. In alternate, Merck will get a three-year reprieve from tariffs.

Here is what Merck reported for the fourth quarter in contrast with what Wall Avenue was anticipating, based mostly on a survey of analysts by LSEG: 

• Earnings per share: $2.09 adjusted vs. $2.01 anticipated
• Income: $16.4 billion vs. $16.19 billion anticipated

The corporate posted web revenue of $2.96 billion, or $1.19 per share, for the quarter. That compares with web revenue of $3.74 billion, or $1.48 per share, for the year-earlier interval. 

Excluding acquisition and restructuring prices, Merck earned $2.04 per share for the fourth quarter.

Merck raked in $16.4 billion in income for the quarter, up 5% from the identical interval a yr earlier.

The outcomes come as Merck slashes $3 billion in prices by the top of 2027, and prepares to offset income losses from the upcoming patent expiration of Keytruda in 2028.

Merck’s pharmaceutical unit, which develops a variety of medication, booked $14.84 billion in income in the course of the fourth quarter. That is up 6% from the identical interval a yr earlier.

Gross sales of Keytruda topped $8.37 billion for the quarter, rising 7% from the identical interval a yr in the past. Analysts had been anticipating income of $8.35 billion, in line with StreetAccount estimates. 

The rise in Keytruda income was pushed by larger uptake of the drug for earlier-stage cancers and robust demand for the remedy for metastatic cancers, which unfold to different components of the physique, the corporate stated. 

Gross sales of the extra handy subcutaneous model of Keytruda, which received approval final yr, got here in at $35 million in the course of the fourth quarter. 

That model of Keytruda is vital to Merck’s efforts to offset seemingly declines in income after the unique formulation of the drug, which is run intravenously, goes off patent. 

In the meantime, Merck’s newer drug Winrevair, which is used to deal with a uncommon, lethal lung situation, recorded $467 million in gross sales for the quarter, up 133% from the identical interval a yr earlier. 

Analysts had anticipated the treatment to herald $459 million, in line with StreetAccount estimates. 

The expansion of Winrevair, which first entered the market in mid-2024, largely displays larger uptake within the U.S. and its early launch in some worldwide markets.

Merck continued to see hassle with China gross sales of Gardasil, a vaccine that forestalls most cancers from HPV, the most typical sexually transmitted an infection within the U.S.

Final February, Merck introduced it could halt shipments of Gardasil into China starting that month. In July, CFO Caroline Litchfield stated the corporate wouldn’t resume shipments to China via a minimum of the top of 2025, noting that inventories stay excessive and demand continues to be mushy.

Gardasil generated gross sales of $1.03 billion for the quarter, down 34% from the identical interval a yr in the past due to decrease demand in China. Nonetheless, that was in step with what analysts had been anticipating, in line with StreetAccount.

Gardasil’s income might face extra stress in 2026. As a part of the Facilities for Illness Management and Prevention’s modifications to the pediatric vaccine schedule, the company stated that youngsters ought to get one dose of the HPV vaccine as an alternative of the 2 to a few doses beneficial on the label.

Merck’s animal well being division, which develops vaccines and medicines for canines, cats and cattle, posted practically $1.51 billion in gross sales, up 8% from the identical interval a yr prior. The corporate stated that displays larger demand throughout all species.