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Merck Fourth-quarter earnings and revenue reported Tuesday beat expectations for strong demand for its cancer immunotherapy Keytruda and some new products.
But the company posted a tepid outlook for 2026, missing Wall Street expectations as it prepares for some drugs to lose patent protection later this year and face generic competition. These include the type 2 diabetes drugs Januvia and Janumet, and Bridion, a treatment that helps restore muscle function that was blocked during surgery.
While these drugs aren’t top-selling products like Keytruda, their combined sales declines could put pressure on the company.
The pharmaceutical giant expects revenue in 2026 to be between $65.5 billion and $67 billion. Analysts expected revenue of $67.6 billion, according to LSEG.
Merck also expects adjusted earnings per share to be in a range of $5 to $5.15. Analysts expected $5.36 per share, according to LSEG.
That range includes a one-time charge of about $9 billion, or about $3.65 per share, related to Merck’s acquisition of Cidara, a biotech company developing a flu prevention drug.
Guidance includes ‘manageable impacts’ of Merck’s drug pricing deal with president Donald Trump His administration’s most recent move was to cut the U.S. pediatric vaccine program in December, according to a company spokesman.
under that “Most Favored Nation” AgreementMerck will voluntarily sell its existing treatments to Medicaid patients at the lowest prices offered by other developed countries and guarantee pricing for new drugs, among other things. In exchange, Merck will receive a three-year reprieve from tariffs.
Merck’s fourth-quarter report compared with Wall Street expectations, according to a survey of analysts by London Stock Exchange Group (LSEG):
- Earnings per share: Adjusted $2.09, expected $2.01
- income: $16.4 billion vs. $16.19 billion expected
The company reported net income for the quarter of $2.96 billion, or $1.19 per share. This compares with net income of $3.74 billion, or $1.48 per share, a year earlier.
Excluding acquisition and restructuring costs, Merck’s fourth-quarter earnings per share were $2.04.
Merck’s revenue for the quarter was US$16.4 billion, an increase of 5% from the same period last year.
The results come as Merck plans to cut $3 billion in costs by the end of 2027 and prepares to offset lost revenue from the upcoming patent expiration of Keytruda in 2028.
Keytruda drives growth amid Gardasil woes
Merck’s pharmaceutical unit, which develops a variety of drugs, had fourth-quarter revenue of $14.84 billion. An increase of 6% compared with the same period last year.
Keytruda’s sales this quarter exceeded US$8.37 billion, an increase of 7% compared with the same period last year. Analysts expected revenue of $8.35 billion, according to StreetAccount estimates.
Keytruda revenue growth was driven by increased use of the drug to treat early-stage cancers and strong demand to treat metastatic cancers that have spread to other parts of the body, the company said.
A more convenient subcutaneous version of Keytruda, approved last year, had sales of $35 million in the fourth quarter.
This version of Keytruda is key to Merck’s efforts to offset a potential drop in revenue after the patent on the original formulation of the intravenous drug expires.
Meanwhile, Merck’s new drug Winrevair, used to treat a rare and fatal lung disease, had sales of $467 million in the quarter, a 133% increase from the same period last year.
Analysts had expected the drug to bring in $459 million, according to StreetAccount estimates.
Winrevair first entered the market in mid-2024, with growth largely reflecting higher acceptance in the U.S. and early launches in some international markets.
Merck continues to have trouble selling Gardasil, a cancer vaccine that prevents HPV, the most common sexually transmitted infection in the United States, in China
In February last year, Merck announced that it would stop shipping Garvid vaccine to China starting that month. In July, Chief Financial Officer Caroline Litchfield said the company would not resume shipments to China until at least the end of 2025, noting that inventories remained high and demand remained weak.
Due to declining demand in China, Gardasil’s sales in the quarter were US$1.03 billion, a 34% decrease from the same period last year. That was still in line with analysts’ expectations, according to StreetAccount.
Gardasil’s revenue may come under greater pressure in 2026. As part of changes to the Centers for Disease Control and Prevention’s pediatric vaccine schedule, the agency said children should receive one dose of HPV vaccine instead of the two to three doses recommended on the label.
Merck’s animal health unit, which develops vaccines and drugs for dogs, cats and cattle, had sales of nearly $1.51 billion, up 8% from the same period last year. The company said this reflected increased demand across all species.
