MW Merck's outlook for 2026 comes in lower-than-expected as pipeline faces make-or-break year
By Jaimy Lee
The drugmaker had a solid fourth quarter even as sales of its HPV vaccine Gardasil continue to fall
Keytruda Qlex is a subcutaneous formation of Merck's cancer drug. It had $40 million in sales in 2025.
Merck revealed on Tuesday a lower-than-expected outlook for 2026 as the drugmaker aims to remake its business before its powerhouse cancer drug loses patent protection in a few years.
The stock $(MRK)$ was down 2.5% in premarket trading, after Merck said expects $65.5 billion and $67.0 billion in revenue for the year, which is slightly lower than the FactSet estimate of $67.4 billion. It had $65.0 billion in revenue in 2025. The stock had closed Monday at a 16-month high.
The drugmaker also said it expects adjusted earnings per share of between $5.00 and $5.15, which is far lower than the FactSet estimate of $5.27.
However, its fourth-quarter performance was stable and largely beat expectations.
Merck had $16.4 billion in revenue in the fourth quarter in 2025, up 5% from $15.6 billion in the same three months of 2024. The FactSet estimate was $16.2 billion.
Sales of its cancer treatment Keytruda rose 7% to $8.4 billion in the fourth quarter of 2025, compared with $7.8 billion in the same period in 2024. The FactSet consensus was $8.3 billion.
Much of Keytruda's future is tied to a subcutaneous formation of the drug, which was approved in September. The new version, which is called Keytruda Qlex, had $40 million in sales in 2025. Patients undergoing treatment with Keytruda Qlex receive a quick injection rather than sitting for 30 minutes for an infusion.
Merck is preparing for the drug to lose patent protection in 2028, while also dealing with tumbling sales of its second most-important product: the HPV vaccine Gardasil.
Gardasil's revenue continued to decline in the fourth quarter, dropping 34% as sales were further weakened against new, cheaper vaccines in China. The vaccine brought in $1.0 billion in revenue in the fourth quarter, against a FactSet consensus of $1.1 billion. The vaccine's sales could slide in the U.S. this year now that the CDC no longer recommends three doses of the HPV shot in teens.
"As we think about 2026, I would say we see it as a stable product," Merck CEO Rob Davis said last month at an investor conference. "We're going to continue to invest for the growth. Any growth that's there is modest, and we need to see how this single dose plays out."
The two therapies made up almost 57% of Merck's total revenue in 2025.
This is why the drugmaker made two major deals and several licensing deals in 2025. It acquired Verona Pharma, which sells a recently approved COPD drug called Ohtuvayre and is developing other pulmonary therapies, for $10 billion. It also announced plans to buy Cidara Therapeutics, which is working on antiviral treatments, including a flu prophylactic in Phase 3, for $9.2 billion.
(The company said it is expecting a one-time charge of $9 billion, or $3.65 a share, in the first quarter of this year as a result of the Cidara acquisition.)
Merck expects several important Phase 3 readouts this year, including for an oral PCSK9 inhibitor called enlicitide and an experimental drug called islatravir, which is being studied for both HIV prevention and treatment.
"The company's continued diversification within and beyond oncology with novel, differentiated assets has already transformed the [loss of exclusivity] into a manageable 'hill,' which investors will increasingly appreciate," Leerink Partners analyst Daina Graybosch told investors in January.
Analysts are also paying close attention to its new pulmonary arterial hypertension drug Winrevair, which brought in $1.4 billion in sales in 2025 and crossed the $1.0 billion sales threshold for the first time.
Merck reported net income of $5.1 billion in the fourth quarter, beating the FactSet consensus of $5.0 billion. Adjusted EPS came in at $2.04, above the FactSet consensus of $2.01.
Merck's stock is up about 14% over the last year, while the S&P 500 SPX has gained 16%.
-Jaimy Lee
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
February 03, 2026 06:55 ET (11:55 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments