Expects 2026 sales $65.5 bln-$67 bln; analysts estimating $67.6 bln
Q4 sales were $16.4 bln, with Keytruda contributing $8.37 bln
CEO Davis says still on the lookout for deals
Merck on Tuesday forecast 2026 sales and profits below Wall Street estimates as the loss of patent exclusivity on diabetes drug Januvia and other medicines will hit harder than analysts are projecting.
U.S.-listed shares of the company fell 1% in premarket trading.
The weaker-than-anticipated outlook overshadowed a fourth-quarter report in which the U.S. drugmaker beat expectations, driven by strong demand for its blockbuster cancer immunotherapy Keytruda.
The company expects 2026 revenue of $65.5 billion to $67.0 billion, with the high end of the range falling short of the average analyst estimate of $67.6 billion, according to LSEG data.
"Where the disconnect is coming with the Street, frankly, is in a lot of our legacy products, and these are products that are all largely going off patent," CEO Rob Davis said in an interview. "As I look at the strategic drivers of this company, I'm actually very confident."
He said the drugs that would be weaker than analysts are expecting include Januvia and related medicines Janumet and Janumet XR, as well as Bridion, an injection that reverses the effect of muscle-blocking drugs at the end of surgery. Analysts were already expecting significant sales drop-offs from both.
The new Medicare price for Januvia - negotiated under former President Joe Biden's Inflation Reduction Act - could also hurt its sales more than analysts were estimating.
Sales of Merck's COVID-19 treatment Lagevrio would also likely come in below analyst expectations, Davis said.
"With COVID fading... we've seen that slow quite a bit," he said.
SOLID 2025 FOURTH QUARTER
Merck reported an adjusted profit of $2.04 per share for the quarter, ahead of analysts' estimate of $2.01.
It posted fourth-quarter sales of $16.4 billion, topping Wall Street estimates of $16.2 billion, marking a 5% increase from the same period a year earlier.
The sales growth was primarily fueled by Keytruda, with sales up 7% to $8.37 billion, surpassing analysts' expectations of $8.23 billion. For the year, Keytruda sales were $31.7 billion.
That performance helped offset a steep 34% year-over-year plunge in sales for its human papillomavirus vaccine Gardasil, which came in at $1.03 billion for the quarter. The company has been dealing with weak demand for that vaccine in China that led it to halt shipments of the shot there.
Merck struck two deals in the $10 billion range in 2025, buying Cidara Therapeutics and Verona Pharma in order to pick up new drugs before Keytruda, the world's top-selling prescription medicine, loses patent protection later this decade.
Davis said the company will continue to look for deals for oncology, cardiometabolic and immunology treatments.
"We continue to be in that $1 billion to $15 billion sweet spot, but as we've always said, we're willing to go bigger if we see a scientific opportunity that brings value," he said.
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