Merck on Tuesday reported fourth-quarter earnings and revenue that topped estimates on strong demand for its cancer immunotherapy Keytruda and some newer products.
But the company posted a modest 2026 outlook that fell short of Wall Street’s expectations as it prepares for a few drugs to lose patent protection later this year and face generic competition. That includes Type 2 diabetes drugs, Januvia and Janumet, and Bridion, a treatment that helps restore muscle function that was blocked during surgery.
While those medicines aren’t top-selling products like Keytruda, their combined lower sales will likely pressure the company.
The pharmaceutical giant anticipates its 2026 revenue will come in between $65.5 billion and $67 billion. Analysts expected revenue of $67.6 billion, according to LSEG.
Merck also expects adjusted earnings to come in between $5 and $5.15 per share. That compares to analysts’ estimate of $5.36 per share, according to LSEG.
That range includes a one-time charge of roughly $9 billion, or around $3.65 per share, related to Merck’s acquisition of Cidara, a biotech company that is developing a flu prevention drug.
The guidance includes “manageable impacts” from the drug pricing deal Merck struck with President Donald Trump in December, as well as his administration’s recent move to pare back the pediatric vaccine schedule in the U.S., according to a company spokesperson.
Under that “most favored nation” deal, Merck will voluntarily sell its existing treatments to Medicaid patients at the lowest price offered in other developed nations and guarantee that pricing for new medicine, among other efforts. In exchange, Merck will get a three-year reprieve from tariffs.
Here’s what Merck reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
Earnings per share: $2.04 adjusted vs. $2.01 expectedRevenue: $16.4 billion vs. $16.19 billion expected
The company posted net income of $2.96 billion, or $1.19 per share, for the quarter. That compares with net income of $3.74 billion, or $1.48 per share, for the year-earlier period.
Excluding acquisition and restructuring costs, Merck earned $2.04 per share for the fourth quarter.
Merck raked in $16.4 billion in revenue for the quarter, up 5% from the same period a year ago.
The results come as Merck slashes $3 billion in costs by the end of 2027, and prepares to offset revenue losses from the upcoming patent expiration of Keytruda in 2028.
Keytruda drives growth amid Gardasil woes
Merck’s pharmaceutical unit, which develops a wide range of drugs, booked $14.84 billion in revenue during the fourth quarter. That’s up 6% from the same period a year earlier.
Sales of Keytruda topped $8.37 billion for the quarter, rising 7% from the same period a year ago. Analysts were expecting revenue of $8.35 billion, according to StreetAccount estimates.
The increase in Keytruda revenue was driven by higher uptake of the drug for earlier-stage cancers and strong demand for the treatment for metastatic cancers, which spread to other parts of the body, the company said.
Sales of the more convenient subcutaneous version of Keytruda, which won approval last year, came in at $35 million during the fourth quarter.
That version of Keytruda is key to Merck’s efforts to offset likely declines in revenue after the original formulation of the drug, which is administered intravenously, goes off patent.
Meanwhile, Merck’s newer drug Winrevair, which is used to treat a rare, deadly lung condition, recorded $467 million in sales for the quarter, up 133% from the same period a year ago.
Analysts had expected the medication to bring in $459 million, according to StreetAccount estimates.
The growth of Winrevair, which first entered the market in mid-2024, largely reflects higher uptake in the U.S. and its early launch in some international markets.
Merck continued to see trouble with China sales of Gardasil, a vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the U.S.
In February, Merck announced it would halt shipments of Gardasil into China beginning that month. In July, CFO Caroline Litchfield said the company would not resume shipments to China through at least the end of 2025, noting that inventories remain high and demand is still soft.
Gardasil generated sales of $1.03 billion for the quarter, down 34% from the same period a year ago due to lower demand in China. Still, that was in line with what analysts were expecting, according to StreetAccount.
Gardasil’s revenue could face more pressure in 2026. As part of the Centers for Disease Control and Prevention’s changes to the pediatric vaccine schedule, the agency said that children should get one dose of the HPV vaccine instead of the two to three doses recommended on the label.
Merck’s animal health division, which develops vaccines and medicines for dogs, cats and cattle, posted nearly $1.51 billion in sales, up 8% from the same period a year prior. The company said that reflects higher demand across all species.
