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Can MRK's New Drugs Drive Long-Term Growth Amid Looming Keytruda LOE?
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Key Takeaways
Merck faces Keytruda's loss of exclusivity in 2028, a drug driving over half its pharma sales.
Merck explores Keytruda combos while advancing new drugs to secure long-term growth.
New launches like Capvaxive, Winrevair and Welireg, among others, are showing strong early uptake.
Merck (MRK - Free Report) faces a looming patent cliff as its blockbuster PD-L1, Keytruda, approaches loss of exclusivity (LOE) in 2028. The drug is the company's biggest revenue driver, accounting for more than 50% of its pharmaceutical sales during the first half of 2025.
Keytruda, approved for several types of cancers, has played a key role in driving Merck’s steady revenue growth over the past few years. The drug generated sales of $15.16 billion in the first half of 2025, representing a nearly 7% year-over-year increase.
However, Merck remains heavily dependent on Keytruda for growth. Given the heavy reliance and the upcoming loss of exclusivity of Keytruda, Merck is working on different strategies to drive its long-term growth, including innovative immuno-oncology combination studies on Keytruda with LAG3 and CTLA-4 inhibitors.
Merck is also developing a subcutaneous formulation of Keytruda that can extend its patent life. This formulation is under review in the United States, and an FDA decision is expected later this month.
Most importantly, Merck is pinning hopes on new drug launches for driving its long-term growth when Keytruda loses exclusivity in 2028. The company’s new 21-valent pneumococcal conjugate vaccine, Capvaxive, was approved in the United States in June 2024 and in the EU in March 2025, while its pulmonary arterial hypertension (PAH) drug, Winrevair, was approved in the United States and the EU in 2024.
Both Capvaxive and Winrevair witnessed a strong uptake during the first half of 2025. Capvaxive recorded sales of $236 million in the first half of 2025 and Winrevair generated sales worth $615 million during the same time.
Management believes that both Capvaxive and Winrevair have the potential to generate significant long-term revenues, given the strong launch they have witnessed so far.
Sales of another new product, novel HIF-2α inhibitor Welireg, which is approved for treating various types of cancer indications, rose around 42% in the first half of 2025.
Merck’s newest respiratory syncytial virus (RSV) antibody, Enflonsia (clesrovimab), was approved in the United States in June 2025, while it is under review in the EU. Merck is currently gearing up to launch Enflonsia to help protect infants entering their first RSV season.
A fixed-dose combination of doravirine and islatravir for the treatment of HIV is also under review in the United States, with an FDA decision expected in April next year.
MRK's Competition in the Target Market
While Merck’s new products show strong potential, it remains to be seen whether they can scale quickly enough to offset Keytruda’s eventual revenue decline. Competition in the target market also looms large for these products.
Though still in the early days, Winrevair is likely to face stiff competition in the PAH market, which remains highly competitive. Significant players in the PAH market are United Therapeutics (UTHR - Free Report) and J&J (JNJ - Free Report) .
J&J’s key PAH drugs include Opsumit and Uptravi. JNJ recorded revenues of $2.14 billion from its PAH franchise in the first half of 2025.
UTHR markets four drugs to treat PAH in the United States — Remodulin, Orenitram, Tyvaso and Adcirca. United Therapeutics’ Remodulin, Orenitram and Tyvaso recorded sales of $272.9 million, $244.6 million and $935.9 million, respectively, in the first half of 2025.
Meanwhile, Merck’s Enflonsia is likely to face competition from AstraZeneca (AZN - Free Report) /Sanofi’s RSV antibody Beyfortus, which was also approved for a similar indication in 2023.
In the first half of 2025, the AZN/SNY antibody recorded sales worth $393.4 million (€356 million).
Besides antibodies, some other vaccines have been approved for preventing RSV in certain patients in the United States. These include Pfizer’s Abrysvo, GSK’s Arexvy and Moderna’s mRESVIA.
MRK's Price Performance, Valuation and Estimates
Year to date, shares of Merck have declined 18% against the industry’s rise of 0.5%. The stock has also underperformed the sector and the S&P 500 during the same time frame, as seen in the chart below.
Image Source: Zacks Investment Research
From a valuation standpoint, Merck appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 8.67 forward earnings, lower than 14.83 for the industry and its 5-year mean of 12.70.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2025 earnings per share has increased from $8.85 per share to $8.93, while the same for 2026 has decreased from $9.63 to $9.59 over the past 60 days.
Image: Shutterstock
Can MRK's New Drugs Drive Long-Term Growth Amid Looming Keytruda LOE?
Key Takeaways
Merck (MRK - Free Report) faces a looming patent cliff as its blockbuster PD-L1, Keytruda, approaches loss of exclusivity (LOE) in 2028. The drug is the company's biggest revenue driver, accounting for more than 50% of its pharmaceutical sales during the first half of 2025.
Keytruda, approved for several types of cancers, has played a key role in driving Merck’s steady revenue growth over the past few years. The drug generated sales of $15.16 billion in the first half of 2025, representing a nearly 7% year-over-year increase.
However, Merck remains heavily dependent on Keytruda for growth. Given the heavy reliance and the upcoming loss of exclusivity of Keytruda, Merck is working on different strategies to drive its long-term growth, including innovative immuno-oncology combination studies on Keytruda with LAG3 and CTLA-4 inhibitors.
Merck is also developing a subcutaneous formulation of Keytruda that can extend its patent life. This formulation is under review in the United States, and an FDA decision is expected later this month.
Most importantly, Merck is pinning hopes on new drug launches for driving its long-term growth when Keytruda loses exclusivity in 2028. The company’s new 21-valent pneumococcal conjugate vaccine, Capvaxive, was approved in the United States in June 2024 and in the EU in March 2025, while its pulmonary arterial hypertension (PAH) drug, Winrevair, was approved in the United States and the EU in 2024.
Both Capvaxive and Winrevair witnessed a strong uptake during the first half of 2025. Capvaxive recorded sales of $236 million in the first half of 2025 and Winrevair generated sales worth $615 million during the same time.
Management believes that both Capvaxive and Winrevair have the potential to generate significant long-term revenues, given the strong launch they have witnessed so far.
Sales of another new product, novel HIF-2α inhibitor Welireg, which is approved for treating various types of cancer indications, rose around 42% in the first half of 2025.
Merck’s newest respiratory syncytial virus (RSV) antibody, Enflonsia (clesrovimab), was approved in the United States in June 2025, while it is under review in the EU. Merck is currently gearing up to launch Enflonsia to help protect infants entering their first RSV season.
A fixed-dose combination of doravirine and islatravir for the treatment of HIV is also under review in the United States, with an FDA decision expected in April next year.
MRK's Competition in the Target Market
While Merck’s new products show strong potential, it remains to be seen whether they can scale quickly enough to offset Keytruda’s eventual revenue decline. Competition in the target market also looms large for these products.
Though still in the early days, Winrevair is likely to face stiff competition in the PAH market, which remains highly competitive. Significant players in the PAH market are United Therapeutics (UTHR - Free Report) and J&J (JNJ - Free Report) .
J&J’s key PAH drugs include Opsumit and Uptravi. JNJ recorded revenues of $2.14 billion from its PAH franchise in the first half of 2025.
UTHR markets four drugs to treat PAH in the United States — Remodulin, Orenitram, Tyvaso and Adcirca. United Therapeutics’ Remodulin, Orenitram and Tyvaso recorded sales of $272.9 million, $244.6 million and $935.9 million, respectively, in the first half of 2025.
Meanwhile, Merck’s Enflonsia is likely to face competition from AstraZeneca (AZN - Free Report) /Sanofi’s RSV antibody Beyfortus, which was also approved for a similar indication in 2023.
In the first half of 2025, the AZN/SNY antibody recorded sales worth $393.4 million (€356 million).
Besides antibodies, some other vaccines have been approved for preventing RSV in certain patients in the United States. These include Pfizer’s Abrysvo, GSK’s Arexvy and Moderna’s mRESVIA.
MRK's Price Performance, Valuation and Estimates
Year to date, shares of Merck have declined 18% against the industry’s rise of 0.5%. The stock has also underperformed the sector and the S&P 500 during the same time frame, as seen in the chart below.
Image Source: Zacks Investment Research
From a valuation standpoint, Merck appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 8.67 forward earnings, lower than 14.83 for the industry and its 5-year mean of 12.70.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2025 earnings per share has increased from $8.85 per share to $8.93, while the same for 2026 has decreased from $9.63 to $9.59 over the past 60 days.
Image Source: Zacks Investment Research
MRK's Zacks Rank
Merck currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.