Merck’s (MRK Quick QuoteMRK - Free Report) stock has risen 51.4% in the past six months. A key driver of the increase is Merck’s improved outlook for long-term growth once its blockbuster drug, Keytruda, loses patent exclusivity. Keytruda, approved for several types of cancer, alone accounts for around 55% of the company’s pharmaceutical sales. The drug has played an instrumental role in driving Merck’s steady revenue growth over the past few years. However, there were rising concerns about the firm’s ability to grow its non-oncology business ahead of the Keytruda LOE in 2028.

Recent M&A deals have strengthened Merck’s pipeline, while late-stage pipeline and new launches are gaining traction, thus increasing confidence in the company’s long-term growth prospects in the post-Keytruda LOE period.

Let’s understand the company’s strengths and weaknesses to better analyze how to play Merck stock amid the price rise.

Keytruda: Merck’s Biggest Strength

Merck boasts more than six blockbuster drugs in its portfolio, with Keytruda being the key top-line driver. Keytruda recorded sales of $31.7 billion in 2025, up 7% year over year.

Keytruda’s sales are gaining from rapid uptake across earlier-stage indications. Continued strong momentum in metastatic indications is also boosting sales growth. The company expects the growth to continue till it loses patent exclusivity in 2028.

Merck is working on different strategies to drive Keytruda's long-term growth. These include innovative immuno-oncology combinations, including Keytruda with LAG3 and CTLA-4 inhibitors. In partnership with Moderna (MRNA Quick QuoteMRNA - Free Report) , Merck is developing a personalized mRNA therapeutic cancer vaccine called intismeran autogene (V940/mRNA-4157) in combination with Keytruda in pivotal phase III studies for earlier-stage and adjuvant NSCLC and adjuvant melanoma. Merck’s subcutaneous formulation of Keytruda, known as Keytruda Qlex, was approved by the FDA in September 2025. Keytruda Qlex can offer substantially quicker administration time than the intravenous infusion of Keytruda.

Merck expects Keytruda to achieve peak sales of $35 billion by 2028. Merck’s other oncology drugs, Welireg, AstraZeneca-partnered Lynparza and Eisai-partnered Lenvima, are also contributing to top-line growth.

Merck’s Animal Health business is also a key contributor to its top-line growth, with sales expected to more than double by mid-2030s.

MRK’s Pipeline Progress & Strategic M&A Deals

Merck’s expanding drug pipeline and potential new blockbuster drugs beyond Keytruda look encouraging.

Its phase III pipeline has almost tripled since 2021, supported by in-house pipeline progress as well as the addition of candidates through M&A deals. Some key new products with blockbuster potential are its 21-valent pneumococcal conjugate vaccine, Capvaxive, and pulmonary arterial hypertension drug, Winrevair. Both products have witnessed a strong launch and have the potential to generate significant revenues over the long term.

Its RSV antibody, Enflonsia (clesrovimab), was approved in the United States in June 2025, while it is under review in the EU. A fixed-dose combination of doravirine and islatravir for the treatment of HIV is under review in the United States, with an FDA decision expected in April 2026.

Merck has other promising candidates in its late-stage pipeline, such as enlicitide decanoate/MK-0616, an oral PCSK9 inhibitor for hypercholesterolemia, tulisokibart, a TL1A inhibitor for ulcerative colitis and Daiichi-Sankyo-partnered antibody-drug conjugates.

The company has been on an acquisition spree in the past year, as it faces the looming patent expiration of Keytruda in 2028. The acquisition of Verona in 2025 added Ohtuvayre, a novel, first-in-class maintenance treatment for chronic obstructive pulmonary disease, with multibillion-dollar commercial potential. Ohtuvayre's commercial launch is off to a solid start.

In January 2026, Merck acquired Cidara Therapeutics, which added its lead pipeline candidate, MK-1406 (formerly CD388), a first-in-class long-acting, strain-agnostic antiviral agent, currently being evaluated in late-stage studies for the prevention of seasonal influenza in individuals at higher risk of complications.

Earlier this week, Merck announced a definitive agreement to acquire California-based cancer biotech, Terns Pharmaceuticals (TERN Quick QuoteTERN - Free Report) , for $6.7 billion. The deal, if successfully closed, will add Terns’ lead candidate, TERN-701, in early-stage development for treating certain patients with chronic myeloid leukemia (CML) to Merck’s hematology/cancer pipeline.

Declining Sales of MRK’s Gardasil & Other Vaccines

Sales of Merck’s second-largest product, its HPV vaccine, Gardasil, declined 3% in 2024 and 39% in 2025 due to a weak sales performance in China. Sales of Gardasil are declining in China due to weak demand trends amid an economic slowdown. The company is also seeing lower demand for the vaccine in Japan. Gardasil sales are not expected to improve in 2026.

Sales of some other Merck vaccines, like Proquad, M-M-R II, Varivax, Rotateq and Pneumovax 23, also declined in 2025.

MRK’s Keytruda Faces Patent Expiration in 2028

Merck is heavily reliant on Keytruda. Though Keytruda may be Merck’s biggest strength and a solid reason to own the stock, the company is excessively dependent on the drug. Keytruda’s core U.S. patent is expected to expire around 2028, with additional patents expiring slightly after that. Keytruda is expected to face significant biosimilar competition around 2028-2029. Once biosimilars enter, Keytruda’s sales are likely to decline sharply.

Also, competitive pressure might increase for Keytruda in the near future from dual PD-1/VEGF inhibitors that inhibit both the PD-1 pathway and the VEGF pathway at once. They are designed to overcome the limitations of single-target therapies like Keytruda.

MRK’s Generic Headwinds in 2026

MRK is seeing declining demand for its diabetes products (Januvia/Janumet) and the generic erosion of some drugs like Isentress/Isentress HD and Bridion in the European Union and Dificid in the United States. Bridion is expected to lose patent exclusivity in the United States in July 2026, and sales are expected to significantly decline thereafter. Sales of Januvia/Janumet are expected to decline steeply from 2026 onward due to government price setting, an anticipated patent expiry in 2026 and ongoing competitive pressure.

In 2026, Merck expects generic competition for Januvia/Janumet, Bridion and Dificid to hurt revenues by approximately $2.5 billion.

MRK Share Price, Valuation & Estimates

Merck’s shares have risen 33.2% in the past year compared with an increase of 10.6% for the industry. The stock has also outperformed the sector as well as the S&P 500 index.

Merck Stock Outperforms Industry, Sector & S&P 500

Image Source: Zacks Investment Research

The stock has also been trading above its 50-day and 200-day simple moving averages since early November.

From a valuation standpoint, Merck looks slightly expensive. Going by the price/earnings ratio, the company’s shares currently trade at 18.27 forward earnings, slightly higher than 16.99 for the industry. The stock is also trading above its 5-year mean of 12.61.

MRK Stock Valuation

Image Source: Zacks Investment Research

Estimates for MRK’s 2026 earnings have declined from $6.55 per share to $5.47 over the past 60 days, while those for 2027 have declined from $10.07 per share to $9.89 per share.

MRK Estimate Movement

Image Source: Zacks Investment Research

Long-Term Investors May Continue Holding MRK Stock

Merck has one of the world’s best-selling drugs in its portfolio, generating billions of dollars in revenues. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then. Merck’s new products, Winrevair, Welireg and Capvaxive, key pipeline progress and expansion of its respiratory and infectious disease portfolios through the acquisitions of Verona Pharma and Cidara Therapeutics, have improved its long-term growth prospects.  

Merck expects over $70 billion of potential non-risk-adjusted commercial opportunity for the current pipeline by the mid-2030s. Merck pointed out that this estimate was more than double the peak consensus sales estimate for Keytruda of $35 billion in 2028. Merck said that the estimate of $70 billion was $20 billion higher than what they expected just one year ago.

The new products and strong progress in its pipeline have increased confidence that Merck may be able to maintain growth even after Keytruda loses exclusivity.

However, Merck faces several near-term challenges, including persistent challenges for Gardasil in China, potential competition for Keytruda, and rising competitive and generic pressure on some of its drugs. Also, estimates have declined recently due to costs related to its various M&A deals.

Long-term investors may continue retaining this Zacks Rank #3 (Hold) stock and see how the company manages its future product and pipeline growth and replaces Keytruda revenues. However, short-term investors may reduce their position in the stock as there seems to be limited prospects for growth in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.