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MRK Banks on Growing Pipeline & New Drugs to Offset Keytruda LOE
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Key Takeaways
Merck's phase III pipeline has nearly tripled since 2021, with 20 new drugs targeted by 2030.
Newer products Winrevair, Capvaxive and Welireg are emerging as key growth drivers for Merck.
Merck sees more than $70 billion in potential pipeline opportunity by the mid-2030s.
Merck (MRK - Free Report) is relying on a growing pipeline and an expanding portfolio of newer medicines, including acquired assets, to offset the eventual impact of the loss of exclusivity (LOE) for its blockbuster cancer drug Keytruda.
Keytruda remains Merck’s biggest revenue driver. The drug generated sales of $16.40 billion in the first half of 2026, up nearly 4.2% year over year. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then. However, once biosimilars enter around 2028-2029, Keytruda’s sales are likely to decline sharply.
As Keytruda approaches its expected loss of exclusivity in 2028, Merck’s expanding drug pipeline and potential new blockbuster drugs are expected to drive the next phase of growth.
Merck’s phase III pipeline has almost tripled since 2021, supported by in-house progress as well as the addition of candidates through ongoing mergers and acquisitions (M&A) deals. Merck expects to launch 20 new drugs by 2030, with many already launched and carrying blockbuster potential.
Some newer products are already emerging as key growth drivers for Merck, including pulmonary arterial hypertension drug Winrevair, the 21-valent pneumococcal conjugate vaccine Capvaxive and cancer drug Welireg.
Winrevair and Capvaxive generated $1.1 billion and $325 million, respectively, in first-half 2026 sales. Welireg sales surged 57% year over year to $470 million. Strong launches position these drugs as potential long-term revenue contributors, especially in the post-Keytruda era.
Merck has also secured approvals for several newer products, including RSV antibody Enflonsia (clesrovimab), HIV treatment Idvynso, a once-daily, single-tablet, two-drug regimen of doravirine and islatravir, and Lipfendra (enlicitide), an oral PCSK9 inhibitor for lowering LDL cholesterol in adults with hypercholesterolemia.
Some key candidates in late-stage development are sacituzumab tirumotecan or sac-TMT, an anti-TROP2 antibody-drug conjugate for multiple tumor types, MK-8591D/islatravir plus lenacapavir, a once-weekly oral treatment for HIV, and alimatravir, a monthly oral HIV PrEP candidate.
Importantly, several of these higher-value programs are now moving from pipeline studies toward commercial validation. Merck expects more than $70 billion of potential non-risk-adjusted commercial opportunity for the current pipeline by the mid-2030s. This estimate is more than double the peak consensus sales estimate for Keytruda of $35 billion in 2028.
The company has also stepped up acquisitions ahead of Keytruda’s 2028 patent expiry. Deals for Verona Pharma, Cidara Therapeutics and Terns Pharmaceuticals have expanded its pipeline across COPD, influenza and oncology, respectively.
Reflecting Merck’s evolving business mix, management expects the Keytruda LOE period to look like a “shallow dip with a fast return back to growth” as faster-than-expected pipeline de-risking, new products and acquired assets help diversify the portfolio and support long-term growth.
PD-L1 Inhibitors Competing With MRK's Keytruda
Keytruda faces competition from other PD-L1 inhibitors, including Bristol Myers’ (BMY - Free Report) Opdivo, Roche’s (RHHBY - Free Report) Tecentriq and AstraZeneca’s (AZN - Free Report) Imfinzi.
BMY’s Opdivo, like Keytruda, is approved across multiple cancer types, including lung, melanoma and kidney cancers. Bristol Myers recorded $4.63 billion in Opdivo sales in the first half of 2026, down 3.9% year over year.
Tecentriq is Roche’s leading immuno-oncology drug approved for multiple cancer indications. RHHBY recorded CHF 1.70 billion in Tecentriq sales in the first half of 2026, up 6% year over year.
AZN’s Imfinzi generated sales of $3.55 billion in the first half of 2026, up 29%, driven by strong demand growth across all regions from established indications and new launches. Imfinzi has strategically expanded its use across multiple cancer indications, strengthening AstraZeneca’s oncology portfolio.
MRK's Price Performance, Valuation and Estimates
Year to date, shares of Merck have rallied 39.5% compared with the industry’s 12.3% rise. The stock has also outperformed 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 to be trading at a premium compared with the industry. Going by the price/earnings ratio, MRK’s shares currently trade at 18.97 forward earnings, higher than 18.02 for the industry. The stock is also trading above its 5-year mean of 12.91.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings per share has declined from $3.76 to $2.97, while the same for 2027 has decreased from $9.85 to $9.66 over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
MRK Banks on Growing Pipeline & New Drugs to Offset Keytruda LOE
Key Takeaways
Merck (MRK - Free Report) is relying on a growing pipeline and an expanding portfolio of newer medicines, including acquired assets, to offset the eventual impact of the loss of exclusivity (LOE) for its blockbuster cancer drug Keytruda.
Keytruda remains Merck’s biggest revenue driver. The drug generated sales of $16.40 billion in the first half of 2026, up nearly 4.2% year over year. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then. However, once biosimilars enter around 2028-2029, Keytruda’s sales are likely to decline sharply.
As Keytruda approaches its expected loss of exclusivity in 2028, Merck’s expanding drug pipeline and potential new blockbuster drugs are expected to drive the next phase of growth.
Merck’s phase III pipeline has almost tripled since 2021, supported by in-house progress as well as the addition of candidates through ongoing mergers and acquisitions (M&A) deals. Merck expects to launch 20 new drugs by 2030, with many already launched and carrying blockbuster potential.
Some newer products are already emerging as key growth drivers for Merck, including pulmonary arterial hypertension drug Winrevair, the 21-valent pneumococcal conjugate vaccine Capvaxive and cancer drug Welireg.
Winrevair and Capvaxive generated $1.1 billion and $325 million, respectively, in first-half 2026 sales. Welireg sales surged 57% year over year to $470 million. Strong launches position these drugs as potential long-term revenue contributors, especially in the post-Keytruda era.
Merck has also secured approvals for several newer products, including RSV antibody Enflonsia (clesrovimab), HIV treatment Idvynso, a once-daily, single-tablet, two-drug regimen of doravirine and islatravir, and Lipfendra (enlicitide), an oral PCSK9 inhibitor for lowering LDL cholesterol in adults with hypercholesterolemia.
Some key candidates in late-stage development are sacituzumab tirumotecan or sac-TMT, an anti-TROP2 antibody-drug conjugate for multiple tumor types, MK-8591D/islatravir plus lenacapavir, a once-weekly oral treatment for HIV, and alimatravir, a monthly oral HIV PrEP candidate.
Importantly, several of these higher-value programs are now moving from pipeline studies toward commercial validation. Merck expects more than $70 billion of potential non-risk-adjusted commercial opportunity for the current pipeline by the mid-2030s. This estimate is more than double the peak consensus sales estimate for Keytruda of $35 billion in 2028.
The company has also stepped up acquisitions ahead of Keytruda’s 2028 patent expiry. Deals for Verona Pharma, Cidara Therapeutics and Terns Pharmaceuticals have expanded its pipeline across COPD, influenza and oncology, respectively.
Reflecting Merck’s evolving business mix, management expects the Keytruda LOE period to look like a “shallow dip with a fast return back to growth” as faster-than-expected pipeline de-risking, new products and acquired assets help diversify the portfolio and support long-term growth.
PD-L1 Inhibitors Competing With MRK's Keytruda
Keytruda faces competition from other PD-L1 inhibitors, including Bristol Myers’ (BMY - Free Report) Opdivo, Roche’s (RHHBY - Free Report) Tecentriq and AstraZeneca’s (AZN - Free Report) Imfinzi.
BMY’s Opdivo, like Keytruda, is approved across multiple cancer types, including lung, melanoma and kidney cancers. Bristol Myers recorded $4.63 billion in Opdivo sales in the first half of 2026, down 3.9% year over year.
Tecentriq is Roche’s leading immuno-oncology drug approved for multiple cancer indications. RHHBY recorded CHF 1.70 billion in Tecentriq sales in the first half of 2026, up 6% year over year.
AZN’s Imfinzi generated sales of $3.55 billion in the first half of 2026, up 29%, driven by strong demand growth across all regions from established indications and new launches. Imfinzi has strategically expanded its use across multiple cancer indications, strengthening AstraZeneca’s oncology portfolio.
MRK's Price Performance, Valuation and Estimates
Year to date, shares of Merck have rallied 39.5% compared with the industry’s 12.3% rise. The stock has also outperformed 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 to be trading at a premium compared with the industry. Going by the price/earnings ratio, MRK’s shares currently trade at 18.97 forward earnings, higher than 18.02 for the industry. The stock is also trading above its 5-year mean of 12.91.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings per share has declined from $3.76 to $2.97, while the same for 2027 has decreased from $9.85 to $9.66 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.