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Keytruda generates over 55% of pharmaceutical sales, but its 2028 patent expiration poses risks
New launches, pipeline progress and acquisitions could help offset generic pressures and sustain growth
Merck’s (MRK - Free Report) stock has been trading above its 200-day simple moving average (SMA) for over a year now, while it moved above the 50-day SMA on Nov. 4, 2026,
Image Source: Zacks Investment Research
MRK’s sustained trading above its 200-day SMA for nearly a year reflects strong investor confidence in the company’s long-term growth prospects and the resilience of its business. The stock’s recent move above its 50-day SMA further suggests improving near-term sentiment, indicating that investors remain optimistic about the company’s ability to sustain growth despite challenges.
This positive momentum appears to be supported by continued demand for blockbuster cancer drug Keytruda, strong uptake of newer products like Winrevair, encouraging pipeline developments and an improving revenue outlook. The sustained strength also suggests that investors are increasingly recognizing Merck’s efforts to diversify its revenue base and strengthen its portfolio ahead of Keytruda’s looming patent expiration.
On the other hand, its dependence on Keytruda and approaching patent-expiration challenges are key concerns.
Let’s understand all these factors in detail and analyze Merck’s strengths and weaknesses to understand how to play the stock in such a scenario.
Keytruda Dominates Merck's Portfolio
Merck has more than six blockbuster drugs in its portfolio, with Keytruda as the primary top-line driver. Keytruda, approved for several types of cancer, alone accounts for more than 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. Keytruda sales are gaining from continued strong momentum in metastatic indications and rapid uptake across earlier-stage launches. The company expects the growth to continue till it loses patent exclusivity in 2028. The drug generated sales of $23.6 billion in the first nine months of 2026, rising 1% year over year. Several clinical studies are currently evaluating Keytruda across multiple cancer types and treatment settings.
Merck is pursuing innovative immuno-oncology combinations, including Keytruda with LAG3 and CTLA-4 inhibitors, to drive long-term growth. It is also developing intismeran autogene, a personalized mRNA cancer vaccine, with Moderna (MRNA - Free Report) in combination with Keytruda for lung cancer and melanoma. The combination showed clinically meaningful improvements in recurrence-free and distant metastasis-free survival in a phase III melanoma study.
Merck’s subcutaneous formulation of Keytruda, known as Keytruda Qlex, was approved in the United States and EU in 2025 and generated sales of $1.42 billion in the first nine months of 2026. Keytruda Qlex can offer substantially quicker administration time than intravenous infusion of Keytruda.
Merck expects Keytruda to achieve peak sales of $35 billion by 2028. Merck’s other oncology drugs, Welireg, AstraZeneca (AZN - Free Report) -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 double (from 2024 levels) by the mid-2030s.
Merck’s Pipeline Strengthens Its Outlook Beyond Keytruda
Merck’s expanding drug pipeline and potential new blockbuster drugs beyond Keytruda look encouraging.
Its new products, pulmonary arterial hypertension drug Winrevair, cancer drug Welireg and 21-valent pneumococcal conjugate vaccine Capvaxive, have begun to contribute significantly to top-line growth. In the first nine months of 2026, Capvaxive and Winrevair generated sales of $588 million and $1.81 billion, respectively.
Some new products approved/launched recently are RSV antibody, Enflonsia (clesrovimab), Idvynso, a once-daily, single-tablet two-drug regimen of doravirine and islatravir, and Lipfendra (enlicitide), an oral PCSK9 inhibitor to help reduce LDL cholesterol in adults with hypercholesterolemia.
Some key candidates in late-stage development/under review 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.
Merck is actively pursuing acquisitions to prepare for Keytruda’s 2028 patent expiration. Recent deals added Ohtuvayre through Verona Pharma, influenza candidate MK-1406 through Cidara, and potential blockbuster cancer drug MK-4208 through Terns Pharmaceuticals.
Merck’s Recurring Gardasil Issues
Merck is facing a significant slowdown in its Gardasil/Gardasil 9 HPV vaccine franchise, which was previously one of the company's most important growth drivers alongside Keytruda. Sales of Gardasil declined 3% in 2024 and 39% in 2025, primarily due to weak sales in China.
Gardasil’s sales declined 9% in the first half of 2026, primarily due to lower demand in China, Japan and the United States. However, third-quarter sales improved significantly, but much of the growth came from favorable CDC purchasing patterns (approximately $300 million) and higher net pricing in the United States rather than a broad-based recovery in vaccine demand. Of approximately $300 million in favorable vaccine purchasing benefits recorded in the third quarter, $50 million is expected to reverse in the fourth quarter of 2026, while the remaining $250 million will reverse in 2027. This will create a significant year-over-year headwind for Gardasil.
Gardasil faces continued challenges in 2027. Continued weak demand in China and Japan, growing competition from cheaper domestic HPV vaccines in China, broader vaccine hesitancy and reduced vaccination rates could continue to weigh on Gardasil sales.
MRK's Keytruda Dependence and Patent Cliff Risks
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. In 2027, Keytruda’s growth is expected to moderate as the company has reached peak penetration for certain approved indications. Policy-related headwinds in Germany are also expected to impact Keytruda’s sales.
Keytruda’s core U.S. patent is also 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.
Merck also faces rising competitive and generic pressure on some of its other drugs. In 2027, Merck expects more than $2 billion in revenue headwinds from generic competition following the loss of exclusivity (LOE) of Bridion, the Januvia family of products and Adempas.
MRK Expects Moderate Revenue Growth in 2027
Merck expects moderate revenue growth in 2027 as contributions from new product launches and higher sales in Animal Health are expected to be partially offset by generic headwinds. Increased vaccine hesitancy and lower utilization (particularly for Gardasil) are also expected to weigh on sales. Keytruda’s growth is also expected to moderate in 2027. Underlying operating expenses are expected to rise at a mid-to-high single-digit rate, reflecting investments in its expanding pipeline and growing portfolio of new product launches.
MRK Share Price, Valuation & Estimates
Merck’s shares have risen 39% so far this year compared with an increase of 25.9% for the industry. The stock has also outperformed the sector as well as the S&P 500 index, as seen in the chart below.
From a valuation standpoint, Merck is slightly expensive. Going by the price/earnings ratio, the company’s shares currently trade at 19.97 forward earnings, higher than 18.14 for the industry. The stock is trading above its 5-year mean of 13.16.
MRK Stock Valuation
Image Source: Zacks Investment Research
Estimates for MRK’s 2026 earnings have risen from $2.65 per share to $2.77 per share over the past seven days, while those for 2027 have declined from $9.26 per share to $9.07 per share.
MRK Estimate Movement
Image Source: Zacks Investment Research
Stay Invested in 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.
However, Merck faces several near-term challenges, including persistent challenges for Gardasil and rising competitive and generic pressure on some of its drugs. Merck expects only moderate revenue growth in 2027. The company also expects a shallow dip in revenues and earnings in the initial period following Keytruda LOE before quickly returning to growth. Near-term profitability remains affected by costs related to Merck’s various acquisitions. However, these acquisitions eventually benefit the company.
However, MRK’s long-term prospects look brighter. It expects more than $70 billion of potential non-risk-adjusted commercial opportunity for the current pipeline by the mid-2030s. On the third-quarter conference call, Merck mentioned that it expects to raise its $70 billion mid-2030s revenue opportunity estimate, driven by growing confidence in its pipeline, additional revenue potential from the Terns acquisition, PD-1/VEGF combinations, broader indications for sac-TMT and stronger-than-expected commercial prospects for intismeran.
Overall, its new products, strong progress in its pipeline, and business development and acquisitions have increased confidence that Merck may be able to maintain growth even after Keytruda loses exclusivity. Investors can continue to retain this Zacks Rank #3 (Hold) stock as its long-term prospects remain intact. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
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Merck Stock Shows Sustained Strength: Time to Buy, Sell or Hold?
Key Takeaways
Merck’s (MRK - Free Report) stock has been trading above its 200-day simple moving average (SMA) for over a year now, while it moved above the 50-day SMA on Nov. 4, 2026,
MRK’s sustained trading above its 200-day SMA for nearly a year reflects strong investor confidence in the company’s long-term growth prospects and the resilience of its business. The stock’s recent move above its 50-day SMA further suggests improving near-term sentiment, indicating that investors remain optimistic about the company’s ability to sustain growth despite challenges.
This positive momentum appears to be supported by continued demand for blockbuster cancer drug Keytruda, strong uptake of newer products like Winrevair, encouraging pipeline developments and an improving revenue outlook. The sustained strength also suggests that investors are increasingly recognizing Merck’s efforts to diversify its revenue base and strengthen its portfolio ahead of Keytruda’s looming patent expiration.
On the other hand, its dependence on Keytruda and approaching patent-expiration challenges are key concerns.
Let’s understand all these factors in detail and analyze Merck’s strengths and weaknesses to understand how to play the stock in such a scenario.
Keytruda Dominates Merck's Portfolio
Merck has more than six blockbuster drugs in its portfolio, with Keytruda as the primary top-line driver. Keytruda, approved for several types of cancer, alone accounts for more than 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. Keytruda sales are gaining from continued strong momentum in metastatic indications and rapid uptake across earlier-stage launches. The company expects the growth to continue till it loses patent exclusivity in 2028. The drug generated sales of $23.6 billion in the first nine months of 2026, rising 1% year over year. Several clinical studies are currently evaluating Keytruda across multiple cancer types and treatment settings.
Merck is pursuing innovative immuno-oncology combinations, including Keytruda with LAG3 and CTLA-4 inhibitors, to drive long-term growth. It is also developing intismeran autogene, a personalized mRNA cancer vaccine, with Moderna (MRNA - Free Report) in combination with Keytruda for lung cancer and melanoma. The combination showed clinically meaningful improvements in recurrence-free and distant metastasis-free survival in a phase III melanoma study.
Merck’s subcutaneous formulation of Keytruda, known as Keytruda Qlex, was approved in the United States and EU in 2025 and generated sales of $1.42 billion in the first nine months of 2026. Keytruda Qlex can offer substantially quicker administration time than intravenous infusion of Keytruda.
Merck expects Keytruda to achieve peak sales of $35 billion by 2028. Merck’s other oncology drugs, Welireg, AstraZeneca (AZN - Free Report) -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 double (from 2024 levels) by the mid-2030s.
Merck’s Pipeline Strengthens Its Outlook Beyond Keytruda
Merck’s expanding drug pipeline and potential new blockbuster drugs beyond Keytruda look encouraging.
Its new products, pulmonary arterial hypertension drug Winrevair, cancer drug Welireg and 21-valent pneumococcal conjugate vaccine Capvaxive, have begun to contribute significantly to top-line growth. In the first nine months of 2026, Capvaxive and Winrevair generated sales of $588 million and $1.81 billion, respectively.
Some new products approved/launched recently are RSV antibody, Enflonsia (clesrovimab), Idvynso, a once-daily, single-tablet two-drug regimen of doravirine and islatravir, and Lipfendra (enlicitide), an oral PCSK9 inhibitor to help reduce LDL cholesterol in adults with hypercholesterolemia.
Some key candidates in late-stage development/under review 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.
Merck is actively pursuing acquisitions to prepare for Keytruda’s 2028 patent expiration. Recent deals added Ohtuvayre through Verona Pharma, influenza candidate MK-1406 through Cidara, and potential blockbuster cancer drug MK-4208 through Terns Pharmaceuticals.
Merck’s Recurring Gardasil Issues
Merck is facing a significant slowdown in its Gardasil/Gardasil 9 HPV vaccine franchise, which was previously one of the company's most important growth drivers alongside Keytruda. Sales of Gardasil declined 3% in 2024 and 39% in 2025, primarily due to weak sales in China.
Gardasil’s sales declined 9% in the first half of 2026, primarily due to lower demand in China, Japan and the United States. However, third-quarter sales improved significantly, but much of the growth came from favorable CDC purchasing patterns (approximately $300 million) and higher net pricing in the United States rather than a broad-based recovery in vaccine demand. Of approximately $300 million in favorable vaccine purchasing benefits recorded in the third quarter, $50 million is expected to reverse in the fourth quarter of 2026, while the remaining $250 million will reverse in 2027. This will create a significant year-over-year headwind for Gardasil.
Gardasil faces continued challenges in 2027. Continued weak demand in China and Japan, growing competition from cheaper domestic HPV vaccines in China, broader vaccine hesitancy and reduced vaccination rates could continue to weigh on Gardasil sales.
MRK's Keytruda Dependence and Patent Cliff Risks
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. In 2027, Keytruda’s growth is expected to moderate as the company has reached peak penetration for certain approved indications. Policy-related headwinds in Germany are also expected to impact Keytruda’s sales.
Keytruda’s core U.S. patent is also 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.
Merck also faces rising competitive and generic pressure on some of its other drugs. In 2027, Merck expects more than $2 billion in revenue headwinds from generic competition following the loss of exclusivity (LOE) of Bridion, the Januvia family of products and Adempas.
MRK Expects Moderate Revenue Growth in 2027
Merck expects moderate revenue growth in 2027 as contributions from new product launches and higher sales in Animal Health are expected to be partially offset by generic headwinds. Increased vaccine hesitancy and lower utilization (particularly for Gardasil) are also expected to weigh on sales. Keytruda’s growth is also expected to moderate in 2027. Underlying operating expenses are expected to rise at a mid-to-high single-digit rate, reflecting investments in its expanding pipeline and growing portfolio of new product launches.
MRK Share Price, Valuation & Estimates
Merck’s shares have risen 39% so far this year compared with an increase of 25.9% for the industry. The stock has also outperformed the sector as well as the S&P 500 index, as seen in the chart below.
Merck Stock Outperforms Industry, Sector & S&P 500
From a valuation standpoint, Merck is slightly expensive. Going by the price/earnings ratio, the company’s shares currently trade at 19.97 forward earnings, higher than 18.14 for the industry. The stock is trading above its 5-year mean of 13.16.
MRK Stock Valuation
Estimates for MRK’s 2026 earnings have risen from $2.65 per share to $2.77 per share over the past seven days, while those for 2027 have declined from $9.26 per share to $9.07 per share.
MRK Estimate Movement
Stay Invested in 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.
However, Merck faces several near-term challenges, including persistent challenges for Gardasil and rising competitive and generic pressure on some of its drugs. Merck expects only moderate revenue growth in 2027. The company also expects a shallow dip in revenues and earnings in the initial period following Keytruda LOE before quickly returning to growth. Near-term profitability remains affected by costs related to Merck’s various acquisitions. However, these acquisitions eventually benefit the company.
However, MRK’s long-term prospects look brighter. It expects more than $70 billion of potential non-risk-adjusted commercial opportunity for the current pipeline by the mid-2030s. On the third-quarter conference call, Merck mentioned that it expects to raise its $70 billion mid-2030s revenue opportunity estimate, driven by growing confidence in its pipeline, additional revenue potential from the Terns acquisition, PD-1/VEGF combinations, broader indications for sac-TMT and stronger-than-expected commercial prospects for intismeran.
Overall, its new products, strong progress in its pipeline, and business development and acquisitions have increased confidence that Merck may be able to maintain growth even after Keytruda loses exclusivity. Investors can continue to retain this Zacks Rank #3 (Hold) stock as its long-term prospects remain intact. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.