merck On Thursday it reported third-quarter earnings and revenue that topped estimates as it saw strong demand for its Keytruda cancer immunotherapy.
The drugmaker also lowered its full-year profit outlook to reflect lower estimated tariff costs, among other factors. Merck shares closed flat on Thursday.
Keytruda sales surpassed $8 billion for the first time in a quarter, a 10% increase from the same period a year ago. Revenue from the drug of $8.14 billion was slightly below the $8.24 billion analysts expected, according to StreetAccount estimates.
The results come as Merck cuts $3 billion in costs by the end of 2027 and prepares to offset revenue losses from Keytruda's upcoming patent expiration in 2028.
The pharmaceutical giant now expects its 2025 adjusted earnings to be between $8.93 and $8.98 per share. That compares to its previous outlook of between $8.87 and $8.97.
Merck said that reflects several new elements, including “lower estimated costs related to the impact of tariffs.” Over the past two quarters, the company included an estimated $200 million impact from tariffs President Donald Trump has implemented to date, but not planned pharmaceutical-specific taxes. Merck did not disclose a new estimate of the cost of the existing tariffs.
Merck said the guidance also reflects a benefit from a modified deal with AstraZeneca related to a pill for a specific genetic disorder, partially offset by costs tied to the company's now-completed acquisition of Verona Pharma.
Merck expects revenue for the year to be between $64.5 billion and $65 billion, down on both ends from its previous guidance of $64.3 billion to $65.3 billion.
Here's what Merck reported for the third quarter compared to what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: Adjusted $2.58 vs. expected $2.35
- Revenue: $17.28 billion vs. $16.96 billion expected
The company posted net income of $5.79 billion, or $2.32 per share, during the quarter. That compares with net income of $3.16 billion, or $1.24 per share, in the same period a year earlier.
Excluding acquisition and restructuring costs, Merck earned $2.58 per share during the third quarter.
Merck earned $17.28 billion in revenue during the quarter, up 4% from the same period a year earlier.
Merck continued to see problems with sales in China of Gardasil, a vaccine that prevents cancer caused by HPV, the most common sexually transmitted infection in the US.
In February, Merck announced the decision to suspend shipments of Gardasil to China beginning that month. In July, Chief Financial Officer Caroline Litchfield said the company will not resume shipping to China until at least the end of 2025, noting that inventories remain high and demand is still weak.
Gardasil generated sales of $1.75 billion during the quarter, down 24% from the same period a year earlier due to lower demand in China. Still, that was in line with what analysts expected, according to StreetAccount.
Investors are eager for additional updates on Gardasil's presence in China and any details from Merck on potential drug pricing deals with Trump as part of his controversial “most favored nation” policy. Trump has so far signed agreements with Pfizer, AstraZeneca and Merck Serono, the world's largest maker of fertility drugs, which aims to make its medications easier for Americans to access.
In an earnings call Thursday, Merck CEO Rob Davis said the company shares the Trump administration's goal of “decreasing patients' out-of-pocket costs for our products in the U.S. while achieving higher prices for our medicines and vaccines in countries that have not been paying fair value for the innovation we offer.”
Merck is “actively engaged” with the administration to achieve those efforts.
Sale of pharmaceutical and animal health products.
Merck's pharmaceutical unit, which develops a wide range of drugs, posted revenue of $15.61 billion during the third quarter. That's 4% more than the same period last year.
Keytruda's rise was driven by greater acceptance 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.
Meanwhile, Merck's new drug Winrevair, which is used to treat a rare and deadly lung disease, posted sales of $360 million during the quarter. Analysts expected the drug to generate $413 million, according to StreetAccount estimates.
Winrevair's growth largely reflects increased acceptance in the U.S. But it was partially offset by the timing of distributors' purchasing of the drug and a lower net price in the country, primarily due to changes in Medicare prescription drug plans.
Merck's animal health division, which develops vaccines and medications for dogs, cats and livestock, posted nearly $1.62 billion in sales, up 9% from the same period a year earlier. The company said this primarily reflects increased demand for livestock products.
Correction: Sales at Merck's animal health division increased 9% from the same period a year earlier. An earlier version incorrectly indicated the percentage.
