Merck & Co. signaling on the floor of the New York Stock Exchange (NYSE) in New York, USA, on Tuesday, April 8, 2025.
Michael Nagle | Bloomberg | Getty images
Merck On Tuesday, he said that he will reduce the costs of $ 3 billion by the end of 2027 to reinvest completely to support new products and their drug pipe.
The Multiyear Effort Comes As Merck Preparas To Offset Revenue Losses From The Upcoming Patent Expiration of its Blockbuster Drug Keytruda In 2028. It also comes as Drugmakers Brace for President Donald Trump's Planned Tariffs On Pharmaceuticals I amount to the US Merck and Other Companies To Invest Billions to Boost Their Manufacturing Footprints in The US
The actions of the pharmaceutical giant fell 4% in the afternoon negotiation on Tuesday.
“Today, we announce a several -year optimization initiative that will redirect the investment and resources of more mature areas of our business to our flourishing variety of new growth drivers, it will further allow the transformation of our portfolio and promote our next chapter for productive growth and promoted by innovation,” said the CEO of Merck, Rob Davis, in the observations prepared for the profits of the company.
He added that his confidence in Merck's ability to navigate the loss of exclusivity of Keytruda increases with each launch of new products, reading data and commercial businesses. Davis said that he sees that the expiration of the patent “is more a hill than a cliff, and I am sure of our ability to grow in the long term.”
As part of the effort, Merck in July approved a new restructuring program that will eliminate certain administrative, sales and research and development positions. But the company will continue to hire employees in new roles in the areas of growth of its business. Merck will also reduce its global real estate footprint and continue to recover its manufacturing network.
Merck expects the shares under the restructuring program to generate around $ 1.7 billion in annual cost savings, most of which will be activated at the end of 2027.
The company expects costs before taxes related to the restructuring program to be approximately $ 3 billion in total. For his second quarter, Merck registered a $ 649 million charge related to the program.
Also on Tuesday, Merck reported income in the second quarter that received Wall Street estimates. It was the first time that Metric had lost expectations since April 2021.
While Keytruda's sales grew during the period, Merck continued to see problems with China Gardasil's sales, a vaccine that prevents HPV cancer, the most common sexually transmitted infection in the United States.
In February, Merck announced the decision to stop Gardasil's shipments to China from that month and pass at least 2025. In the prepared comments, the CFO Caroline Litchfield said that the company will not resume shipments to China until at least at the end of 2025, noting that the inventories remain high and that the demand is still soft.
The company also reduced its full year guide. Merck now hopes that his tight profits of 2025 will be between $ 8.87 and $ 8.97 per share. That compares to its previous perspective of $ 8.82 to $ 8.97 per share.
Merck hopes that the income of the year will be between $ 64.3 billion and $ 65.3 billion, reduced at both ends of its previous guide of $ 64.1 billion to $ 65.6 billion.
This is what Merck reported for the second quarter compared to what Wall Street expected, based on an LSEG analysts survey:
- Profit per action: $ 2.13 adjusted. That figure may not be comparable to estimates of $ 2.01.
- Revenue: $ 15.81 billion compared to $ 15.89 billion expected
Merck said his guide includes the estimated impact of $ 200 million previously associated with the rates Trump has implemented to date. In April, the company said that the expected rate position mainly reflects levies between the United States and China, but did not take into account the specific pharmaceutical rates of the sector.
The perspectives also include unique charges related to the company's license agreements with Hugi Pharma and Lanova, but not its recently announced acquisition of Verona Pharma.
The company registered net income of $ 4.43 billion, or $ 1.76 per share, for the quarter. That is compared to the net income of $ 5.46 billion, or $ 2.14 per share, during the period of year more than the year.
Excluding acquisition and restructuring costs, Merck won $ 2.13 per share for the second quarter. That includes a position of 7 cents per share for closing the license agreement with Hangrui Pharma.
Merck raised $ 15.81 billion in revenues for the quarter, 2% less than the same period of the previous year.
Animal health pharmaceutical sales
The Merck Pharmaceutical Unit, which develops a wide range of drugs, booked $ 14.05 billion in revenues during the second quarter. That was reduced by 2% since the same period of the previous year.
Keytruda registered $ 7.96 billion in revenues during the quarter, only 9% more than the period of year and more.
This increase was driven by a greater absorption of Keytruda for previous stage cancers and a strong demand for the medicine for metastatic cancers, which extended to other parts of the body, said the company. Analysts expected the medicine to see $ 7.9 billion in sales, according to Streetacount estimates.
Gardasil generated sales of $ 1.13 billion for the quarter, 55% less than the same period of a year due to the lowest demand in China. Analysts expected Gardasil to reserve sales of $ 1.33 billion, said Streetacount Estimates.
The Chinese market constitutes the majority of Blockbuster Shot's international income. Merck expects the expanded gardasil approval for men from 9 to 26 years in China to increase vaccine absorption.
Gardasil's sales in the United States increased 2% during the second quarter.
Meanwhile, the new Winrvair de Merck drug, which is used to treat a rare and mortal lung condition, registered $ 336 million in sales for the quarter. Analysts expected the medicine to bring $ 324.7 million, according to Streetacount estimates.
The Merck Animal Health Division, which develops vaccines and drug medications, cats and cattle, recorded almost $ 1.65 billion in sales, 11% more than the same period of the previous year. The company said that a greater demand for cattle and sales products of Aqua Business de Elanco, which it acquired last year, promoted that growth.
