Merck reported higher-than-expected second-quarter sales on Tuesday and raised its full-year revenue forecast on the strength of its top-selling cancer treatment Keytruda.
The U.S. drugmaker reported quarterly revenue of US$16.61 billion, up 5% from a year earlier and above analysts’ average estimate of US$16.36 billion, according to LSEG data.
Merck reported a loss for the quarter due to a US$5.7 billion charge from its acquisition of cancer drug developer Terns Pharmaceuticals.
The company’s reported loss in the quarter was 13 cents per share, including the US$2.31 per share charge from the deal. Analysts had expected an adjusted loss per share of 27 cents.
Sales of immunotherapy Keytruda, the world’s top-selling prescription medicine, rose 5% to US$8.37 billion in the quarter, including US$463 million from its newer subcutaneous formulation, Keytruda QLEX. That exceeded analysts’ estimate of US$8.07 billion.
Merck’s outlook is becoming clearer ahead of Keytruda’s generic competition, with more than US$70 billion in potential sales from its products by the mid-2030s, said Scotiabank analyst Louise Chen.
Stronger-than-expected QLEX uptake contributed to the Keytruda beat, Chief Financial Officer Caroline Litchfield said in an interview.
“We’re at double-digit of QLEX as a portion of the total business in the United States, and we are very much on a path that takes us to the 30% to 40% adoption by the end of 2027,” she said.
Gardasil, Merck’s cancer-preventing HPV vaccine, generated sales of US$1.17 billion, slightly above the US$1.15 billion analyst consensus.
Sales of its measles, mumps, rubella and chickenpox vaccines fell 3% to US$592 million in the quarter, below analysts’ estimates of US$608 million. The company said the decline was due primarily to lower U.S. demand.
“The data that we access suggest that the overall vaccines market in the United States has declined,” Litchfield said, adding that the mix of vaccines the company makes is faring quite well within that declining market.
Animal health sales rose 8% to US$1.78 billion, slightly ahead of Wall Street projections of US$1.75 billion.
Separately, Merck said its experimental drug, tulisokibart, met the main goal in a mid-stage trial for hidradenitis suppurativa, an inflammatory skin condition, but failed another separate trial involving patients with a type of lung disease.
Merck raised its 2026 revenue forecast to US$66.3 billion to US$67.3 billion, from a previous range of US$65.8 billion to US$67.0 billion. The midpoint is slightly above the LSEG consensus forecast of about US$66.8 billion.
The company now expects 2026 adjusted earnings of US$2.66 to US$2.76 per share compared to its previous expectation between US$5.04 and US$5.16. The cut includes charges of US$3.62 per share for the acquisition of Cidara and US$2.31 per share for the acquisition of Terns.
(Reporting by Michael Erman in New Jersey; Editing by Bill Berkrot and Pooja Desai)
