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Merck Stock Falls. Sales of Key Products Missed Estimates.

Oct 29, 2025 16:30:00 -0400 by Josh Nathan-Kazis | #Biotech and Pharma #Earnings Report

Merck faces competition from biosimilars and Medicare price negotiations in the future just as its patent for Keytruda expires. (Dreamstime)

Key Points

Merck shares were down on Thursday after sales of two of its most important products fell short of Wall Street estimates.

Sales of Merck’s aging megablockbuster Keytruda were $8.1 billion in the third quarter, up 10% from the same quarter last year, but short of the $8.2 billion analysts had anticipated. The treatment is set to begin facing competition from biosimilar copycats in 2028

Perhaps more worrying was a miss for Winrevair, a lung treatment that is expected to grow into one of the company’s most important products as Keytruda revenue falls at the end of the decade. Winrevair sales were $360 million, below the FactSet consensus estimate of $380 million.

Winrevair’s sales growth was “partially offset” by the timing of purchases by distributors, and lower net prices in the U.S., the company said.

Merck shares were down 2.4% early Thursday.

Despite the Keytruda and Winrevair results, overall revenue was higher than expected. The company reported total third quarter worldwide sales of $17.3 billion, beating the FactSet consensus estimate of $17 billion.

Non-GAAP earnings were $2.58 per share, better than the consensus call for $2.35. Merck updated its full-year guidance, saying it now expects 2025 sales of between $64.5 billion and $65 billion, slightly up from its prior estimate of between $64.3 billion and $65.3 billion.

It also narrowed its range of forecasts for earnings, saying investors should expect 2025 non-GAAP earnings of between $8.93 and $8.98 per share. Its prior projection was for between $8.87 and $8.97.

Merck shares have floundered this year, as the company speeds toward the expiration of the patents protecting Keytruda.

The stock was down 13% so far this year as of the end of the day on Wednesday.

Shares briefly surged this fall after Pfizer cut a favorable drug-price and tariff deal with the Trump administration, easing policy overhangs that have dragged on drug stocks since the president’s inauguration. The stock jumped 15% on Sept. 30 and Oct. 1 to $90.13 on news of Pfizer’s deal, but was trading on Wednesday at $86.77.

“We share the Administration’s goal of decreasing patient out-of-pocket costs for our products in the U.S. while at the same time realizing greater prices for our medicines and vaccines in countries that have not been paying fair value for the innovation we provide,” Merck CEO Rob Davis said in remarks released ahead of a Thursday morning investor call.

“We’re actively engaged with the Administration in an effort to find a path forward that achieves these objectives.”

Keytruda sales accounted for half of Merck’s revenue in the second quarter. Competitors are expected to launch biosimilar versions of the drug in 2028, and analysts see Keytruda sales dropping 14% in 2029, and 19% in 2030.

The current FactSet consensus estimate has Merck revenue climbing to $74.3 billion in 2028 from $64.7 billion in 2025, before beginning to slide.

In addition to biosimilar competition, Medicare will also be eligible to pay a lower price for Keytruda starting in 2028, under the price- negotiation process created as part of the Inflation Reduction Act.

Merck has made a series of acquisitions to prepare for the loss of Keytruda. Most notable was a $10.4 billion deal to buy Acceleron Pharma that got it Winrevair, the projected blockbuster lung treatment. Most recently, the company acquired Verona Pharma, a lung-disease drugmaker, in another $10 billion deal.

In comments prepared for an investor call on Thursday morning, CFO Caroline Litchfield said that business development “remains a high priority and we are well positioned to pursue additional science-driven, value-enhancing transactions.”

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com and Mackenzie Tatananni at mackenzie.tatananni@barrons.com