Updated Version 3 - Merck Raises Revenue Forecast for the Next Decade Due to Optimism About New Drug Prospects

The article has been completely reorganized, with comments from the company’s conference call interspersed and an update on the stock price movement.

Michael Erman/Kamal Choudhury

Reuters New York, October 29 - Merck & Co. MRK.N said on Thursday it plans to raise its revenue expectations for new products over the next decade, driven by recent successes in clinical trials and acquisition deals. This comes as the company is preparing for the patent expiry of its blockbuster cancer drug Keytruda.

Merck CEO Robert Davis stated that the company’s January forecast—that its emerging drug portfolio would generate $70 billion in revenue by the mid-2030s (link)—did not account for positive clinical trial results and the potential impact of other new assets, such as the acquisition of Terns Pharma (link) and an experimental PD-1/VEGF bispecific antibody drug.

“The progress to date makes me more confident than ever in our $70 billion target. As we have previously indicated, we now expect to raise that number,” Davis said during a conference call discussing the company’s performance and outlook.

Merck’s shares rose more than 4% in midday trading.

Davis noted that the experimental cancer therapy sacituzumab tirumotecan (link), abbreviated as sac-TMT, is expected to be widely used. He also expressed greater optimism for the personalized mRNA cancer vaccine intismeran, being co-developed with Moderna (MRNA.O), after late-stage clinical trial data (link) showed the vaccine combined with Keytruda reduced risk of melanoma death or recurrence by 42%.

When the two companies announced successful trial results but withheld detailed data in August, Merck’s share price rose by 12% (link).

“Looking across the portfolio, I am very optimistic about our current momentum and our ability to manage the ‘Keytruda’ loss of exclusivity (LOE),” Davis said, referring to Merck’s bestselling drug, which is nearing patent expiry.

This optimistic long-term outlook coincides with the release of third-quarter results—thanks to strong demand for Keytruda, the pulmonary arterial hypertension drug Winrevair, and the HPV vaccine Gardasil, the quarter’s results exceeded Wall Street expectations.

According to data from the London Stock Exchange Group (LSEG), Merck’s third-quarter revenue was $18.1 billion and adjusted earnings per share were $2.49, both surpassing Wall Street forecasts.

About $550 million in this quarter’s sales benefited from favorable U.S. purchasing and inventory timing for Keytruda, Gardasil, and Winrevair; Merck expects this impact will largely dissipate by the fourth quarter and 2027.

Sales of the immunotherapy Keytruda (until recently the world’s top-selling drug) rose 6% year-on-year to $8.6 billion, beating the $8 billion forecast. This includes $830 million in revenue from the newly approved subcutaneous formulation Keytruda QLEX.

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Sales of Gardasil, used to prevent human papillomavirus-related cancers, rose 14% to just under $2 billion, thanks to advance purchases by the U.S. Centers for Disease Control and Prevention. Winrevair sales surged 94% to $694 million, ahead of the $645 million estimate.

Merck raised the lower end of its full-year revenue outlook, now expecting revenue between $66.8 billion and $67.3 billion. The company also raised its adjusted earnings per share guidance to $2.77–$2.82.

Looking ahead to 2027, the company said it expects “modest revenue growth,” as gains from new medicines and its animal health business will be partly offset by losses of over $2 billion due to generic competition and patent expirations for legacy products.

The pharmaceutical company also stated that as Keytruda nears its revenue peak in several approved indications, its growth momentum will level off.

Merck has spent billions of dollars on acquisitions, aiming to reduce its dependence on Keytruda before the drug begins losing U.S. patent protection in 2028.

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Cantor Fitzgerald analyst Carter Gould said investors remain focused on the “latest developments in Merck’s R&D pipeline,” especially the clinical trial timeline for sac-TMT and the next batch of data for the mRNA cancer vaccine.

(To facilitate non-English speakers, Reuters has automatically translated its reports into several other languages. As automated translations may be inaccurate or lack needed context, Reuters does not guarantee the accuracy of automatic translation texts and provides them solely for reader convenience. Reuters accepts no liability for any damage or loss resulting from the use of automated translation features.)