Merck is a high-cash-flow oncology leader racing to blunt the 2028 Keytruda cliff by scaling new chronic-disease blockbusters, vaccines, and a “hidden gem” Animal Health franchise.
Overview
Merck & Co. (MRK) is a leading global biopharmaceutical company (MSD outside the U.S./Canada) with two core segments: Pharmaceuticals and Animal Health. For FY2025 (ended Dec 31, 2025), Merck delivered $65.0B in worldwide sales (+1%), driven by continued oncology strength and Animal Health growth, partially offset by a sharp Gardasil decline in China. Pharmaceuticals generated $58.1B, anchored by Keytruda—an anti–PD-1 therapy and the world’s top-selling cancer drug—at $31.7B in 2025 (≈49% of company revenue), creating both exceptional profitability and meaningful concentration risk ahead of the late-2028 patent expiration. Merck’s vaccine franchise includes Gardasil and the newer adult pneumococcal vaccine Capvaxive, while other portfolios span hospital acute care and virology. The Animal Health segment contributed $6.4B and grew 8% (9% ex-FX), supported by livestock demand and Bravecto in companion animals; importantly, it operates largely in a private-pay environment, providing a regulatory hedge versus U.S. drug-pricing reforms. Strategically, Merck is executing a major diversification push to prepare for the Keytruda “patent cliff,” combining heavy internal R&D (80+ Phase 3 programs) with large-scale business development (e.g., Verona for COPD asset Ohtuvayre; Cidara for long-acting flu prevention MK-1406). Management claims a “line of sight” to $70B+ in mid-2030s commercial opportunities from new growth drivers, aiming to reposition Merck from an oncology-dominant company into a broader chronic-disease and preventive-medicine leader.