Merck (MRK) Q3 2025 results

Merck on Thursday reported third-quarter earnings and revenue that beat estimates as the company saw strong demand for its cancer immunotherapy drug Keytruda.

The drugmaker also trimmed its full-year profit outlook to reflect lower estimated tariff costs, among other things. Merck shares closed flat on Thursday.

Keytruda’s sales topped $8 billion in a quarter for the first time, rising 10% from the same period last year. According to StreetAccount estimates, revenue from the drug of $8.14 billion was just shy of the $8.24 billion analysts had expected.

The results come as Merck cuts its costs by $3 billion by the end of 2027 and prepares to offset lost sales from Keytruda’s upcoming patent expiration in 2028.

The pharmaceutical giant now expects its 2025 adjusted earnings to be between $8.93 and $8.98 per share. In comparison, the previous forecast was $8.87 to $8.97.

Merck said this reflected several new points, including “lower estimated costs related to the impact of the tariffs.” In the previous two quarters, the company saw an estimated $200 million decline from tariffs imposed so far by President Donald Trump, but not his planned pharmaceutical-specific levies. Merck did not provide a new estimate for the cost of existing tariffs.

Merck said the forecast also reflected a benefit from an amended contract with AstraZeneca related to a pill for a specific genetic disorder, partially offset by costs related to the company’s now completed acquisition of Verona Pharma.

Merck expects full-year sales to be between $64.5 billion and $65 billion, down from its previous forecast of $64.3 billion to $65.3 billion.

Here’s what Merck reported for the third quarter compared to Wall Street’s expectations, based on an analyst survey from LSEG:

• Earnings per share: $2.58 adjusted vs. $2.35 expected
• Revenue: $17.28 billion versus expected $16.96 billion

The company had net income of $5.79 billion, or $2.32 per share, for the quarter. In comparison, net income in the year-ago period was $3.16 billion, or $1.24 per share.

Excluding acquisition and restructuring costs, Merck earned $2.58 per share in the third quarter.

Merck posted revenue of $17.28 billion in the quarter, up 4% from the same period last year.

Merck continued to see problems with sales in China of Gardasil, a vaccine that prevents cancer caused by HPV, the most common sexually transmitted infection in the United States

In February, Merck announced the decision to halt shipments of Gardasil to China starting this month. In July, CFO Caroline Litchfield said the company would not resume shipments to China until the end of 2025 at the earliest, noting that inventories remained high and demand remained weak.

Gardasil posted revenue of $1.75 billion in the quarter, down 24% from the same period last year, reflecting lower demand in China. However, according to StreetAccount, this was in line with analyst expectations.

Investors are looking forward to further updates on Gardasil’s presence in China and details from Merck on possible drug pricing deals with Trump under his controversial “most favored nation” policy. Trump has so far signed agreements with Pfizer, AstraZeneca and EMD Serono, the world’s largest maker of fertility drugs, whose goal is to make it easier for Americans to access their medications.

In an earnings call Thursday, Merck CEO Rob Davis said the company shared the Trump administration’s goal of “reducing patients’ out-of-pocket costs for our products in the U.S. while achieving higher prices for our medicines and vaccines in countries that have not paid fair value for the innovations we have provided.”

Merck is “actively working” with the administration to achieve these efforts.

Sales of pharmaceuticals and animal health

Merck’s pharmaceutical division, which develops a wide range of drugs, posted third-quarter sales of $15.61 billion. That is 4% more than in the same period last year.

Keytruda’s increase was due to greater acceptance of the drug in early-stage cancers and strong demand for the treatment of metastatic cancers that spread to other parts of the body, the company said.

Meanwhile, Merck’s newer drug Winrevair, used to treat a rare, fatal lung disease, posted sales of $360 million in the quarter. Analysts had expected the drug to bring in $413 million, according to StreetAccount estimates.

Winrevair’s growth largely reflects greater adoption in the US. However, it was partially offset by the timing of distributors’ purchases of the drug and lower net prices in the country, primarily due to changes in Medicare prescription drug plans.

Merck’s animal health division, which develops vaccines and medicines for dogs, cats and cattle, posted sales of nearly $1.62 billion, up 9% from the same period last year. The company said this was primarily due to higher demand for animal products.

Correction: Merck’s animal health division sales increased 9% compared to the same period last year. A previous version incorrectly stated the percentage.