Merck & Co. (MRK) — Company Research

Last Updated: 16 Oct 2026

Merck & Co. (NYSE: MRK), known as MSD outside the US and Canada, is a global biopharmaceutical company built around Keytruda, the world’s best-selling cancer immunotherapy, alongside vaccines, cardiometabolic and infectious-disease medicines and an Animal Health business. The 2026 story is Merck spending heavily to diversify ahead of Keytruda’s 2028 US compound-patent expiry: the Cidara and Terns acquisitions pushed GAAP results into loss in H1 2026, while new launches such as Winrevair, Welireg, the subcutaneous Keytruda Qlex and the oral PCSK9 Lipfendra are growing quickly. This refreshed report covers results through Q2 2026, the balance sheet at 30 Jun 2026, valuation and risks, using company releases and SEC filings only.

1. Company Snapshot

Field	Value
Ticker / Exchange	MRK / NYSE
Headquarters	Rahway, New Jersey, USA
CEO / Leadership	Robert M. Davis, Chairman & CEO; Caroline Litchfield, EVP & CFO
Sector	Healthcare — pharmaceuticals, vaccines and animal health
Employees	~75,000 at 31 Dec 2025, of which ~73,000 full-time (FY2025 10-K)
Market cap	~$358.2bn ($145.19 at 15 Oct 2026 close × ~2.47bn shares)
FY2025 Revenue	$65,011m (+1.3%; +2% ex-FX)
FY2025 GAAP net income	$18,254m ($7.28 per diluted share)
FY2025 non-GAAP EPS	$8.98
2026 guidance	Sales $66.3–$67.3bn (raised 04 Aug 2026); non-GAAP EPS $2.66–$2.76, including $5.93 per share of Cidara and Terns charges
Dividend	$0.85 per quarter ($3.40 annualised; yield ~2.3%)

2. Bull & Bear Case

Bull Case

• New growth engines scaling: In Q2 2026 Winrevair sales rose 75% to $588m and Welireg 67% to $271m, Ohtuvayre added $204m, and the FDA approved Lipfendra (enlicitide), the first oral PCSK9 inhibitor, in Jul 2026.
• Keytruda lifecycle extension: Subcutaneous Keytruda Qlex reached $463m of Q2 2026 sales, is approved in the EU and (from 21 Sep 2026) Japan across all Keytruda indications, and carries a US patent listed to 2043.
• Late-stage oncology wins: Phase 3 INTerpath-001 (intismeran plus Keytruda in melanoma) and TroFuse-005 (sac-TMT in endometrial cancer) were both positive and take three Presidential Symposium slots at ESMO 2026.
• Strong cash generation: Trailing-twelve-month operating cash flow was about $20.0bn and free cash flow about $16.1bn to 30 Jun 2026, funding a dividend raised to $0.85 a quarter.
• Guidance moving up: 2026 sales guidance was raised to $66.3–$67.3bn on 04 Aug 2026 from $65.8–$67.0bn.

Bear Case

• Keytruda concentration: Keytruda was 49% of 2025 sales; its US compound patent expires in 2028 and Merck expects it to be selected for IRA price-setting in 2027, effective 01 Jan 2029, after which US sales would “decline materially”.
• Gardasil slump: Gardasil sales fell 39% in 2025 on China and Japan weakness, and Merck expects revenue under the revised China supply contract to be immaterial in 2026.
• Deal charges crush GAAP earnings: The $9.0bn Cidara and $5.7bn Terns IPR&D charges produced an H1 2026 GAAP net loss of $5,575m and cut 2026 non-GAAP EPS guidance to $2.66–$2.76.
• Rising debt: Non-current long-term debt rose from $34.5bn at the end of 2024 to $51.1bn at 30 Jun 2026, helped by a $6.0bn bond issue in May 2026.
• Pipeline setbacks: LITESPARK-012, KEYNOTE-975 and KEYNOTE-866 missed their primary endpoints, and the ifinatamab deruxtecan small-cell lung cancer BLA was withdrawn on 25 Sep 2026.

3. Business Segments

Merck reports two operating segments. Percentages use FY2025 sales of $65,011m from the Q4 2025 earnings release.

Segment	% of revenue	What it is
Pharmaceutical	89.4% ($58,142m)	Human health medicines and vaccines: Keytruda and Keytruda Qlex ($31,680m), Gardasil/Gardasil 9 ($5,233m), Januvia/Janumet ($2,544m), ProQuad/M-M-R II/Varivax ($2,451m), Bridion ($1,841m), Lynparza and Lenvima alliance revenue, Winrevair ($1,443m), Prevymis, Vaxneuvance, Capvaxive and Welireg.
Animal Health	9.8% ($6,354m)	Livestock ($3,896m) and companion-animal ($2,458m) medicines, vaccines and monitoring, including the Bravecto parasiticide franchise.
Other revenues	0.8% ($515m)	Third-party manufacturing and other non-segment revenue.

4. Business Model & Moat

How it makes money. Merck discovers, develops, licenses and acquires patented medicines and vaccines and sells them to wholesalers, hospitals, governments and pharmacies worldwide. Non-GAAP gross margin was 81.5% in 2025, and the cash funds a large R&D budget, acquisitions and the dividend.

Buying the post-Keytruda portfolio. Merck is using its balance sheet to add late-stage assets: Verona Pharma (Ohtuvayre, closed 07 Oct 2025), Cidara (long-acting flu antiviral, about $9.2bn, Jan 2026), Terns (CML drug MK-4208, $6.8bn, 05 May 2026) and a SciBrunch KRAS G12D licence ($400m upfront, Sep 2026).

Moat. Patents, regulatory exclusivity, complex biologic and vaccine manufacturing, and Keytruda’s position as the backbone of many cancer combinations protect pricing. The subcutaneous Qlex formulation and new combination indications are designed to extend the franchise beyond the 2028 compound-patent expiry.

Cost and capital programme. A restructuring announced in Jul 2025 expects about $3.0bn of pre-tax costs and about $1.7bn of annual savings, substantially realised by end-2027. Merck has also committed more than $70bn to US capital and R&D spending, and the ADVANCE bioanalytical facility in West Point, Pennsylvania opened on 14 Oct 2026.

5. Financial Health

Annual figures are from Merck’s Q4 earnings releases and SEC XBRL filings. Long-term debt is the non-current balance-sheet amount at year end. Merck calls its adjusted measure non-GAAP EPS.

Fiscal Year	Revenue ($m)	YoY %	GAAP EPS	Adjusted EPS	Dividend/share	Long-term debt (YE)
FY2021	$48,704m	+17%	$5.14†	$6.02†	$2.64	$30,690m
FY2022	$59,283m	+21.7%	$5.71	$7.48	$2.80	$28,745m
FY2023	$60,115m	+1.4%	$0.14	$1.51	$2.96	$33,683m
FY2024	$64,168m	+6.7%	$6.74	$7.65	$3.12	$34,462m
FY2025	$65,011m	+1.3%	$7.28	$8.98	$3.28	$46,750m

† FY2021 revenue is continuing operations after the Jun 2021 Organon spin-off. FY2021 GAAP EPS of $5.14 includes discontinued operations; continuing-operations GAAP EPS was $4.86. FY2021 non-GAAP EPS is as originally reported; the FY2022 release restated it to $5.37. FY2023 GAAP and non-GAAP EPS include $6.21 per share of business-development charges, mainly the Prometheus acquisition. Dividends are declared per share.

Quarterly progression, most recent first, with the FY2025 total in bold:

Quarter / Half	Revenue	Adjusted EPS	GAAP EPS
Q2 2026	$16,607m	−$0.13	−$0.54
Q1 2026	$16,286m	−$1.28	−$1.72
Q4 2025	$16,400m	$2.04	$1.19
Q3 2025	$17,276m	$2.58	$2.32
FY2025 total	$65,011m	$8.98	$7.28

Q1 2026 includes the $9.0bn Cidara charge ($3.62 per share) and Q2 2026 the $5.7bn Terns charge ($2.31 per share), both booked as R&D with no tax benefit. Over the four quarters to 30 Jun 2026, revenue was about $66,569m, GAAP EPS about $1.25 and non-GAAP EPS about $3.21. The SciBrunch licence adds a $400m (about $0.13 per share) charge to Q3 2026.

Cash flow and balance sheet. All figures are from SEC XBRL filings (FY2025 10-K and Q2 2026 10-Q).

• Operating cash flow: $16.47bn in FY2025; ~$19.97bn trailing twelve months to 30 Jun 2026.
• Capital expenditure: $4.11bn in FY2025; ~$3.90bn trailing twelve months.
• Depreciation & amortisation: $5.85bn in FY2025 (depreciation $3.05bn, including accelerated restructuring depreciation, plus intangible amortisation $2.80bn).
• Debt at 30 Jun 2026: non-current long-term debt $51,081m and loans payable plus current portion of long-term debt $2,825m, about $53.9bn in total.
• Cash at 30 Jun 2026: cash and equivalents $6,849m plus short-term investments $292m.

6. Valuation

Raw metrics, October 2026. Not opinions on whether the stock is cheap or expensive.

Metric	Value
Market cap	~$358.2bn (price $145.19 at 15 Oct 2026 close × ~2.47bn shares)
Enterprise value	~$405.0bn (market cap ~$358.2bn + total debt ~$53.9bn − cash and short-term investments ~$7.1bn per 30 Jun 2026 balance sheet; total debt = long-term debt $51.08bn + current debt $2.83bn)
Trailing P/E (GAAP)	~116x ($145.19 / ~$1.25 TTM GAAP EPS, Q3 2025–Q2 2026, distorted by ~$14.7bn of Cidara and Terns IPR&D charges); on TTM non-GAAP EPS of ~$3.21 the multiple is ~45x, which carries the same charges
P/E (forward)	~54x ($145.19 / $2.71, the midpoint of 2026 non-GAAP EPS guidance of $2.66–$2.76); adding back the $5.93 per share of one-time Cidara and Terns charges gives ~$8.64 and ~16.8x
P/S (TTM)	~5.4x ($358.2bn / ~$66.57bn TTM revenue)
EV/EBITDA (TTM)	~15.0x (EV ~$405.0bn / EBITDA ~$27.06bn; EBITDA = FY2025 operating income ~$21.22bn, derived as sales less cost of sales, SG&A, R&D and restructuring, + D&A $5.85bn; FY2025 used because TTM GAAP EBITDA is distorted by the H1 2026 acquired-IPR&D charges)
P/FCF	~22.3x (market cap ~$358.2bn / TTM FCF ~$16.06bn; FCF = operating CF $19.97bn − capex $3.90bn); on FY2025 FCF of ~$12.36bn ($16.47bn − $4.11bn) it is ~29.0x
Dividend yield	~2.3% ($3.40 annualised / $145.19)
52-week high	$156.92
52-week low	$82.01
Short interest (% of float)	~1.2% (~30.3m shares short at 31 Aug 2026 settlement, MarketBeat; Yahoo Finance data show ~1.15% at 30 Sep 2026)
Days to cover	~2.2 days at 31 Aug 2026 (MarketBeat); ~2.9 days at 30 Sep 2026 (Yahoo Finance)

7. What Are They Building

Merck’s pipeline is aimed at replacing Keytruda revenue from 2028 onward across oncology, cardiometabolic, infectious disease and immunology.

• Oncology: Sac-TMT (TROP2 ADC, with Kelun) is in 17 global Phase 3 trials and holds an FDA national priority voucher; intismeran (V940, with Moderna) was positive in Phase 3 INTerpath-001; calderasib (KRAS G12C) has Breakthrough Therapy designation; MK-4208 from Terns targets CML; and SPR2015 adds an oral KRAS G12D (ON) inhibitor.
• Cardiometabolic: Lipfendra (enlicitide) cut LDL-C by 56–59% placebo-adjusted at week 24 in the CORALreef trials and was approved in Jul 2026. Winrevair gained the HYPERION label on 22 Sep 2026, and a Phase 3 is planned in CpcPH-HFpEF after a positive Phase 2.
• Infectious disease: IDVYNSO (doravirine/islatravir) was approved in Apr 2026; once-weekly islatravir/lenacapavir (with Gilead) was positive in Phase 3; once-monthly oral PrEP alimatravir is in Phase 3; and MK-1406 from Cidara is a long-acting flu preventive in Phase 3.
• Immunology and ophthalmology: Anti-TL1A tulisokibart was positive in the ATLAS-UC Phase 3 induction study and a Phase 2b in hidradenitis suppurativa, but failed in SSc-ILD; remigromig met its pivotal endpoint in diabetic macular edema.

8. Competitive Landscape

Merck competes with the other global large-cap pharmaceutical groups, and with Bristol-Myers Squibb, AstraZeneca and Roche in immuno-oncology in particular. Market caps are at the 15 Oct 2026 close. Metrics come from each company’s FY2025 results release.

Peer	Market cap (Oct 2026)	Key 2025 metric
Eli Lilly (LLY)	~$1,116bn	FY2025 revenue $65,179m, +45%, per Lilly Q4 2025 release
Johnson & Johnson (JNJ)	~$610bn	FY2025 sales ~$94.2bn, +6.0%, per J&J Q4 2025 release
AbbVie (ABBV)	~$501bn	FY2025 net revenue $61,160m, +8.6%, per AbbVie Q4 2025 release
AstraZeneca (AZN)	~$259bn	FY2025 total revenue $58,739m, +8% at constant exchange rates; core EPS $9.16, per AstraZeneca FY2025 results
Pfizer (PFE)	~$168bn	FY2025 revenue $62,579m, −2% operationally, per Pfizer Q4 2025 release
Bristol-Myers Squibb (BMY)	~$124bn	FY2025 revenue ~$48.2bn, roughly flat; non-GAAP EPS $6.15, per BMS Q4 2025 release

9. Leadership & Insider Activity

Robert M. Davis is Chairman and CEO and Caroline Litchfield is EVP and CFO. Paul J. Diaz joined the board on 13 Oct 2026. After the share price recovery that followed the Q2 results, several executive officers sold stock in Aug 2026, about $30m in total, mostly after exercising options; no open-market purchases were reported. Davis received his annual equity award (187,421 shares) on 05 May 2026 and made no open-market trades in the period reviewed. Plan type is not shown in the filing summaries reviewed.

Name	Date	Type	Shares	Price	Value	Plan Type
Chirfi Guindo (EVP, Access, Policy & Comms)	13 Aug 2026	Sale	10,000	$135.00	~$1.35m	Open market; plan status not stated
Jennifer Zachary (EVP & General Counsel)	12 Aug 2026	Sale	80,315	$133.46	~$10.72m	Open market after option exercise; plan status not stated
Richard DeLuca (EVP, President Animal Health)	10 Aug 2026	Sale	45,320	$131.12	~$5.94m	Open market; plan status not stated
Richard DeLuca (EVP, President Animal Health)	06 Aug 2026	Sale	6,050	$130.38	~$0.79m	Open market; plan status not stated
Chirfi Guindo (EVP, Access, Policy & Comms)	06 Aug 2026	Sale	15,000	$131.00	~$1.97m	Open market; plan status not stated
David Williams (EVP, Chief Information & Digital Officer)	05 Aug 2026	Sale	52,847	$128.77	~$6.81m	Open market after option exercise; plan status not stated
David Maraldo (EVP, President MMD)	05 Aug 2026	Sale	18,706	$128.72	~$2.41m	Open market after option exercise; plan status not stated

10. Key Risks

• Keytruda exclusivity and IRA (Regulatory): The US compound patent expires in 2028, with two further patents to 2029 that Merck expects to be litigated; exclusivity runs to 2031 in the EU and 2028 in China. Expected IRA selection in 2027 would set a Medicare price from 01 Jan 2029. Lenvima’s set price applies from 01 Jan 2028.
• Wider loss of exclusivity (Commercial): Januvia/Janumet and Bridion lose exclusivity in 2026 (Januvia/Janumet sales fell 31% in Q2 2026), followed by Bravecto, Lynparza and Winrevair’s compound patent in 2027 and Gardasil in 2028.
• Gardasil in China (Commercial): Shipments were suspended in Feb 2025; limited shipments resumed in Q2 2026 under a revised Zhifei contract, but Merck expects the revenue to be immaterial in 2026.
• Leverage and deal integration (Financial): Non-current long-term debt reached $51.1bn at 30 Jun 2026 and net interest expense is rising, while three acquisitions and a licence in nine months must deliver to justify about $15bn of 2026 IPR&D charges.
• Pipeline execution (Operational): Recent Phase 3 misses (LITESPARK-012, KEYNOTE-975, KEYNOTE-866) and the I-DXd BLA withdrawal show the risk that replacement assets fall short.
• Pricing and tariffs (Regulatory): Merck’s voluntary agreement with the US government covers most-favoured-nation pricing and a direct-to-patient programme in return for a three-year Section 232 tariff delay; the detailed pricing terms are not disclosed.

11. Recent Developments

• 14 Oct 2026 — ADVANCE facility opens. Merck inaugurated its ADVANCE bioanalytical facility on the West Point, Pennsylvania campus, part of its US investment commitment.
• 13 Oct 2026 — Three ESMO Presidential Symposium slots. Merck will present INTerpath-001 (intismeran plus Keytruda in melanoma), TroFuse-005 (sac-TMT in endometrial cancer) and KEYNOTE-C93 at ESMO 2026.
• 13 Oct 2026 — New director. Paul J. Diaz was elected to Merck’s board of directors.
• 10 Oct 2026 — Remigromig one-year data. One-year BRUNELLO results in diabetic macular edema were presented at AAO 2026, after the pivotal trial met its primary endpoint on 24 Sep 2026.
• 30 Sep 2026 — Tulisokibart Phase 2b success. The anti-TL1A antibody met its primary and key secondary endpoints in hidradenitis suppurativa.
• 28 Sep 2026 — SciBrunch KRAS G12D licence. Merck licensed preclinical oral inhibitor SPR2015 for $400m upfront and up to $2.13bn in total, adding a $400m charge to Q3 2026.
• 25 Sep 2026 — FDA approves Welireg plus Lenvima. The combination was approved for certain previously treated advanced clear-cell renal cell carcinoma based on LITESPARK-011.
• 25 Sep 2026 — I-DXd BLA withdrawn. The application for ifinatamab deruxtecan (with Daiichi Sankyo) in extensive-stage small-cell lung cancer was voluntarily withdrawn after the FDA said the Phase 2 data did not support accelerated approval.
• 22 Sep 2026 — Winrevair label update. The FDA approved adding Phase 3 HYPERION data in newly diagnosed pulmonary arterial hypertension.
• 21 Sep 2026 — Keytruda Qlex approved in Japan. The subcutaneous formulation was approved for all Keytruda indications.
• 04 Aug 2026 — Q2 2026 results. Sales rose 5% to $16,607m; GAAP EPS was −$0.54 and non-GAAP EPS −$0.13 after the $2.31 per share Terns charge. Sales guidance was raised.

12. Key Dates

• 23 Oct 2026 — ESMO 2026 opens in Madrid (to 27 Oct), with Merck’s three Presidential Symposium presentations including INTerpath-001 as LBA1
• 26 Oct 2026 — Merck Oncology Investor Event at ESMO (1:00pm EDT)
• 29 Oct 2026 — Q3 2026 results and conference call (9:00am ET)
• Expected Feb 2027 — Q4 and full-year 2026 results with 2027 guidance (FY2025 results were released on 03 Feb 2026)
• 22 Mar 2027 — FDA PDUFA date for the Enflonsia (clesrovimab) second-RSV-season label expansion

The next quarterly dividend declaration date has not yet been announced; the last $0.85 payment was made on 07 Oct 2026.

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