Merck reported its fourth-quarter and full-year 2025 earnings on Tuesday, showing results that largely met expectations but left some investors questioning the company’s growth prospects. The pharmaceutical giant posted $16.4 billion in sales for the fourth quarter, slightly above analysts’ estimates.
Sales of Gardasil, Merck’s HPV vaccine, dropped by 35% globally due to reduced demand in China and Japan. Despite this decline, overall annual sales reached $65 billion, a 1% increase over 2024. Keytruda, Merck’s leading cancer therapy, generated $31.7 billion in sales with a 7% year-over-year growth.
During the investor call, Steve Scala of TD Cowen asked whether Merck should be expected to show only modest growth during strong periods and face significant pressure during downturns. CEO Robert Davis responded: “I’m not sure I agree with your characterization,” emphasizing that Scala was “taking one year out of context.” Davis also pointed to future potential for the company to reach $70 billion in yearly earnings and highlighted a projected financial peak of $35 billion for Keytruda in 2028 before it loses patent protection.
Davis stressed Merck’s efforts to expand its pipeline through acquisitions. In July 2025, Merck acquired Verona Pharma for $10 billion, adding Ohtuvayre—a COPD drug expected to potentially achieve peak annual sales of $3.4 billion. In November, the company bought Cidara Therapeutics for $9.2 billion, gaining CD388, an antiviral candidate described as a “single-dose, universal preventative agent” for influenza.
Dean Li, president of Merck Research Laboratories, commented on the importance of new flu prevention strategies: “The scale of the ongoing seasonal flu outbreak in the Northern hemisphere reinforces the threat posed by influenza,” he said on the call, “and importantly, the need for improved prevention strategies.”
Executives also referenced Winrevair—a cardiovascular drug obtained through Merck’s $11.5 billion acquisition of Acceleron in 2021—which saw a 133% increase in quarterly revenue after FDA approval for pulmonary arterial hypertension last year.
Davis indicated that future acquisitions would likely fall within a range up to $15 billion but noted: “for the right scientific deal, we’d go bigger.”
Merck set its 2026 sales guidance at between $65.5 billion and $67.0 billion—below consensus estimates of $67.4 billion.
Absent from discussion was any mention of recent talks with Revolution Medicines regarding a possible acquisition reportedly valued at more than $30 billion.
“So the question is,” Scala continued during the call, “is this what we should expect from Merck going forward, a company that grows modestly in good times and is significantly pressured in less good times?”
“I’m not sure I agree with your characterization,” Davis replied.
“The scale of the ongoing seasonal flu outbreak in the Northern hemisphere reinforces the threat posed by influenza,” Dean Li said on the earnings call, “and importantly, the need for improved prevention strategies.”
However, he said about potential deals: “for the right scientific deal, we’d go bigger.”
