Merck (MRK) Q3 2026 Earnings: Keytruda U.S. Growth Rises, Qlex Hits 13.3%

Merck (MRK) Q3 2026 earnings, released on October 29, 2026 for the quarter ended September 30, showed Keytruda growth speeding up while the growth cushion in the rest of the business grew thinner [1]. Quarterly sales were $18.085 billion, up 5% year over year, including about $550 million of benefit from the timing of U.S. customer purchases [1]. Going into the quarter, there were three open questions: whether the subcutaneous Keytruda Qlex could take over as U.S. Keytruda growth slowed, whether the HPV vaccine Gardasil could stabilize after shipments to China stopped, and whether new medicines could fill the gap left by U.S. patent expiries on Bridion, Januvia and Janumet. This quarter, Keytruda family growth and the pace of the switch to Qlex were both faster than in the second quarter [2]. Gardasil rose 14%, but mainly because of one large purchase by the U.S. Centers for Disease Control and Prevention (CDC); without it, sales were roughly flat or slightly lower [3]. The year-over-year net gain from new medicines over those three off-patent products shrank from $462 million in the second quarter to $108 million [2][4]. Overall, the view of the company is unchanged: Keytruda is holding up better than feared, but Merck's dependence on it has not fallen ahead of the 2027 patent-expiry headwinds.

Merck is one of the world's largest prescription drug companies, with 2025 sales of $65.011 billion [5], of which Keytruda contributed $31.641 billion [6]. It sells its prescription drugs and vaccines mainly to wholesalers, hospitals, government agencies and managed care organizations, and a large share of U.S. pediatric and adolescent vaccines is bought through the CDC's Vaccines for Children program [7].

Keytruda U.S. growth picks up as Qlex reaches 13.3% of U.S. sales

Keytruda family sales were $8.601 billion in the third quarter, up 5.6% year over year, faster than the 5.2% growth in the second quarter [2][4]. Intravenous Keytruda brought in $7.771 billion, down 5%, while subcutaneous Qlex brought in $830 million. U.S. family sales were $5.213 billion, up 6.7%, and international family sales were $3.387 billion, up 3.8% [2].

Merck attributed the growth to demand in earlier-stage cancers, including triple-negative breast, cervical, head and neck, and bladder cancer, as well as metastatic uses such as urothelial cancer [1]. Management said the headwind from the timing of U.S. customer purchases a year earlier was largely offset by a build in channel inventory this quarter. It also said about $200 million of purchase-timing benefit belonged to Keytruda and should fully reverse in the fourth quarter [3]. The year-over-year growth rate is therefore broadly comparable, but the roughly $207 million sequential increase in U.S. family sales is about the size of that benefit, so U.S. sales were roughly flat quarter over quarter without it.

The switch to the subcutaneous form sped up noticeably. Qlex rose from 7.9% of U.S. Keytruda family sales in the second quarter to 13.3% in the third [2][4]. Management said adoption has kept rising since Qlex received a permanent reimbursement code on April 1, and its goal is 30% to 40% U.S. adoption by the end of 2027 [3].

The financial effect of the switch is on the mix of revenue. Qlex does not add to family sales in the current quarter, but it moves more U.S. revenue into a form that is less exposed to intravenous biosimilars after 2028. The Keytruda family made up about 48% of quarterly sales and added about $450 million year over year, the largest source of Merck's revenue growth [2]. Three caveats apply. Merck did not disclose how the $200 million timing benefit split across formulations and regions, so the Qlex share may include some channel stocking. Merck has stopped supplying the subcutaneous form in six European countries because of a Dutch court injunction, though management described the volume as small. Management also expects Keytruda growth to slow in 2027 [3].

Conclusion

The quarter strengthens the case for near-term Keytruda growth, but Merck's broader transition pressure has not eased. On growth, Gardasil relied mainly on a CDC purchase of about $250 million that will reverse in 2027, and the net gain from new medicines over off-patent products was close to zero after removing about $50 million of Winrevair purchase timing. Management expects more than $2 billion of patent-expiry and generic headwinds in 2027 [3]. On profit conversion, the non-GAAP gross margin was 81.4% and was no longer pulled down by vaccine inventory charges, but higher spending and higher interest costs left non-GAAP EPS at $2.49, down 3% [1]. The release did not disclose quarterly operating cash flow. In the fourth quarter, about $200 million of Keytruda timing benefit and about $50 million each for Winrevair and vaccines are expected to reverse. Whether the Keytruda family keeps growing after absorbing that reversal, whether the Qlex share keeps rising, and whether new medicines can hold a net gain through a full quarter of multiple Bridion generics will decide the direction of this view.

Sources

[1] MRK 8-K filed 2026-10-29 · Q3 2026 earnings release (EX-99.1) (Merck, 8-K, 2026-10-29, https://www.sec.gov/Archives/edgar/data/310158/000110465926119825/tm2628203d1_ex99-1.htm) [2] MRK 8-K filed 2026-10-29 · Q3 2026 financial tables (EX-99.2) (Merck, 8-K, 2026-10-29, https://www.sec.gov/Archives/edgar/data/310158/000110465926119825/tm2628203d1_ex99-2.htm) [3] MRK Q3 2026 earnings call 2026-10-29 · transcript (Merck, earnings call, 2026-10-29) [4] MRK 10-Q filed 2026-08-07 · 2Q26 product sales table (Merck, 10-Q, 2026-08-07, https://www.sec.gov/Archives/edgar/data/310158/000031015826000212/) [5] MRK 10-K filed 2026-02-24 · FY2025 financial highlights (Merck, 10-K, 2026-02-24, https://www.sec.gov/Archives/edgar/data/310158/000031015826000063/) [6] MRK 10-K filed 2026-02-24 · FY2025 product sales by segment (Merck, 10-K, 2026-02-24, https://www.sec.gov/Archives/edgar/data/310158/000031015826000063/) [7] MRK 10-K filed 2026-02-24 · Segment reporting (customers and channels) (Merck, 10-K, 2026-02-24, https://www.sec.gov/Archives/edgar/data/310158/000031015826000063/)