[MRK] Merck: Q3 2026 Earnings Hinge on U.S. Keytruda Slowdown

Merck, which develops, manufactures and sells prescription medicines, vaccines and animal health products, is scheduled to hold its earnings call on 2026-10-29, according to the Drillr earnings calendar, to report the third quarter of 2026, ended September 30, 2026[1]. Ahead of Merck's Q3 2026 earnings, the latest disclosed quarter was the second quarter of 2026: sales were $16.607 billion, up 5% year over year (up 4% excluding foreign exchange), but a one-time $5.7 billion R&D charge for the Terns acquisition produced a GAAP loss of $0.54 per share and a non-GAAP loss of $0.13 per share, versus earnings of $1.76 and $2.13 a year earlier[2]. Non-GAAP gross margin was 81.1%, compared with 82.2% a year earlier[3]. On August 4, Merck raised and narrowed its full-year outlook to 2026 sales of $66.3 billion to $67.3 billion, including a positive foreign exchange impact of about 1%, and non-GAAP EPS of $2.66 to $2.76, which includes one-time charges of $3.62 per share for Cidara and $2.31 per share for Terns[4]; it also cut its full-year non-GAAP gross margin assumption from about 82% to about 81%[5]. Analyst consensus compiled by Drillr puts third-quarter sales at a mean of $17.307 billion (9 analysts, range $17.091 billion to $17.494 billion) and EPS at a mean of $2.21 (11 analysts, range $2.16 to $2.30)[6].

Three things matter most in this report. First, how far U.S. Keytruda family growth slows: U.S. family sales were $5.006 billion in the second quarter, up 5.4%[7], but first-half growth included roughly $250 million of first-quarter wholesaler buying[8], and management has said key indications are nearing peak penetration[5]; the U.S. share of subcutaneous Keytruda Qlex rose from 2.3% in the first quarter to 7.9% in the second, and that share determines how much U.S. revenue will not face intravenous biosimilars directly after 2028. Second, whether growth from Winrevair and other launches can outrun generic erosion: four launches added about $620 million year over year in the second quarter, while Bridion, Januvia and Janumet lost only about $158 million[7], yet the third quarter is the first full quarter after U.S. generics arrived for all three[9], and Ohtuvayre's specialty pharmacy stocking is set to unwind in the third quarter[10]. Third, whether Gardasil can keep growing and gross margin can stop falling: Gardasil rose 4% year over year in the second quarter for the first time since China shipments fell to zero[11], but the same quarter's margin decline came mainly from vaccine inventory write-downs[3], and together those two lines decide whether the vaccine business is stabilizing or still weighing on profit.

Company Background and Business Structure

Merck is a large drugmaker built mainly on prescription medicines and vaccines, with an animal health business alongside; in 2025 it reported sales of $65.011 billion, net income attributable to the company of $18.254 billion and non-GAAP EPS of $8.98[12]. Founded in 1891 and headquartered in Rahway, New Jersey, the company operates as Merck in the United States and Canada and as MSD elsewhere. Its core products include the cancer immunotherapy Keytruda, the HPV vaccine Gardasil, the pulmonary arterial hypertension drug Winrevair and the pneumococcal vaccine Capvaxive.

Merck's revenue is concentrated in the pharmaceutical segment, and that segment is in turn concentrated in Keytruda. In 2025, pharmaceutical segment sales were $58.142 billion and animal health sales were $6.354 billion, with animal health split between livestock at $3.896 billion and companion animals at $2.458 billion[13]. Within pharmaceuticals, Keytruda generated $31.641 billion in 2025 ($18.829 billion in the U.S.), Gardasil $5.233 billion and Winrevair $1.443 billion[13].

Sales channels and licensing terms shape when revenue is recognized and part of the cost base. Prescription medicines are sold mainly to drug wholesalers and retailers, hospitals, government agencies and managed care organizations such as HMOs and PBMs, with oncology drugs like Keytruda infused in hospitals and clinics; vaccines are sold to physicians, wholesalers, distributors and governments, with a large share of U.S. pediatric and adolescent vaccines bought through the CDC's Vaccines for Children program, while animal health products go to veterinarians, distributors and producers[14]. In China, Merck's HPV vaccine is distributed exclusively by Chongqing Zhifei[11]. Manufacturing is largely in-house, but some products carry royalties to licensors; Merck pays BMS a 22% royalty on Winrevair net sales, recorded in cost of sales[15], while Keytruda's 2.5% global royalty ends after 2026[13].

Financial History and Current Position

The annual record shows three years of sales growth, but growth slowed sharply in 2025. Sales were $60.115 billion in 2023, $64.168 billion in 2024 and $65.011 billion in 2025, up 1% in 2025 or 2% excluding foreign exchange; net income attributable to Merck was only $365 million in 2023, mainly because of large R&D asset acquisition charges, then recovered to $17.117 billion in 2024 and $18.254 billion in 2025[12]. GAAP gross margin was 74.8% in 2025, down from 76.3% in 2024, because of accelerated depreciation from restructuring, higher inventory write-downs (primarily vaccines) and higher amortization of intangibles[16].

Operating cash flow fell in 2025 even as profit grew. Cash from operations was $16.5 billion, down from $21.5 billion in 2024, because income tax payments rose from $3.9 billion to $6.1 billion and upfront, milestone and related payments for collaborations, licensing deals and acquisitions rose from $1.1 billion to $3.0 billion[17]. Merck says operating cash flow remains its primary source of funds, with excess cash used for business development, capital spending, dividends and buybacks.

In the latest period, the second quarter of 2026, revenue kept growing but a one-time acquisition charge pushed profit into a loss. Sales were $16.607 billion, up 5% or 4% excluding foreign exchange; the GAAP net loss was $1.335 billion and the non-GAAP net loss was $330 million, versus profits of $4.427 billion and $5.366 billion a year earlier[2]. The loss came mainly from the $5.7 billion charged to R&D after Merck completed the Terns acquisition in May, equal to $2.31 per share[18]; as a result, non-GAAP R&D expense rose to $9.7 billion from $4.0 billion a year earlier, and non-GAAP gross margin fell to 81.1%[3].

In the first half of 2026, operating cash flow improved, but the two acquisitions consumed most of the cash and added debt. Operating cash flow was $9.288 billion, versus $5.793 billion a year earlier; Merck paid a combined $14.621 billion, net of cash acquired, for Cidara and Terns, paid $4.249 billion in dividends, bought back $1.631 billion of stock, spent $1.884 billion on capital expenditures and issued $5.956 billion of debt, ending June with $6.891 billion in cash and equivalents including restricted cash[19]. Under its August 4 outlook, Merck guides to sales of $66.3 billion to $67.3 billion and non-GAAP EPS of $2.66 to $2.76, a range that already includes $5.93 per share of one-time charges from the two deals but assumes no other significant business development transactions[4].

Operating Model

Merck's revenue breaks into three parts: the pharmaceutical segment, the animal health segment and other revenue. In 2025 these were $58.142 billion, $6.354 billion and about $515 million, with other revenue consisting mainly of hedging and licensing income[13]. The pharmaceutical segment is roughly the sum of the Keytruda family (indication volume times net price, plus or minus wholesaler buying), vaccines (government purchases and tender volume times price), launches (new patient starts and continuations times net price), mature products that erode quickly after patent loss, and alliance revenue from Lynparza and Lenvima recognized on a profit-sharing basis; in the second quarter of 2026 the segment generated $14.760 billion, including $8.367 billion from the Keytruda family[7].

On the profit side, the key variables are gross margin and one-time acquisition charges. Gross profit equals sales minus manufacturing cost, royalties, inventory write-downs and amortization of intangibles; in the second quarter, amortization was $984 million versus $599 million a year earlier, GAAP gross margin fell from 77.5% to 73.5%, and SG&A rose 10% on IT investment and launch promotion[20]. Operating profit then subtracts roughly $2.9 billion of non-GAAP SG&A and R&D; acquired in-process research is treated as an asset acquisition and expensed in R&D at once rather than capitalized, so Cidara's $9.0 billion and Terns's $5.7 billion turned both GAAP and non-GAAP profit into losses in the quarters they were booked[18].

On the cash side, R&D asset acquisition charges do not reduce operating cash flow; the cash leaves through investing activities instead. Operating cash flow is roughly net income plus depreciation and amortization, plus the add-back of acquisition charges whose cash is shown in investing activities, adjusted for working capital and taxes; in the first half of 2026, a net loss of $5.580 billion plus a $13.811 billion add-back for R&D asset acquisitions still produced $9.288 billion of operating cash flow[19]. Financing consists of dividends, buybacks and debt issuance, and Merck says it is targeting about $3 billion of repurchases in 2026 while keeping an investment-grade credit rating[21].

These drivers reach the financial statements with different lags, and Merck does not disclose several of them. Wholesaler and specialty pharmacy buying only shifts revenue between adjacent quarters, so one quarter's gain often reverses in the next; generic erosion is usually fast once generics enter, while Keytruda Qlex conversion adds no family revenue in the quarter it happens and only shows its value when biosimilars arrive after 2028. When vaccine demand falls below production plans, write-downs hit cost of sales in the same quarter. Merck does not disclose Keytruda's volume and price split, a Qlex conversion target, the size of vaccine write-downs or launch patient counts, and the launch and loss-of-exclusivity groupings used below are simply sums of lines in the 10-Q product sales table[7].

Industry and Competitive Position

Keytruda is one of the most broadly approved cancer immunotherapies, and it leaves Merck unusually dependent on a single product. According to the 2025 10-K, Keytruda has more than 40 approved U.S. indications spanning 19 tumor types plus 2 tumor-agnostic indications, and Keytruda and Qlex together made up about 48.7% of 2025 sales[13]. Compared with other large drugmakers, that means Merck's patent cliff is more concentrated, although the available material does not provide peer concentration figures for a line-by-line comparison.

Two overlapping timelines, patents and government price setting, define how long Keytruda's advantage lasts. Once the primary compound patent expires, biosimilars could enter the U.S. as early as December 2028 and Europe in 2031, and Merck expects Keytruda sales to be materially hurt by biosimilar competition between 2028 and 2029[9]; Merck also expects Keytruda to be selected for IRA government price setting in 2027, effective January 1, 2029, after which U.S. sales would decline materially[22]. A pending CMS proposed rule could bring Keytruda Qlex under price setting at the same time, which would weaken the protection the subcutaneous form offers[23]. International pressure is already visible: launches and reimbursement of new EU indications continue to weigh on pricing, and a Keytruda biosimilar launched in Argentina in 2025, although Merck expects biosimilar erosion to be immaterial in 2026[8].

Merck's response is to spread the Keytruda expiry shock across the subcutaneous form, new launches and acquisitions, but those newer businesses are not yet large enough to replace Keytruda. On the second-quarter call, management said it is on track to unlock more than $70 billion of commercial opportunity from more than 20 new products and reaffirmed that the Keytruda patent expiry would be "a shallow hill rather than a cliff," with a small earnings dip followed by a quick return to growth; the FDA has approved Lipvendra, the first oral PCSK9 inhibitor, although management also said uptake of new products will be gradual as reimbursement and access build[21]. Keytruda Qlex carries U.S. patent protection to 2043, cardiometabolic and vaccine launches and the two acquisitions form the other pillars, and because Merck does not give revenue targets by product, outsiders cannot break the $70 billion figure into year-by-year numbers.

Core Debates

Keytruda family sales reached $8.37 billion in the second quarter, up 5.2%, and about $250 million of the 8% first-half growth came from wholesaler buying. Management has said U.S. growth will slow. How far will U.S. growth moderate in the third quarter, and can subcutaneous Keytruda Qlex keep gaining share?

Each quarter's Keytruda family growth rate sets the size of the gap that new products have to fill. The Keytruda family contributed about 48.7% of Merck's 2025 sales, almost all of it high-margin revenue[13]; U.S. biosimilars could arrive as early as December 2028[9], and IRA government pricing is expected to take effect in 2029[22]. Until then, the Qlex conversion rate determines how much U.S. revenue after 2028 will not be directly exposed to intravenous biosimilars.

Second-quarter data still support steady demand, but growth has already come down from the first-quarter high. Global Keytruda family sales were $8.367 billion (Keytruda $7.904 billion plus Qlex $463 million), up 5.2% from $7.956 billion a year earlier; the U.S. family reached $5.006 billion (Keytruda $4.611 billion plus Qlex $395 million), up 5.4%[7]. The 10-Q attributes U.S. growth to higher net pricing and demand, with demand coming from earlier-stage indications such as triple-negative breast cancer, bladder cancer, head and neck cancer and cervical cancer[8]; Qlex rose from 2.3% of U.S. family sales in the first quarter to 7.9% in the second[24].

The alternative reading is that one-time stocking inflated first-half growth and the real slowdown could be sharper in the third quarter. First-half global family sales were $16.4 billion, up 8.2%, and U.S. family sales were $9.711 billion, up 7.2%, with about $250 million coming from first-quarter wholesaler buying; excluding it, U.S. first-half growth was roughly 4.5%[8]. Management said key indications are nearing peak penetration, and the call summary also says a $250 million wholesaler timing benefit from the third quarter of 2025 will not repeat, which does not match the 10-Q's placement of the stocking in the first quarter of 2026 and needs to be checked against the third-quarter 10-Q[5]. The transmission runs from earlier-stage penetration and net price to U.S. volume and revenue, from international uptake minus EU price cuts to international revenue, and from Qlex conversion, which adds no family revenue in the quarter but sets the share of U.S. revenue exposed to intravenous biosimilars after 2028, to pharmaceutical segment sales and high-margin gross profit. Because Merck does not disclose a volume and price split or a Qlex conversion target, the statements alone cannot show whether a slowdown comes from volume or price.

The third quarter needs to be read on two numbers at once: growth and conversion. The specific checks are whether global Keytruda family growth stays at or above 4%, whether U.S. family growth holds at 3% or more with the 10-Q still citing demand, whether Qlex's U.S. share rises above 11%, and whether international family growth remains positive and the 10-Q's description of EU price cuts and biosimilars changes. If U.S. family sales decline year over year without a stocking-reversal explanation, the "moderate slowdown" reading fails; if Qlex's share stalls near 8%, subcutaneous conversion is unlikely to cover a large enough share before 2028.

In the second quarter, Winrevair and three other launches added about $620 million year over year, while Bridion, Januvia and Janumet lost only about $160 million. The third quarter is the first full quarter after U.S. generics arrived for all three. Can launch growth still outrun the erosion?

This debate tests whether Merck has a growth business outside Keytruda that can sustain itself. The loss-of-exclusivity group generated $4.345 billion in 2025, and Merck expects to lose nearly all of its U.S. portion, while the launch group generated only $3.136 billion; U.S. exclusivity for Januvia and Janumet ended in May 2026 and for Janumet XR and Bridion in July, and Merck expects to stop U.S. Bridion sales by the end of 2026[9]. IRA government pricing for Januvia took effect on January 1, 2026[22]. If launch growth still outruns erosion in the quarter when generic pressure is most concentrated, pharmaceutical revenue outside Keytruda can sustain itself; if not, the full-year revenue outlook will lean more heavily on Keytruda and one-time revenue.

Second-quarter figures show launch gains well ahead of erosion, with Winrevair the largest contributor. The launch group (Winrevair $588 million, Ohtuvayre $204 million, Welireg $271 million and Capvaxive $184 million) totaled $1.247 billion, up $620 million from $627 million a year earlier; the loss-of-exclusivity group (Bridion $497 million, Januvia $258 million and Janumet $171 million) totaled $926 million, down $158 million from $1.084 billion, leaving a positive net of $462 million[7]. Winrevair rose 75% to $588 million in the second quarter ($522 million in the U.S. and $66 million internationally), up from $526 million in the first quarter, driven mainly by continued U.S. uptake and early launches in Japan and Europe[10]; in the same quarter Welireg grew 67% and Capvaxive 43%[7].

The alternative reading is that both the small erosion and the large gain in the second quarter contained one-time elements. U.S. Bridion still sold $460 million before generics arrived in July, above $411 million a year earlier, and the three drugs together sold $637 million in the U.S. versus $695 million; part of Capvaxive's growth came at the expense of Merck's own Vaxneuvance, which fell from $229 million to $148 million, so it was not a full net gain for the company[7]. Ohtuvayre's $204 million included specialty pharmacy buying that Merck says will unwind in the third quarter[10], while management also said U.S. Bridion would decline more slowly than previously expected because generic competition has been weaker than anticipated[5]. In transmission terms, new patient starts and continuations lift the launch group, generic penetration pulls the loss-of-exclusivity group down, and the difference decides whether pharmaceutical revenue outside Keytruda and vaccines can keep growing and whether launch spending in SG&A pays off; both groupings are sums of product-table lines that Merck itself does not report.

In the third quarter, the questions are whether the net stays positive and whether the largest source of growth keeps expanding. The specific checks are whether the launch group's year-over-year gain still exceeds the loss-of-exclusivity group's decline, whether Winrevair passes $600 million with international sales still rising, how much U.S. Bridion sells in its first full quarter after generic entry, and where Ohtuvayre demand settles once the stocking unwinds. A negative net would show launches falling behind erosion at the peak of patent losses; a sequential decline in Winrevair would undercut the assumption that the biggest growth source is still ramping.

Gardasil sales fell 39% in 2025. In the second quarter of 2026, with China already at zero, they rose 4% year over year for the first time. In the same quarter, vaccine inventory write-downs pushed Merck to cut its full-year gross margin assumption from about 82% to about 81%. Can Gardasil hold growth in the third quarter, and can margins stop falling?

Gardasil affects both revenue and gross margin, which makes it the key to judging whether the vaccine business has bottomed. Gardasil was once Merck's second-largest product, with $8.583 billion of sales in 2024, but only $5.233 billion in 2025[13]; Merck suspended shipments to China in February 2025, and revenue under the new contract is expected to be immaterial in 2026, so year-over-year comparisons now reflect underlying demand in the U.S. and other international markets[11]. Meanwhile, vaccine inventory left over from weaker demand keeps being written down, which directly lowers gross margin.

Second-quarter Gardasil data show signs of stabilization, but the first half was still down. Global Gardasil sales were $1.169 billion, up 4% from $1.126 billion a year earlier, while first-half sales were $2.238 billion, down 9%; international sales were $626 million, up 7.7% from $581 million, while first-half international sales were $1.211 billion, down 12%[7]. The 10-Q attributes the second-quarter growth to demand in Asia Pacific and Europe and to the timing of European tenders, and Merck signed a revised supply contract with Zhifei in April 2026 and resumed limited shipments in the second quarter[11].

The alternative reading is that part of the second-quarter gain came from tender timing, and the margin decline shows demand assumptions are still being cut. First-half U.S. Gardasil sales fell about 5% on unfavorable CDC purchasing patterns and lower demand, and the CDC's January announcement, now stayed, also cut the recommended adolescent HPV dose to a single dose, although Merck expects any effect to be immaterial[11]. The earnings release attributed the 1.1-point drop in non-GAAP gross margin mainly to inventory write-downs[3], GAAP gross margin fell from 77.5% to 73.5%[20], and Merck then cut its full-year margin assumption from about 82% to about 81%[5]. The transmission runs from CDC purchasing and international tender demand to Gardasil sales, and from demand below production plans to vaccine write-downs in cost of sales that lower non-GAAP gross margin; on second-quarter sales of $16.6 billion, each 1-point drop in margin removes about $170 million of gross profit, and Merck does not disclose the write-down amount.

The third quarter needs to be read on Gardasil growth and gross margin together. The specific checks are whether global Gardasil growth is at or above 0%, whether international growth is still attributed to demand rather than tender timing, whether non-GAAP gross margin holds at 81%, and how the appeal over the CDC single-dose recommendation progresses. A renewed Gardasil decline of more than 5% would show the second quarter was just tender timing; a gross margin below 80% would show vaccine write-downs are still widening.

Risks and Falsifiers

The first risk is the cost of buying pipeline. In the first half of 2026, the Cidara ($9.2 billion) and Terns ($6.8 billion) acquisitions produced one-time R&D charges of $9.0 billion ($3.62 per share) and $5.7 billion ($2.31 per share), $14.7 billion in total[18]; Merck issued $5.956 billion of debt, cash fell from $14.690 billion at the start of the year to $6.891 billion at the end of June, and buybacks slowed to $1.631 billion from $2.509 billion a year earlier[19]. The full-year outlook assumes no other significant deals, so any new transaction before the third-quarter report could rewrite EPS again[4]. If the third quarter carries no new large R&D asset acquisition charge and operating cash flow keeps covering dividends and capital spending, this risk has not materialized.

The second risk is the Keytruda patent and price-setting timeline. The primary U.S. compound patent could face biosimilars from December 2028[9], Keytruda is expected to be selected for IRA price setting in 2027 with prices effective in 2029[22], and a pending CMS rule could bring Keytruda Qlex in at the same time[23]. The exposed line is $31.641 billion of 2025 Keytruda sales, $18.829 billion of it in the U.S., and Merck expects U.S. sales to fall materially after 2029[13]. If the final CMS rule leaves Qlex out of the same price setting and Merck's patent litigation preserves the patents expiring in 2029, the current concern would weaken.

The third risk is that U.S. Keytruda slows faster than expected while Qlex conversion stalls, leaving too little U.S. revenue protected by the subcutaneous form before 2028. The exposed lines are $18.829 billion of 2025 U.S. Keytruda sales and $5.006 billion of U.S. family sales in the second quarter of 2026, of which Qlex was $395 million[7]. If third-quarter U.S. family growth is at least 3% and Qlex's U.S. share is at least 11%, this risk is falsified.

The fourth risk is that generic erosion concentrates in the third and fourth quarters while launch gains temporarily fall short. U.S. generic pressure on Bridion, Januvia and Janumet is concentrated in the second half; the loss-of-exclusivity group generated $4.345 billion in 2025[9] and its U.S. portion was $637 million in the second quarter of 2026[7], while Ohtuvayre's specialty pharmacy stocking will unwind in the third quarter[10]. If the launch group's third-quarter year-over-year gain minus the loss-of-exclusivity group's decline is still at least $300 million, this risk is falsified.

The fifth risk is that vaccine demand keeps falling short of production plans, write-downs grow, and gross margin drops below Merck's full-year assumption of about 81%. On second-quarter sales of $16.607 billion, each 1-point drop in margin removes about $170 million of gross profit, and Merck does not disclose the write-down amount[3]; GAAP gross margin in the second quarter had already fallen to 73.5% because of inventory write-downs, primarily vaccines[20]. If third-quarter non-GAAP gross margin is at least 81% and Gardasil growth is at least 0%, this risk is falsified.

What to Watch Next

The third-quarter checklist condenses to a handful of numbers that can be checked in the 10-Q or the earnings release.

• U.S. Keytruda slowdown and Qlex conversion: global family sales were $8.367 billion (+5.2%) and U.S. family sales $5.006 billion (+5.4%) in the second quarter. Watch whether global growth stays at or above 4% and U.S. growth at or above 3% with demand still cited; a U.S. decline without a stocking-reversal explanation would reject the "moderate slowdown" reading.
• Qlex share of U.S. family sales: 2.3% in the first quarter and 7.9% in the second. Watch whether it rises above 11%; a stall near 8% would mean too little coverage before 2028.
• Launches versus loss of exclusivity: the net of launch gains minus erosion was +$462 million in the second quarter. Watch whether it stays positive and at least $300 million; a negative net would show launches falling behind.
• Winrevair, U.S. Bridion and Ohtuvayre: $588 million, $460 million and $204 million in the second quarter. Watch whether Winrevair passes $600 million, how Bridion fares in its first full generic quarter and where Ohtuvayre settles after the unwind; a sequential Winrevair decline would undercut the ramp assumption.
• Gardasil and vaccine margin: Gardasil was $1.169 billion (+4%) and non-GAAP gross margin 81.1%. Watch whether Gardasil growth is at or above 0% and margin holds at 81%; a Gardasil drop of more than 5% or margin below 80% would weaken the stabilization case.

Conclusion

Merck's business is still driven by Keytruda, and its current financial position combines steady revenue growth and healthy cash flow with profit temporarily wiped out by one-time charges from two acquisitions. Second-quarter 2026 sales were $16.607 billion, up 5%, yet GAAP EPS was a loss of $0.54[2]; first-half operating cash flow was $9.288 billion, but cash fell to $6.891 billion after $14.621 billion of acquisition payments[19]. The central open question is whether the pace of the U.S. Keytruda family slowdown (+5.4% in the second quarter), the Qlex conversion rate (7.9%), the net gain of launches over generic erosion (+$462 million) and the drag of vaccine write-downs on gross margin (81.1%) can together support Merck's description of its patent expiry period as "a shallow hill rather than a cliff"[21].

Both outside commentaries published after the second-quarter report focus on what comes after Keytruda, but with different emphases. In a September 28 piece, Trefis noted that Keytruda family sales of $8.4 billion in the second quarter were about half of Merck's revenue, that management now expects U.S. growth to moderate, and that the stock's recent run may not have fully reflected this transition; it acknowledged management's "hill rather than a cliff" framing and cited Winrevair and the cancer vaccine developed with Moderna as potential growth sources[25]. In an August 5 article, Bailey Pemberton of Simply Wall St argued that the progress of new drugs and the integration of recent acquisitions will determine how resilient Merck looks once Keytruda faces full competition[26]. The two agree that Merck needs launches to take over, but differ in focus: Trefis is more concerned with the size of the near-term U.S. slowdown, Simply Wall St with execution on deals and research. Trefis does not discuss Qlex conversion or how first-quarter stocking lifted first-half growth, and Simply Wall St neither quantifies the gap between launch gains and erosion nor addresses how the $14.7 billion of one-time charges from the two deals affects 2026 profit, gaps that the third-quarter product table and expense data will need to fill.

Whether the third-quarter report strengthens the current reading depends on several observations holding at once: U.S. Keytruda family growth of at least 3% that is still demand-driven, a Qlex U.S. share above 11%, a launch net gain of at least $300 million in the quarter of heaviest generic pressure, Gardasil growth of at least 0% with non-GAAP gross margin holding at 81%, and no new large R&D asset acquisition charge. Conversely, if U.S. family sales fall year over year without a stocking-reversal explanation, Qlex's share stalls near 8%, the launch net turns negative or gross margin drops below 80%, the "shallow hill rather than a cliff" description would lose the support of current operating data.

Sources

[1] Drillr earnings calendar (updated 2026-09-28) · MRK 2026-10-29 call · 2026-09-28 · Drillr earnings calendar

[2] MRK 8-K filed 2026-08-04 · 2Q26 earnings release financial summary · 2026-08-04 · 8-K · https://www.sec.gov/Archives/edgar/data/310158/000110465926090045/tm2621496d1_ex99-1.htm

[3] MRK 8-K filed 2026-08-04 · 2Q26 non-GAAP gross margin and expenses · 2026-08-04 · 8-K · https://www.sec.gov/Archives/edgar/data/310158/000110465926090045/tm2621496d1_ex99-1.htm

[4] MRK 8-K filed 2026-08-04 · Full-year 2026 financial outlook · 2026-08-04 · 8-K · https://www.sec.gov/Archives/edgar/data/310158/000110465926090045/tm2621496d1_ex99-1.htm

[5] MRK 2Q26 earnings call 2026-08-04 · Drillr structured summary (guidance) · 2026-08-04 · earnings_call · https://gateway.drillr.ai/mcp/private

[6] Drillr analyst_financial_estimates (updated 2026-09-28) · MRK 3Q26 consensus · 2026-09-28 · Drillr analyst_financial_estimates · https://gateway.drillr.ai/mcp/private

[7] MRK 10-Q filed 2026-08-07 · 2Q26 product sales table · 2026-08-07 · 10-Q · https://www.sec.gov/Archives/edgar/data/310158/000031015826000212/

[8] MRK 10-Q filed 2026-08-07 · 2Q26 Keytruda sales discussion · 2026-08-07 · 10-Q · https://www.sec.gov/Archives/edgar/data/310158/000031015826000212/

[9] MRK 10-K filed 2026-02-24 · Loss of market exclusivity risk factor · 2026-02-24 · 10-K · https://www.sec.gov/Archives/edgar/data/310158/000031015826000063/

[10] MRK 10-Q filed 2026-08-07 · 2Q26 Winrevair and Ohtuvayre · 2026-08-07 · 10-Q · https://www.sec.gov/Archives/edgar/data/310158/000031015826000212/

[11] MRK 10-Q filed 2026-08-07 · 2Q26 Gardasil and China supply · 2026-08-07 · 10-Q · https://www.sec.gov/Archives/edgar/data/310158/000031015826000212/

[12] MRK 10-K filed 2026-02-24 · FY2025 financial highlights · 2026-02-24 · 10-K · https://www.sec.gov/Archives/edgar/data/310158/000031015826000063/

[13] MRK 10-K filed 2026-02-24 · FY2025 product sales by segment · 2026-02-24 · 10-K · https://www.sec.gov/Archives/edgar/data/310158/000031015826000063/

[14] MRK 10-K filed 2026-02-24 · Segment reporting (customers and channels) · 2026-02-24 · 10-K · https://www.sec.gov/Archives/edgar/data/310158/000031015826000063/

[15] MRK 10-K filed 2026-02-24 · Winrevair sales and royalty · 2026-02-24 · 10-K · https://www.sec.gov/Archives/edgar/data/310158/000031015826000063/

[16] MRK 10-K filed 2026-02-24 · FY2025 cost of sales and gross margin · 2026-02-24 · 10-K · https://www.sec.gov/Archives/edgar/data/310158/000031015826000063/

[17] MRK 10-K filed 2026-02-24 · FY2025 liquidity and capital resources · 2026-02-24 · 10-K · https://www.sec.gov/Archives/edgar/data/310158/000031015826000063/

[18] MRK 10-Q filed 2026-08-07 · Terns and Cidara acquisitions · 2026-08-07 · 10-Q · https://www.sec.gov/Archives/edgar/data/310158/000031015826000212/

[19] MRK 10-Q filed 2026-08-07 · 1H26 cash flow statement · 2026-08-07 · 10-Q · https://www.sec.gov/Archives/edgar/data/310158/000031015826000212/

[20] MRK 10-Q filed 2026-08-07 · 2Q26 cost of sales and gross margin · 2026-08-07 · 10-Q · https://www.sec.gov/Archives/edgar/data/310158/000031015826000212/

[21] MRK 2Q26 earnings call 2026-08-04 · Drillr structured summary (strategy and Q&A) · 2026-08-04 · earnings_call · https://gateway.drillr.ai/mcp/private

[22] MRK 10-K filed 2026-02-24 · IRA government price setting · 2026-02-24 · 10-K · https://www.sec.gov/Archives/edgar/data/310158/000031015826000063/

[23] MRK 10-Q filed 2026-08-07 · IRA price setting and Keytruda Qlex · 2026-08-07 · 10-Q · https://www.sec.gov/Archives/edgar/data/310158/000031015826000212/

[24] MRK 10-Q filed 2026-05-04 · 1Q26 Keytruda and Keytruda Qlex discussion · 2026-05-04 · 10-Q · https://www.sec.gov/Archives/edgar/data/0000310158/000162828026029802/mrk-20260331.htm

[25] Trefis 2026-09-28 · What Are Merck Stock Investors Overlooking? · 2026-09-28 · Trefis · https://www.trefis.com/stock/mrk/articles/616808/what-are-merck-stock-investors-overlooking/2026-09-28

[26] Simply Wall St via Yahoo Finance 2026-08-05 · Merck (MRK) Is Racing Beyond Keytruda As Its Biggest Patent Cliff Nears · 2026-08-05 · Simply Wall St(Yahoo Finance 转载) · https://finance.yahoo.com/healthcare/articles/merck-mrk-racing-beyond-keytruda-180945781.html