MRK: FY25 Deep Dive
FY25 revenue $65.0B (+1.3%) — Keytruda $31.7B (+7.5%) now ~49% of total. Gardasil collapsed -39% to $5.2B on China destocking. Winrevair $1.44B (+244%) and Capvaxive $759M (+683%) the post-Keytruda bridge candidates emerging on visible base.
Key Takeaways
Merck closed fiscal 2025 (calendar year ended December 31, 2025) at $65.0 billion of total revenue, up just 1.3% YoY — a print where Keytruda + Animal Health + the new launches did the work, masked by a sharp Gardasil reset. Keytruda + Keytruda Qlex revenue was $31.68 billion (+7.5%), now representing ~49% of total company revenue — the single most concentrated franchise in big pharma. Gardasil / Gardasil 9 fell -39% to $5.2 billion (vs $8.6B FY24) on China inventory destocking and broader market dynamics; this is the headline disappointment of the year. The Winrevair (sotatercept) launch — the pulmonary arterial hypertension franchise from the Acceleron acquisition — grew +244% to $1.44 billion and Capvaxive (the 21-valent pneumococcal vaccine) reached $759 million in its first full year (+683%) — two clean Phase 3 → commercial successes that begin to validate the post-Keytruda pipeline. Animal Health revenue grew 8% to $6.4 billion. Net income was $18.3 billion, operating cash flow $16.5 billion, capex $4.1 billion, free cash flow $12.4 billion. The company returned $13.3 billion to shareholders ($8.2B dividends + $5.1B buybacks). Sell-side coverage in the Feb-April 2026 window: 6 Buy / 2 Hold (Citi, Cantor) / 0 Sell with consensus PT $137.13, range $120-$150 — and notably, every covered action in the period was a maintain rating with PT raised, including Guggenheim +$18 (the largest), UBS +$15, and Wells Fargo +$15 to the Street-high $150.
Main business structure
Merck reports two operating segments: Pharmaceutical and Animal Health.
| Segment | FY25 ($M) | % of Total | YoY |
|---|---|---|---|
| Pharmaceutical | 58,142 | 89.4% | +1.3% |
| Animal Health | 6,354 | 9.8% | +8.1% |
| Other Revenues | 515 | 0.8% | -42.2% |
| Total | 65,011 | 100% | +1.3% |
Pharmaceutical segment — top product detail (FY25 $M)
| Product | FY25 | YoY |
|---|---|---|
| Keytruda + Keytruda Qlex | 31,680 | +7.5% |
| Gardasil / Gardasil 9 | 5,233 | -39.0% |
| Januvia / Janumet | 2,544 | +12.2% |
| ProQuad / M-M-R II / Varivax | 2,451 | -1.4% |
| Bridion (sugammadex) | 1,841 | +4.4% |
| Lynparza (alliance with AZN) | 1,450 | +10.6% |
| Winrevair (PAH, new) | 1,443 | +244.4% |
| Lenvima (alliance with Eisai) | 1,053 | +4.3% |
| Prevymis | 978 | +24.6% |
| Vaxneuvance | 825 | +2.1% |
| Capvaxive (new pneumo vaccine) | 759 | +682.5% |
| Welireg | 716 | +40.7% |
Keytruda is the central asset. The franchise is approved across 30+ tumor indications (NSCLC, melanoma, head & neck, urothelial, RCC, gastric, ovarian, endometrial, cervical, plus a long tail of newer indications and adjuvant settings). The 7.5% FY25 growth (vs 17% FY24) signals the maturation curve — high-base law of large numbers — and the 2028 US composition-of-matter patent cliff is the central long-cycle issue. Subcutaneous Keytruda (administered with hyaluronidase, partnered with Halozyme / Alteogen) is the franchise extension lever — full FDA approval expected H1 2026, with a 7-year patent extension if approved.
Gardasil collapse. The FY25 -39% decline reflects a step-function reduction in shipments to China (which had been the dominant international growth engine through FY24), partially due to inventory destocking and partially due to market dynamics. The franchise reset to the new run-rate is the structural concern — Gardasil was the second-largest product going into FY25.
Winrevair (sotatercept) is the post-Acceleron acquisition asset for pulmonary arterial hypertension. The Phase 3 STELLAR trial showed best-in-class efficacy. FY25 $1.44B (+244%) is the cleanest pipeline-to-commercial story of the year and Street is modeling $5-7B peak.
Capvaxive is the 21-valent pneumococcal conjugate vaccine for adults — competing with Prevnar / Vaxneuvance. FY25 $759M (+683%) signals strong launch uptake; Street modeling >$3B peak.
Welireg is a HIF-2α inhibitor for VHL-associated RCC and other indications. FY25 $716M (+41%) — small but growing.
Lynparza + Lenvima are partnered oncology assets (with AstraZeneca and Eisai respectively). Combined ~$2.5B FY25 revenue.
Animal Health is the second segment — livestock + companion animal pharmaceuticals (parasiticides, vaccines). +8% FY25 growth on Bravecto (parasiticide) and ruminant biologics. Spun off from Merck pharma history but has continued to compound at mid-single to high-single digits.
Geographic mix. US ~50% of pharma revenue (Keytruda US $18.8B vs Intl $12.8B). International ~50%, but international Gardasil exposure is the key vulnerability point.
Customer concentration. Big specialty distributors per industry standard; no 10%+ disclosure threshold breached.
Scale anchors. ~70,000 employees globally. R&D spend ~$18-19B annually (~28-29% of revenue, the highest R&D intensity in big pharma).
Key core metrics (3-year trend)
1. Revenue and Keytruda concentration
| FY23 | FY24 | FY25 | |
|---|---|---|---|
| Total revenue ($B) | 60.1 | 64.2 | 65.0 |
| YoY | — | +7% | +1% |
| Keytruda ($B) | 25.0 | 29.5 | 31.7 |
| Keytruda YoY | — | +18% | +7.5% |
| Keytruda % of revenue | 42% | 46% | 49% |
The Keytruda concentration ratio has stepped from 42% → 46% → 49% over three years. That ~50% concentration is the structural Street debate: the franchise is bigger every year on a modestly slowing absolute growth rate, while the 2028 LOE clock keeps ticking.
2. Gardasil step-down
| FY23 | FY24 | FY25 | |
|---|---|---|---|
| Gardasil ($B) | 8.9 | 8.6 | 5.2 |
| YoY | — | -3% | -39% |
The FY25 -39% Gardasil print is the largest single-product reset in any big pharma in the year. Whether this stabilizes near $5B or steps further down in FY26 will shape FY26 total revenue.
3. Pipeline launches (new products with traction)
| FY23 | FY24 | FY25 | |
|---|---|---|---|
| Winrevair ($M) | — | 419 | 1,443 |
| Capvaxive ($M) | — | 97 | 759 |
| Welireg ($M) | — | 509 | 716 |
| Combined ($M) | — | 1,025 | 2,918 |
Three growth assets compounded from $1.0B in FY24 to $2.9B in FY25 — a +185% combined increase. The post-Keytruda bridge depends on these asset trajectories continuing to compound.
4. Free cash flow and capital return
| FY23 | FY24 | FY25 | |
|---|---|---|---|
| OCF ($B) | 13.0 | 21.0 | 16.5 |
| Capex ($B) | 4.0 | 4.1 | 4.1 |
| FCF ($B) | 9.1 | 16.9 | 12.4 |
| Buybacks ($B) | 1.6 | 7.1 | 5.1 |
| Dividends ($B) | 7.4 | 7.8 | 8.2 |
| Total return ($B) | 9.0 | 14.9 | 13.3 |
FY25 capital return moderated 11% from FY24 — buyback pulled back from $7.1B to $5.1B as cash deployment moderated. Dividend continued the standard Merck increase pattern.
Market evaluation
Sell-side coverage (as of April 27, 2026). 8 analysts cover the stock (in the Feb-April 2026 covered-action window).
| Rating | Count |
|---|---|
| Buy / Outperform / Overweight | 6 |
| Hold / Neutral | 2 (Citi, Cantor) |
| Sell | 0 |
Price targets. Consensus $137.13, range $120 (low: Citi & Cantor, both Neutral) to $150 (high: Wells Fargo, OW).
Recent analyst activity (February through April 2026). 10 covered actions in the window — every one a maintain or initiate, all PT raises or new initiations with no cuts:
- UBS (Michael Yee): $130 → $145 on April 13 — Buy maintained, +$15
- JPMorgan (Chris Schott): $125 → $135 on April 6 — OW maintained, +$10
- Citi (Geoff Meacham): two raises — $115 → $120 (Feb 4), then $120 → $125 (Mar 20) — Neutral maintained, cumulative +$10
- Wells Fargo (Mohit Bansal): two raises — $125 → $135 (Feb 4), then $135 → $150 (Mar 12) — Street-high, OW maintained, cumulative +$25
- RBC Capital (Trung Huynh): initiated Outperform at $142 on February 25
- Barclays (Emily Field): initiated Overweight at $140 on February 20
- Guggenheim (Vamil Divan): $122 → $140 on February 6 — largest single raise (+$18), Buy maintained
- Cantor Fitzgerald (Carter Gould): $116 → $120 on February 4 — Neutral maintained, +$4
The pattern is uniformly bullish on direction (every action a raise or bullish initiation), with two Neutrals (Citi, Cantor) cited around the Keytruda 2028 LOE risk and Gardasil reset. Two new bullish initiations (RBC OP and Barclays OW) signal fresh institutional Street interest.
Buy-side positioning. MRK is a core large-cap pharma holding. Trades at a discount to ABBV and LLY on the Keytruda LOE overhang. Short interest ~1.5% of float.
FY25 corporate structure: the Keytruda concentration vs pipeline-in-emergence trade
FY25 is the year the Merck thesis became unambiguously the Keytruda concentration vs pipeline-in-emergence trade. Keytruda at $31.7B is now 49% of company revenue and grew +7.5% in the year — still the largest absolute-dollar pharmaceutical franchise globally and still compounding, but on a maturity curve that flattens further as the 2028 US composition-of-matter LOE approaches. The two emerging-pipeline data points that mattered most in FY25 were Winrevair (PAH, $1.44B at +244%) and Capvaxive (pneumococcal, $759M at +683%) — clean Phase 3 → commercial executions that begin to validate the broader pipeline-rebuild premise. Subcutaneous Keytruda (the Halozyme / Alteogen partnered SC formulation) is the patent-extension lever — full FDA approval expected H1 2026 with a 7-year extension if approved, which would push the effective franchise LOE from 2028 to 2035. Gardasil at $5.2B (-39%) is the 2025 disappointment — whether the franchise stabilizes near this run-rate or steps further down in FY26 affects the FY26 base from which growth resumes. The Q1 FY26 earnings print this week is the proximate event for measuring all four threads: Keytruda quarterly velocity, Gardasil stabilization, Winrevair / Capvaxive ramp continuation, and any update on the SC Keytruda regulatory timeline.