Merck’s stock has climbed more than 32% over the past three months, propelled by expectations for an accelerated launch of next-generation therapies in cardiometabolic and respiratory diseases. Despite the move, consensus earnings per share estimates for fiscal 2026 have fallen by 4% since December, driven by anticipated declines in Gardasil vaccine volumes and mounting cost pressures in research and development. Analysts note that Keytruda’s patent expiration in major markets begins in late 2028, and market models project a 25% revenue drop for the PD-1 inhibitor in its first 12 months post-loss of exclusivity, keeping the majority of sell-side firms at underperform or sell ratings.

During a mid-January investor call, management reiterated a target of achieving $70 billion in annual revenue from its pipeline of next-generation drugs by 2035. Key drivers include an oral therapy for nonalcoholic steatohepatitis (NASH) expected to enter Phase III next quarter and a once-daily inhaled biologic for severe asthma in Phase IIb trials. While the roadmap appears robust, internal forecasts show only a 60% probability of success for these late-stage programs. Investors remain cautious, citing past pipeline setbacks and the company’s elevated R&D expense ratio, which climbed to 22% of revenues in the third quarter.

Keytruda accounted for over 50% of Merck’s global pharmaceutical sales in the third quarter, but sequential growth slowed to 4%, down from 9% in Q2 2025. Sales in lung and melanoma indications underperformed analyst projections by 3 percentage points, prompting concerns about market saturation and competitive pressures from rival checkpoint inhibitors. The upcoming fourth-quarter report on February 5 will be closely watched for region-specific growth rates in Europe and Asia, where volume gains could offset narrowing U.S. pricing spreads.