Merck warns 2026 sales will fall short of estimates as key drugs lose patent protection
Merck beat fourth-quarter expectations thanks to Keytruda, but forecast 2026 sales below analyst estimates as patent losses for Januvia and other legacy drugs weigh on revenue.
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By Torontoer Staff
Merck on Tuesday said it expects 2026 revenue below Wall Street estimates, citing the impending loss of patent exclusivity for several legacy drugs. The softer outlook overshadowed a stronger-than-expected fourth quarter driven by demand for its cancer immunotherapy Keytruda.
The company forecast 2026 revenue of US$65.5-billion to US$67.0-billion, with the top of the range under the average analyst estimate of US$67.6-billion, according to LSEG data. Shares fell about 1.2 per cent in premarket trading after the guidance.
Quarterly results: profit and Keytruda strength
Merck reported adjusted earnings of US$2.04 per share for the fourth quarter, slightly above analysts’ estimate of US$2.01. Quarterly sales were US$16.4-billion, beating the US$16.2-billion consensus and rising 5 per cent from a year earlier.
Keytruda remained the company’s largest revenue driver. Sales of the cancer immunotherapy rose 7 per cent to US$8.37-billion for the quarter, helping push full-year Keytruda sales to US$31.7-billion. Those gains offset steep declines elsewhere in Merck’s portfolio.
Which products are driving the weaker outlook
Chief executive Rob Davis said the disconnect with Wall Street stems largely from legacy products that will soon face generic competition. He singled out the diabetes medicine Januvia and its combination versions Janumet and Janumet XR, as well as Bridion, an injection used to reverse muscle relaxants after surgery.
Where the disconnect is coming with the Street, frankly, is in a lot of our legacy products, and these are products that are all largely going off patent. As I look at the strategic drivers of this company, I’m actually very confident.
Rob Davis, CEO
Analysts had already modelled significant sales declines for those medicines, but Merck signalled the impact could be worse than anticipated. The company also flagged that a negotiated Medicare price for Januvia under the U.S. Inflation Reduction Act could further depress revenue.
Other swings in the portfolio
Merck said sales of its COVID-19 treatment Lagevrio will likely come in below analyst expectations as demand continues to fade. “With COVID fading, we’ve seen that slow quite a bit,” Davis said.
The company also reported a 34 per cent year-over-year drop in sales for Gardasil, its human papillomavirus vaccine, which generated US$1.03-billion in the quarter. Merck has faced weak demand for the vaccine in China and halted shipments there.
Acquisitions and the search for new growth
To broaden its pipeline before Keytruda loses patent protection later this decade, Merck closed two acquisitions in 2025, buying Cidara Therapeutics and Verona Pharma in deals in the roughly US$10-billion range. The company said it will keep pursuing acquisitions focused on oncology, cardiometabolic and immunology treatments.
We continue to be in that $1 billion to $15 billion sweet spot, but as we’ve always said, we’re willing to go bigger if we see a scientific opportunity that brings value.
Rob Davis, CEO
- 2026 revenue guidance: US$65.5-billion to US$67.0-billion
- Q4 sales: US$16.4-billion, up 5% year over year
- Q4 adjusted EPS: US$2.04, above estimates
- Keytruda Q4 sales: US$8.37-billion; 2025 total: US$31.7-billion
- Gardasil Q4 sales: US$1.03-billion, down 34%
What this means going forward
Merck’s near-term results show resilience, but the company faces a structural revenue challenge as several high-value drugs confront generic competition and pricing pressure. Management plans to offset those losses through dealmaking and continued investment in oncology and other growth areas.
For investors, the immediate takeaway is mixed. Merck delivered a beat for the quarter, but its guidance suggests a softer top line in 2026. The company’s strategy now hinges on whether acquisitions and new pipeline assets can replace revenue lost to patent expiry.
Merck’s full-year outlook and deal pipeline will be watched closely in the coming months as analysts revise models to reflect accelerated patent erosion and new pricing realities in the U.S. health-care market.
MerckpharmaceuticalsearningsKeytrudaJanuvia
