Kenilworth, NJ – August 3, 2025 — Pharmaceutical heavyweight Merck & Co. (NYSE: MRK) is pushing forward with a bold strategic overhaul aimed at fortifying its future in the face of one of the most anticipated patent cliffs in the biopharma sector: the 2028 expiration of exclusivity for Keytruda, its blockbuster immuno-oncology therapy.
The company is undertaking a multibillion-dollar cost-saving plan, coupled with aggressive acquisitions and pipeline investments, to shore up revenue streams and diversify its portfolio across oncology, cardiovascular, and pulmonary disease.
Financial Realignment Signals a New Chapter
In its Q2 2025 earnings report, Merck posted worldwide sales of $15.8 billion, a 2% year-over-year decline, signaling the first visible signs of a shifting revenue mix. Keytruda continued to shine, posting $8 billion in sales, up 9% from the same period last year. However, the company took a hit with a 55% drop in sales for Gardasil and Gardasil 9, largely due to waning demand in China.
Despite the dip, Merck narrowed its full-year 2025 outlook, now forecasting revenue between $64.3 billion and $65.3 billion and non-GAAP EPS between $8.87 and $8.97. The company emphasized that cost discipline and pipeline execution will be key drivers of performance through the remainder of the year.
$3 Billion Cost-Cutting Plan Targets Long-Term Agility
Merck unveiled a multi-year optimization initiative designed to save $3.0 billion annually by the end of 2027, a move intended not to shrink operations but to fuel reinvestment into pipeline assets and growth platforms.
The plan includes:
- Reducing global real estate footprint
- Automating administrative functions
- Streamlining R&D and commercial operations
- A workforce reduction of approximately 6,000 positions globally
“These aren’t cuts — they’re investments in agility,” said a Merck spokesperson. “We’re reshaping our internal cost structure to support the science and scale of tomorrow.”
Acquisitions Target New Therapeutic Frontiers
M&A is emerging as a cornerstone of Merck’s growth strategy, as it looks beyond Keytruda for future blockbusters.
- In ophthalmology, Merck completed its $3 billion acquisition of EyeBio, reentering the eye care space with late-stage assets targeting diabetic macular edema and wet AMD.
- In respiratory care, the company announced a $10 billion deal to acquire Verona Pharma, gaining control of Ohtuvayre, a novel treatment for chronic obstructive pulmonary disease (COPD).
Analysts say the Verona acquisition fills a key gap in Merck’s cardiopulmonary portfolio, giving it an edge in a growing market where innovation has long lagged behind other therapeutic areas.
“These deals aren’t just defensive moves,” said Kathryn Lee, a healthcare analyst at Biopharma Brief. “They’re forward-looking bets on therapeutic categories that are overdue for disruption.”
Pipeline Push: Oncology, Cardio, and mRNA in the Spotlight
Merck continues to treat its R&D engine as its most critical asset, with over 80 programs in mid- to late-stage development. The company is investing deeply in both internal discovery and external innovation partnerships, including ongoing collaborations with biotech leaders.
Among the most closely watched assets:
- Winrevair (sotatercept) for pulmonary arterial hypertension (PAH), which has shown statistically significant improvements in six-minute walk distance, a key trial endpoint.
- V940, an mRNA-based personalized cancer vaccine in collaboration with Moderna, now in Phase 3 trials alongside Keytruda for melanoma and other solid tumors.
- Various combinations of Keytruda with targeted or immune-modulating agents, aiming to expand its utility before the onset of biosimilar competition.
At the same time, Merck has begun pruning less promising assets. In Q2, the company announced it would discontinue development of MK-6194, a once-promising autoimmune asset from its Pandion Therapeutics acquisition, after disappointing clinical results.
Managing the Keytruda Cliff: More Than Just Extensions
Keytruda remains a cash machine for Merck, but 2028 is approaching fast. The drug’s loss of exclusivity poses a multi-billion-dollar revenue risk, compounded by looming drug price negotiations under the U.S. Inflation Reduction Act that may dampen sales even before biosimilars enter the market.
To counteract this, Merck is betting on a subcutaneous formulation of Keytruda, aiming to preserve market share through improved convenience and reduced administration costs.
But analysts caution that even a successful SC version may only partially stem the erosion.
“There’s no one-to-one Keytruda replacement,” said Jefferies analyst Michael Donnely. “The key is volume — can Merck stack enough mid-tier successes to compensate for the coming drop-off?”
Analyst Views: A Divided, Yet Hopeful Market
Wall Street sentiment toward Merck remains cautiously optimistic, with most analysts rating the stock a “Buy” or “Hold.” Price targets vary, reflecting uncertainty about both Keytruda’s future and how quickly Merck’s new bets can scale.
Several firms, including Morningstar and MarketBeat, cite strong free cash flow, pipeline optionality, and disciplined capital deployment as positives. Others are wary of near-term headwinds, especially in global vaccine sales and China exposure.
Investor attention is now turning to Merck’s upcoming R&D Day this fall, where the company is expected to unveil updates on Winrevair, Ohtuvayre, and its early-stage ADC (antibody-drug conjugate) pipeline.
This story is developing and will be updated as new financial reports, trial results, and regulatory decisions emerge.
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