Will Keytruda Continue to Aid MRK's Top Line Ahead of Q2 Earnings?

Merck’s MRK primary strength lies in oncology, propelled by its blockbuster PD-L1 inhibitor, Keytruda, which fuels robust growth across various cancer indications worldwide. The drug alone accounts for almost 50% of the company’s pharmaceutical sales and is a key driver of Merck’s top-line growth.

As Merck prepares to report second-quarter results on July 29, investors will look out for the sales performance of Keytruda. Sales of the drug are likely to have been driven by underlying and rapid uptake across earlier-stage cancers and metastatic indications globally. The Zacks Consensus Estimate for Keytruda’s sales in the second quarter is $7.90 billion, while our estimate is $7.87 billion.

In the last reported quarter, U.S. sales of Keytruda were negatively impacted by around $250 million due to the timing of wholesaler purchases. This negative impact is expected to have reversed this time around.

Keytruda’s sales are gaining from rapid uptake across earlier-stage indications, mainly early-stage non-small cell lung cancer. Continued strong momentum in metastatic indications is also boosting sales growth. The company expects continued growth from Keytruda, particularly in early lung cancer. Our model estimates for Keytruda sales suggest a CAGR of 5.4% over the next three years.

Though Merck is riding on the success of Keytruda, the company’s heavy dependence on the drug for growth remains a concern. Moreover, Keytruda is set to face loss of exclusivity (LOE) in 2028. Also, competitive pressure might increase for Keytruda in the near future. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then.

Competition From Other PD-L1 Inhibitors

Keytruda faces competition from other PD-L1 inhibitors, including Bristol Myers’ BMY Opdivo, Roche’s RHHBY Tecentriq and AstraZeneca’s AZN Imfinzi.

BMY’s Opdivo, like Keytruda, is approved across multiple cancer types, including lung, melanoma and kidney cancers. Bristol Myers recorded $2.26 billion in Opdivo sales during the first quarter of 2025, up 9% year over year.

AZN’s Imfinzi generated sales of $1.26 billion in the first quarter of 2025, up 16%, driven by demand growth in lung and liver cancer indications. Imfinzi has strategically expanded its use across multiple cancer indications, strengthening AstraZeneca’s oncology portfolio.

Tecentriq is Roche’s leading immuno-oncology drug approved for multiple cancer indications. RHHBY recorded CHF 870 million in Tecentriq sales in the first quarter of 2025.

MRK's Price Performance, Valuation and Estimates

Year to date, shares of Merck have lost 17.9% compared with the industry’s decrease of 2.7%.

From a valuation standpoint, Merck appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 8.79 forward earnings, lower than 14.60 for the industry and its 5-year mean of 12.81.

The Zacks Consensus Estimate for 2025 earnings has declined from $8.93 per share to $8.85, while the same for 2026 has decreased from $9.74 to $9.63 over the past 60 days.

Merck currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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