Can Keytruda Sustain Merck's Growth Through the Rest of 2025?

Merck’s MRK strong foothold in the oncology space is propelled by its biggest revenue driver, Keytruda. The blockbuster PD-L1 inhibitor alone accounted for more than 50% of the company’s pharmaceutical sales during the first half of 2025.

Keytruda, approved for several types of cancers, has played an instrumental role in driving Merck’s steady revenue growth over the past few years.

Keytruda generated sales of $15.16 billion in the first half of 2025, up almost 7% year over year. The drug remains a key driver of Merck’s top-line growth. Our model estimates full-year 2025 sales for Keytruda to be $32.2 billion, suggesting an increase of 9.2% year over year.

The drug’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.

Per management, Keytruda will remain a key revenue driver for the company in the second half of 2025, along with the Animal Health business and new product launches like Winrevair and Capvaxive. However, weaker Gardasil sales in China and Japan will partly offset gains.

MRK Eyes Keytruda's Long-Term Growth Amid Upcoming Patent Loss

With Keytruda set to face patent loss in 2028, Merck is working on different strategies to drive its long-term growth. The company is advancing innovative immuno-oncology combinations, such as pairing Keytruda with LAG3 and CTLA-4 inhibitors.

In partnership with Moderna MRNA, Merck is developing a personalized mRNA therapeutic cancer vaccine (V940/mRNA-4157) in combination with Keytruda for patients with certain types of melanoma and non-small cell lung cancer (NSCLC). Merck and Moderna are conducting pivotal phase III studies on V940, in combination with Keytruda, for earlier-stage and adjuvant NSCLC and adjuvant melanoma.

Merck is also developing a subcutaneous formulation of Keytruda that can extend its patent life. This formulation is under review in the United States and an FDA decision is expected in September.

While Keytruda continues to drive Merck’s growth, the company’s heavy dependence on the drug remains a concern.

Also, competitive pressure might increase for Keytruda in the near future. In 2024, Summit Therapeutics SMMT reported positive data from a phase III study (conducted in China by partner Akeso) in patients with locally advanced or metastatic NSCLC, in which its lead pipeline candidate, ivonescimab, a dual PD-1 and VEGF inhibitor, outperformed Keytruda. Summit believes iivonescimab has the potential to replace Keytruda as the next standard of care across multiple NSCLC settings.

Though Keytruda is set to face loss of exclusivity in 2028, its sales are expected to stay strong until then.

MRK's Price Performance, Valuation and Estimates

Year to date, shares of Merck have lost 15.3% compared with the industry’s decrease of 2.8%. The stock has also underperformed the sector and the S&P 500 during the same time frame, as seen in the chart below.

From a valuation standpoint, Merck appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 9.01 forward earnings, lower than 14.45 for the industry and its 5-year mean of 12.76.

The Zacks Consensus Estimate for 2025 earnings has increased from $8.85 per share to $8.92, while the same for 2026 has decreased from $9.65 to $9.59 over the past 30 days.

MRK's Zacks Rank

Merck currently has a Zacks Rank #3 (Hold). 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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