Can Merck's New Products Aid Growth as Keytruda LOE Test Looms?

Merck MRK is going to face a major patent cliff, as its blockbuster PD-L1 therapy Keytruda is nearing loss of exclusivity (LOE) in 2028. The company’s biggest revenue driver, Keytruda, is approved for several types of cancer and has played a key role in driving Merck’s steady revenue growth over the past few years.

Keytruda accounts for more than 50% of the company’s pharmaceutical sales. The drug recorded sales worth $23.3 billion in the first nine months of 2025, up 8% year over year.

In September 2025, the FDA approved a subcutaneous (SC) formulation of Keytruda, known as Keytruda Qlex. Though Keytruda’s intravenous (IV) formulation is set to lose exclusivity in 2028, the newly approved SC version comes with its own set of patents that extend protection well beyond that date. The approval of Keytruda Qlex can help lower the negative impact of Keytruda's LOE.

However, with the Keytruda IV formulation facing an LOE in 2028, Merck has been looking for ways to diversify its product portfolio, especially by launching new products to navigate the potential challenges.

Among its new products, Merck is pinning hopes on its 21-valent pneumococcal conjugate vaccine, Capvaxive and pulmonary arterial hypertension (PAH) drug, Winrevair, to drive its long-term growth. Capvaxive was approved in the United States in June 2024 and in the EU in March 2025.

Winrevair was approved to treat PAH in adults with (PAH, WHO Group 1) in the United States and the EU in 2024.

Capvaxive and Winrevair have witnessed a strong uptake so far. Capvaxive recorded sales of $480 million in the first nine months of 2025 and Winrevair generated sales worth $976 million during the same time. Per management, Winrevair’s launch in the United States continues to outperform due to a steady increase in new prescription trends.

Management believes that both Capvaxive and Winrevair have the potential to generate significant long-term revenue growth, given the strong launch they have witnessed so far.

Sales of another new product, novel HIF-2α inhibitor Welireg, which is approved for treating various types of cancer indications, rose around 42.1% year over year to $496 million in the first nine months of 2025.

Merck’s newest respiratory syncytial virus (RSV) antibody, Enflonsia (clesrovimab), was approved in the United States in June 2025, while it is under review in the EU. Enflonsia recorded sales worth $79 million in the third quarter of 2025, consisting of inventory stocking.

A fixed-dose combination of doravirine and islatravir for the treatment of HIV is under review in the United States, with an FDA decision expected in April next year.

Though Merck’s new products hold significant potential, we will have to wait for more sustainable growth heading into the new year, as the company nears Keytruda LOE.

MRK's Competition in the Target Market

Despite the strong potential of Merck’s new products, competitive pressure in the target market remains a major challenge.

Winrevair is likely to face stiff competition in the PAH market, which remains highly competitive. Significant players in the PAH market are United Therapeutics UTHR and J&J JNJ.

United Therapeutics markets four drugs to treat PAH in the United States — Remodulin, Orenitram, Tyvaso and Adcirca. UTHR’s Tyvaso recorded sales of $1.41 billion, while Remodulin and Orenitram generated sales of $398.8 million and $375.7 million, respectively, in the first nine months of 2025.

J&J’s key PAH drugs include Opsumit and Uptravi. JNJ recorded revenues of $3.25 billion from its PAH franchise in the first nine months of 2025.

Meanwhile, Enflonsia is also likely to face competition from AstraZeneca/Sanofi’s RSV antibody Beyfortus, which was also approved for a similar indication in 2023.

Besides antibodies, several vaccines have been approved for preventing RSV in certain patients in the United States. These include Pfizer’s Abrysvo, GSK’s Arexvy and Moderna’s mRESVIA.

MRK's Price Performance, Valuation and Estimates

Year to date, shares of Merck have increased 2.9% compared with the industry’s rally of 15.6%. 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 11.59 forward earnings, lower than 16.91 for the industry and its 5-year mean of 12.54.

The Zacks Consensus Estimate for 2025 earnings per share has increased from $8.94 per share to $8.98, while the same for 2026 has decreased from $9.55 to $8.81 over the past 60 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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