Will MRK's Growing Pipeline Help Navigate the Looming Keytruda LOE?

Merck MRK has built a substantial portfolio of new products and pipeline candidates in areas like oncology, vaccines, neuroscience, and infectious disease.

Merck’s phase III pipeline has almost tripled since 2021, supported by in-house pipeline progress as well as the addition of candidates through M&A deals. The company is now positioned to launch around 20 new vaccines and drugs over the next few years, with many having blockbuster potential.

Merck has several promising candidates in late-stage development, such as enlicitide decanoate/MK-0616, an oral PCSK9 inhibitor for hypercholesterolemia, tulisokibart, a TL1A inhibitor for ulcerative colitis, bomedemstat/MK-3543 for essential thrombocythemia, myelofibrosis and polycythemia vera and Daiichi-Sankyo-partnered antibody-drug conjugates (ADCs).

Merck and Daiichi Sankyo are co-developing three DXd ADCs — patritumab deruxtecan, ifinatamab deruxtecan and raludotatug deruxtecan for several types of cancer indications.

To foray into the lucrative obesity market, Merck has in-licensed global rights to an investigational oral GLP-1 receptor agonist, HS-10535, from China-based biotech Hansoh Pharma.

MRK's Keytruda Faces Patent Expiration in 2028

As Merck prepares for Keytruda’s eventual loss of exclusivity in 2028, the company’s expanding pipeline and new products are expected to play a key role in shaping its future business mix.

Besides working on various strategies to drive Keytruda's long-term growth, Merck is also pinning hopes on its new 21-valent pneumococcal conjugate vaccine, Capvaxive, and pulmonary arterial hypertension (PAH) drug, Winrevair, to boost its top line once Keytruda loses exclusivity. Both products have witnessed a strong launch so far.

Merck’s long-acting monoclonal antibody, Enflonsia (clesrovimab), for the prevention of respiratory syncytial virus was approved by the FDA earlier this month.

Keytruda, a PD-L1 inhibitor approved for several types of cancer, generated sales of $7.21 billion in the first quarter of 2025, up 6% year over year. Our model estimates for Keytruda suggest a CAGR of 5.4% over the next three years.

However, at present, it is not quite clear whether Merck’s new products and pipeline candidates can help the company successfully navigate the Keytruda LOE period and potential competition for the drug.

PD-L1 Inhibitors Competing With Keytruda

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.

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.

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.

MRK's Price Performance, Valuation and Estimates

Year to date, shares of Merck have lost 19.9% compared with the industry’s decrease of 1.8%.

From a valuation standpoint, Merck appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 8.56 forward earnings, lower than 14.92 for the industry and its 5-year mean of 12.85.

The Zacks Consensus Estimate for 2025 earnings has declined from $8.94 per share to $8.92, while the same for 2026 has decreased from $9.79 to $9.73 over the past 60 days.

Merck 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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