In its 2025 full year and fourth-quarter earnings call, Merck executives touted the merits of recent deals and what CEO Robert Davis called “probably the broadest and widest pipeline we’ve had in years.”
Financially speaking, everything appears to be going well enough at Merck, with the company mostly meeting its 2025 sales expectations. Nevertheless, questions and even an air of discontent lingered on the company’s investor call on Tuesday.
“In 2025 Merck achieved the sales guidance it provided to start the year, and you dealt with Gardasil pressures all year long,” Steve Scala, an analyst at TD Cowen noted on the call, where Merck reported its Q4 and full year 2025 earnings. “But in any year for any company, there will be some challenges.”
Sales of Gardasil, the company’s HPV vaccine, plummeted 35% worldwide, a drop Merck attributed to falling demand in China and Japan. Overall, however, fourth-quarter sales came in at $16.4 billion, beating street expectations of around $16.3 billion.
“So the question is,” Scala continued, “is this what we should expect from Merck going forward, a company that grows modestly in good times and is significantly pressured in less good times?”
CEO Robert Davis responded by saying Scala was “taking one year out of context.”
“I’m not sure I agree with your characterization,” Davis said, pointing to the potential for the Merck to achieve $70 billion in yearly earnings in the near future. He projected a financial peak of $35 billion in 2028 for blockbuster cancer drug Keytruda, which comes off patent that year, and claimed “probably the broadest and widest pipeline we’ve had in years.”
Merck has added to that pipeline recently, as Davis pointed repeatedly to the company’s 2025 pickups of Verona Pharma and Cidara Therapeutics. The $10 billion Verona acquisition in July brought with it Ohtuvayre, a COPD drug projected to potentially reach peak sales of $3.4 billion annually. The $9.2 billion Cidara buy in November, meanwhile, brought CD388, an antiviral that Cidara had positioned as a “single-dose, universal preventative agent” for influenza.
“The scale of the ongoing seasonal flu outbreak in the Northern hemisphere reinforces the threat posed by influenza,” Dean Li, Merck’s president of research laboratories, said on the earnings call, “and importantly, the need for improved prevention strategies.”
Absent from the discussion was last month’s reported flirtation and breakup with Revolution Medicines, a deal that could have seen Merck spend upwards of $30 billion on the company’s suite of promising developmental cancer therapeutics.
Nevertheless, Davis made clear that acquisitions are key to Merck’s ongoing strategy. He and other executives on the call repeatedly pointed to Winrevair, the cardiovascular drug it acquired in its $11.5 billion buy of Acceleron in 2021. Winrevair, approved by the FDA for pulmonary arterial hypertension in 2024, grew 133% year-over-year in Q4, bringing in $467 for the quarter and $1.4 billion for all of 2025.
Due to that success, Merck is on the lookout for Verona- and Cidara-sized deals, with Davis tagging “up to $15 billion” as the company’s sweet spot. However, he said, “for the right scientific deal, we’d go bigger.”
Merck’s full year sales were $65 billion, up 1% over 2024. The company set its 2026 sales expectations at $65.5 billion to $67.0 billion, below consensus of $67.4 billion. Keytruda, the company’s flagship cancer therapy, grew 7% for the year, getting $31.7 billion in sales.
