Merck & Co., Inc. (NYSE: MRK), the global pharmaceutical major headquartered in Rahway, New Jersey, posted third-quarter 2025 results that reinforced the strength of its oncology franchise and pipeline diversification strategy. Total worldwide revenue rose 4 percent year-on-year to USD 17.3 billion, driven by continued growth in blockbuster drug Keytruda, surging demand for WINREVAIR, and meaningful contributions from newer vaccine and cardiometabolic products. Non-GAAP earnings per share came in at USD 2.58, up 64 percent from the prior-year period, beating consensus estimates and prompting the company to revise its full-year 2025 EPS guidance upward.
Despite a decline in vaccine sales in key Asian markets and headwinds from foreign exchange, Merck delivered a strong quarter marked by robust profitability, disciplined cost controls, and a clearly articulated pipeline narrative aimed at sustaining long-term growth beyond patent cliffs.
How did Merck’s Q3 product mix and commercial execution support year-over-year revenue expansion?
Merck’s pharmaceutical sales rose to USD 15.6 billion, representing 4 percent annual growth. Oncology led the charge, with Keytruda growing 10 percent year-over-year to USD 8.1 billion. Uptake was strong across both metastatic and early-stage indications, including non-small cell lung cancer, endometrial cancer, triple-negative breast cancer, and renal cell carcinoma. Analysts noted the sequential growth momentum in U.S. markets, further amplified by timing of wholesaler inventory builds.
WINREVAIR sales surged 141 percent to USD 360 million. The treatment for pulmonary arterial hypertension benefited from expanded clinical indications and positive trial data from ZENITH and HYPERION studies, which demonstrated a significant reduction in disease progression risks. Merck emphasized that WINREVAIR has transitioned from early launch phase to consistent prescriber adoption.
Newly launched CAPVAXIVE, Merck’s pneumococcal conjugate vaccine targeting adults at elevated risk, generated USD 244 million in Q3 revenue. While this marked a meaningful uptick from prior quarters, its trajectory is still in early days. CAPVAXIVE benefited from seasonal inventory buildup and positive response from public-sector distribution programs.
JANUVIA and JANUMET grew 29 percent year-over-year to a combined USD 624 million. U.S. pricing supported this growth, although demand declined in China and other international markets due to generic competition.
On the downside, GARDASIL/GARDASIL 9 revenue fell 24 percent to USD 1.7 billion, primarily due to a sharp drop in Chinese demand and normalization of catch-up vaccination campaigns in Japan. Excluding China, sales declined just 2 percent. VAXNEUVANCE and other vaccines also saw declines, pressured by competitive intensity in Japan and weaker-than-expected flu season trends in the Northern Hemisphere.
Animal Health contributed USD 1.6 billion in revenue, up 9 percent. Livestock products led the gain with 16 percent growth, while companion animal revenue dipped 2 percent due to fewer veterinary visits and competitive pressure in the parasiticide space.
What operational levers helped Merck expand margins despite FX drag and inventory write-offs?
Merck’s GAAP gross margin expanded to 77.7 percent in Q3 2025, up from 75.5 percent in Q3 2024, while non-GAAP gross margin rose to 81.9 percent from 80.5 percent. The increase reflected a favorable shift in product mix toward oncology and specialty drugs, as well as a decline in restructuring charges. These gains were partially offset by higher inventory write-offs and continued FX headwinds.
Selling, general and administrative expenses fell 4 percent to USD 2.6 billion due to reduced administrative and restructuring costs. Research and development expenses declined 28 percent to USD 4.2 billion, largely because the previous year included USD 2.2 billion in one-time charges related to the acquisitions of EyeBio and MK-1045. In Q3 2025, Merck recorded a USD 300 million milestone payment tied to the MK-2010 technology transfer from LaNova Medicines Ltd., now part of Sino Biopharmaceutical Limited.
The effective tax rate declined to 14.2 percent, supporting earnings leverage and contributing to the 87 percent jump in GAAP earnings per share to USD 2.32.
How are Merck’s oncology breakthroughs and regulatory approvals strengthening its long-term growth outlook?
Q3 2025 was a highly productive period for Merck’s R&D machine. The U.S. Food and Drug Administration approved KEYTRUDA QLEX, a subcutaneous formulation of its flagship checkpoint inhibitor, across all solid tumor indications. KEYTRUDA QLEX can be administered in under one minute, offering a streamlined alternative to traditional IV infusion and enabling better throughput in infusion centers.
The European Medicines Agency’s Committee for Medicinal Products for Human Use also issued a positive opinion on KEYTRUDA QLEX. Final EMA approval is expected in Q4 2025, paving the way for broader global adoption.
Merck presented data on over 20 tumor types at the European Society for Medical Oncology Congress 2025. Notable readouts included KEYNOTE-905 in cisplatin-ineligible bladder cancer, KEYNOTE-B96 in platinum-resistant ovarian cancer, and KEYNOTE-775 in advanced endometrial cancer. Exploratory long-term data from KEYNOTE-671 and KEYNOTE-042 further strengthened Keytruda’s position in early-stage and metastatic non-small cell lung cancer.
In cardiovascular disease, the Phase 3 CORALreef Lipids trial of enlicitide decanoate met all primary and key secondary endpoints. If approved, enlicitide could become the first oral PCSK9 inhibitor, addressing a large unmet need in hypercholesterolemia management.
Meanwhile, Merck closed its acquisition of Verona Pharma in October 2025, adding OHTUVAYRE to its portfolio. The COPD maintenance therapy received FDA approval earlier this year and is expected to support Merck’s respiratory franchise alongside WINREVAIR.
How Merck’s upgraded 2025 earnings guidance is influencing investor sentiment and positioning strategies
Merck now expects full-year 2025 revenue between USD 64.5 billion and USD 65.0 billion, reflecting 0.5 percent FX drag at mid-October exchange rates. The company raised its non-GAAP earnings per share guidance to a range of USD 8.93 to USD 8.98, narrowing from the previous USD 8.87–8.97 range.
The guidance embeds one-time charges of USD 0.16 per share from the LaNova and Hengrui Pharma agreements, a benefit of USD 0.09 from the amended AstraZeneca Koselugo agreement, and a negative impact of USD 0.04 from the Verona Pharma acquisition.
Merck’s revised tax rate guidance of 14.0 to 15.0 percent, down from the prior 15.0 to 16.0 percent, reflects audit reserve adjustments and operational efficiency gains. Analysts noted that the midpoint upgrade of USD 0.04 per share from the previous outlook reinforces management’s confidence in business fundamentals despite ongoing currency and pricing risks.
How is Merck investing in future manufacturing scale and U.S. supply chain resilience?
Merck announced the construction of a USD 3 billion Center of Excellence for pharmaceutical manufacturing in Elkton, Virginia. The 400,000-square-foot facility will serve as a dual-purpose site for active pharmaceutical ingredient and drug product production, primarily focused on small molecules. The project will generate over 500 full-time jobs and marks a major step in Merck’s USD 70 billion investment plan to expand domestic manufacturing and R&D over the coming years.
This move is viewed as a proactive response to supply chain vulnerabilities exposed during the pandemic, as well as a strategy to reinforce U.S.-based production for future pipeline scale-up and expedited regulatory timelines.
What upcoming FDA decisions and late-stage trial readouts could define Merck’s growth momentum heading into 2026
Merck will present new data from its cardiovascular portfolio, including enlicitide, at the American Heart Association Scientific Sessions 2025 in November. An investor event is scheduled for November 9 in New Orleans.
Regulatory milestones expected in the next two quarters include FDA decisions on KEYTRUDA QLEX combinations with Padcev, a PDUFA decision for KEYNOTE-B96 in February 2026, and further updates in doravirine/islatravir’s HIV program.
Beyond regulatory catalysts, investors will monitor how Merck manages vaccine portfolio volatility in Asia, FX sensitivity, and competitive pressures in the checkpoint inhibitor space as biosimilar threats loom post-2028. Nonetheless, Merck’s sustained oncology leadership, expanding cardio-respiratory platform, and focused capital allocation suggest continued shareholder support.
Key takeaways from Merck’s Q3 2025 results and strategic pipeline momentum
- Merck & Co., Inc. reported Q3 2025 sales of USD 17.3 billion, up 4 percent year-over-year, led by strong oncology and cardiopulmonary growth.
- Non-GAAP earnings per share rose 64 percent to USD 2.58, while GAAP EPS increased 87 percent to USD 2.32; gross margin improved to 81.9 percent on a non-GAAP basis.
- Keytruda sales reached USD 8.1 billion, up 10 percent, supported by expanded use in both metastatic and early-stage cancers across global markets.
- WINREVAIR posted 141 percent growth to USD 360 million, benefiting from expanded indications and positive Phase 3 ZENITH and HYPERION trial results.
- New vaccine CAPVAXIVE generated USD 244 million in Q3 revenue, with seasonal U.S. inventory builds and ongoing commercial uptake.
- GARDASIL/GARDASIL 9 revenue declined 24 percent to USD 1.7 billion due to lower demand in China and normalization in Japan.
- Merck upgraded its full-year 2025 non-GAAP EPS guidance to USD 8.93–8.98 and expects total revenue between USD 64.5 billion and USD 65.0 billion.
- KEYTRUDA QLEX, a subcutaneous formulation, received FDA and EMA support, further strengthening Merck’s immuno-oncology leadership.
- Enlicitide, Merck’s oral PCSK9 inhibitor for hypercholesterolemia, met primary endpoints in the CORALreef Lipids trial, with more data expected at AHA 2025.
- Merck completed the acquisition of Verona Pharma, bringing COPD drug OHTUVAYRE into its cardiopulmonary portfolio.
- A new USD 3 billion manufacturing facility in Elkton, Virginia is under construction as part of Merck’s USD 70 billion domestic investment push.
- Upcoming Q4 catalysts include regulatory decisions on KEYTRUDA QLEX combinations, HIV program updates, and cardiovascular data presentations at AHA Scientific Sessions.
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