Merck lifts annual profit forecast after Keytruda injection drives record quarter

Merck and Wall Street analysts faced a divergence in expectations regarding the company's ability to defend its flagship cancer drug against upcoming generic competition. On Thursday, the company resolved that uncertainty by beating third-quarter estimates and raising its adjusted profit forecast for the year. The update was driven by stronger-than-anticipated sales of Keytruda, specifically the newer injectable version launched in 2025.

The company now projects adjusted earnings of $2.77 to $2.82 per share for 2026, up from a prior range of $2.66 to $2.76. This revised guidance accounts for a one-time charge of $400 million, or 12 cents per share, associated with a licensing agreement with Chinese cancer drugmaker SciBrunch. Merck also adjusted its revenue outlook, narrowing the low end of the 2026 forecast to $66.8 billion, compared with the previous $66.3 billion floor, while the high end remains at $67.3 billion.

For the quarter, Merck reported adjusted earnings of $2.49 per share, surpassing the $2.08 average estimate from analysts surveyed by LSEG. Revenue climbed 5% from the prior year to $18.09 billion, exceeding the $17.31 billion forecast. Net income fell to $5.07 billion, or $2.04 per share, down from $5.79 billion, or $2.32 per share, in the same period last year.

Keytruda generated $8.60 billion in sales, topping the $7.73 billion expected by analysts at StreetAccount. That figure includes $830 million from Keytruda Qlex, the under-the-skin injection. This result represented the product's best quarter to date and significantly outpaced the $649 million projection, suggesting the injectable format could soon achieve blockbuster status with over $1 billion in annual sales.

The performance of Qlex is central to Merck's strategy to maintain market share as key patents for the original intravenous version of Keytruda begin expiring in 2028. The company aims to transition patients to the injectable form, which is viewed as more convenient, to sustain revenue after the original drug loses exclusivity. Merck has also pursued a series of deals to offset the impact of this generic pressure.

Other newer products contributed to the strong quarter. Winrevair, a treatment for a rare lung condition, saw sales rise 93% year-over-year to $694 million, beating analyst estimates of $645 million. The Gardasil vaccine, which protects against HPV-related cancers, brought in approximately $2 billion in sales, aided by higher U.S. demand and a recovery from elevated inventory and weak Chinese demand in the previous year. Analysts had projected $1.76 billion for Gardasil.

The company’s animal health division posted $1.68 billion in sales for the quarter, a figure that came in slightly below analyst estimates.