Merck reported a stronger-than-expected third quarter on October 29, helped by its cancer drug Keytruda and its HPV vaccine Gardasil. The drugmaker also raised its profit outlook for the full year.
What Happened
Merck reported third-quarter revenue of $18.1 billion, above the average analyst estimate of $17.3 billion. Adjusted earnings were $2.49 per share, well ahead of the $2.08 analysts expected.
Keytruda sales rose 6% from a year earlier to $8.6 billion, beating the $7.73 billion estimate. That total included $830 million from Keytruda QLEX, a newer injectable form of the drug. Gardasil sales rose 14% to just under $2 billion, helped by early purchases from the US Centers for Disease Control and Prevention. Winrevair, a drug for pulmonary arterial hypertension, saw sales jump 93% to $694 million.
Merck raised the low end of its full-year revenue forecast to $66.8 billion, from $66.3 billion, keeping the top end at $67.3 billion. It also lifted its adjusted profit forecast to $2.77 to $2.82 per share, up from $2.66 to $2.76. That new profit outlook includes a one-time charge of $400 million, or 12 cents per share, linked to a licensing deal with Chinese drugmaker SciBrunch.
Why It Happened
Keytruda is still the engine of Merck. It is one of the world’s best-selling drugs, used to treat many types of cancer. The new injectable version, Keytruda QLEX, is making the drug easier to give to patients, and it had its strongest quarter since launch.
Gardasil also helped. The vaccine prevents cancers linked to the human papillomavirus. Sales had been hurt by weak demand in China in recent quarters, but early US government purchases gave this quarter a lift.
About $550 million of quarterly sales came from favorable purchase and inventory timing in the US for Keytruda, Gardasil and Winrevair. Merck expects much of that to reverse in the fourth quarter and in 2027, so not all of this quarter’s strength will repeat.
Why It Matters
Merck faces a well-known challenge: Keytruda will start losing key patent protection in 2028. When a drug loses patent protection, cheaper generic versions can enter the market and sales usually fall sharply. That is why Merck is working hard to build up other products before that happens.
This quarter matters because it shows the rest of the portfolio is starting to carry more weight. Winrevair nearly doubled. Gardasil bounced back. And the company said it plans to raise its revenue forecast for new products over the next decade, above the $70 billion by the mid-2030s it projected in January, thanks to recent clinical trial results and deals such as its Terns Pharma agreement.
For investors, the message is mixed but positive: the core business is still strong, and management is more confident about what comes after Keytruda.
Key Figures
| Figure | Q3 2026 |
|---|---|
| Revenue | $18.09 billion, vs $17.31 billion expected |
| Adjusted EPS | $2.49, vs $2.08 expected |
| Keytruda sales | $8.6 billion, up 6% |
| Keytruda QLEX sales | $830 million |
| Gardasil sales | Just under $2 billion, up 14% |
| Winrevair sales | $694 million, up 93% |
| Full-year revenue outlook | $66.8–$67.3 billion |
| Full-year adjusted EPS outlook | $2.77–$2.82 |
What Happens Next
Looking to 2027, Merck expects only moderate revenue growth. Gains from newer drugs and animal health should be partly offset by a hit of more than $2 billion from generic competition and patent expirations on older products. Keytruda’s growth is also expected to slow as it nears peak sales in some uses.
The key things to watch are whether Winrevair and other newer drugs keep growing fast, whether Gardasil demand in China recovers, and how the new-product pipeline develops ahead of the 2028 patent cliff.
Final Thoughts
Merck’s quarter was a clear beat, and the raised outlook backs that up. But the real story is longer term: can Merck replace Keytruda’s sales before patents expire? This quarter gave investors a reason to believe it can — but the next two years will be the real test.
Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.
Sources: CNBC, “Merck tops estimates, hikes profit outlook on strength of injectable Keytruda” (https://www.cnbc.com/2026/10/29/merck-mrk-earnings-q3-2026.html); Reuters via 94.7 The Beast, “Merck tops third-quarter estimates as Keytruda, Gardasil outperform” (https://947thebeast.com/2026/10/29/merck-tops-third-quarter-estimates-as-keytruda-gardasil-outperform/)
Related healthcare earnings — Eli Lilly’s outlook raise on weight-loss drug demand: https://thefinanceclass.wordpress.com/2026/10/30/eli-lilly-raises-outlook-weight-loss-demand/
