Merck (NYSE: MRK) lifts 2026 guidance as Winrevair nearly doubles and Keytruda grows 6%

Merck reported third-quarter worldwide sales of $18.1 billion on 29 October, up 5%, or 4% excluding foreign exchange, and narrowed its 2026 sales guidance to between $66.8 billion and $67.3 billion, raising the midpoint by $250 million. Non-GAAP earnings per share fell 3% to $2.49, including a one-time charge of $0.12 a share for its licence agreement with SciBrunch, and the company lifted its full-year non-GAAP EPS range to $2.77 to $2.82 from $2.66 to $2.76.

Keytruda remains the core of the business. Sales of the immunotherapy, including the subcutaneous version Keytruda Qlex, rose 6% to $8.60 billion, or roughly 48% of group sales, with growth attributed to earlier-stage indications in triple-negative breast, cervical, head and neck and bladder cancer. Keytruda Qlex contributed $830 million. That figure matters more than its size suggests: shifting patients to the subcutaneous form is central to Merck's effort to defend the franchise as Keytruda's main US exclusivity draws to a close later in the decade.

The fastest growth came from newer products. Winrevair, the pulmonary arterial hypertension treatment, rose 93% to $694 million, Welireg grew 56% to $307 million and Prevymis 30% to $347 million. Ohtuvayre, acquired with Verona Pharma in October 2025, added $184 million, and the infant RSV antibody Enflonsia more than doubled to $187 million on seasonal demand and inventory building. Gardasil rose 14% to $2.00 billion, helped by US public-sector purchasing patterns and higher net pricing.

The headline growth needs two qualifications. First, Merck said pharmaceutical sales benefited from the timing of purchases by about $550 million, which accounts for most of the $657 million increase in the division and will not necessarily recur. Second, losses of exclusivity are biting: Januvia and Janumet fell 39% to $380 million and Bridion dropped 67% to $144 million after generic entry in the US, while Lagevrio sales all but disappeared. Capvaxive, the adult pneumococcal vaccine, grew 8% to $263 million, but US sales declined on lower vaccination rates and net pricing.

Profitability moved the other way. GAAP earnings per share fell 12% to $2.04 and GAAP gross margin dropped to 72.9% from 77.7%, reflecting higher amortisation of acquired intangibles, restructuring and production costs. Non-GAAP research and development spending rose 13% to $4.5 billion, including the $400 million SciBrunch charge for a preclinical oral KRAS G12D inhibitor and net of a $200 million reduction under a funding agreement with Blackstone Life Sciences. Higher net interest expense pushed non-GAAP other expense to $420 million from $106 million, and a non-GAAP tax rate of 10.9% flattered the quarter.

The full-year EPS range looks alarming at first sight, but it is dominated by one-off charges: $3.62 a share for the acquisition of Cidara Therapeutics, $2.31 for Terns Pharmaceuticals and $0.12 for SciBrunch. Adding back those $6.05 implies underlying non-GAAP EPS of roughly $8.82 to $8.87, against $8.98 in 2025, a year that itself carried $0.20 of deal charges. Put simply, Merck is guiding to broadly flat or slightly lower underlying earnings in 2026 as it pays for growth it hopes to collect after Keytruda.

That growth rests on the late-stage pipeline. The FDA has accepted for priority review an application for sacituzumab tirumotecan in previously treated endometrial cancer, with an action date of 15 June 2027, building on the TroFuse-005 survival data presented at ESMO. The INTerpath-001 melanoma vaccine result with Moderna and the Winrevair label update from the HYPERION trial add further options. Against that, the application for ifinatamab deruxtecan in small-cell lung cancer, developed with Daiichi Sankyo, was voluntarily withdrawn, and the SciBrunch licence is a long-dated bet rather than a near-term contributor.

The investment question is whether Merck can convert a crowded pipeline into revenue fast enough to offset the Keytruda cliff without further eroding earnings. Purchase timing and a low tax rate helped this quarter, and the underlying EPS trajectory is flat at best. Uptake of Keytruda Qlex, continued Winrevair growth and the 2027 approval decisions will show whether the heavy acquisition spending of 2026 was well judged or simply expensive.