By Michael Erman and Mariam Sunny
Feb 3 (Reuters) – Merck & Co on Tuesday forecast 2026 sales and profits below Wall Street estimates, saying the imminent loss of exclusivity on diabetes drug Januvia and other legacy medicines will impact more than analysts expect.
The weaker-than-anticipated outlook overshadowed a solid fourth quarter, in which the U.S. drugmaker beat profit and sales expectations on strong demand for its blockbuster cancer immunotherapy Keytruda.
The company expects 2026 revenue of $65.5 billion to $67.0 billion, with the top end below the average analyst estimate of $67.6 billion, according to LSEG data.
BMO Capital analyst Evan Seigerman said the quarter “builds a reasonable foundation for Merck heading into 2026,” but the revenue outlook could temper expectations for the year.
Merck said it expects a $2.5 billion impact this year, including from generic competition, Medicare price negotiations and weaker sales of its COVID-19 treatment, Lagevrio.
“Where the disconnect is coming with the Street, frankly, is in a lot of our legacy products, and these are products that are all largely going off patent,” CEO Rob Davis said in an interview.
He said drugs, including Januvia and related medicines Janumet and Janumet XR, as well as Bridion, an injection to reverse the effects of muscle relaxants, could come in weaker than analysts’ expectations.
Even as some products lag near-term expectations, management sought to shift the focus to longer‑term growth drivers.
CLEAR VISION
CEO Davis told analysts on Tuesday that the company expects to give investors greater visibility into nearly all of its growth opportunities for the next decade by the end of 2027.
Earlier this year, Merck forecast $70 billion in revenue from new growth drivers by the mid-2030s.
Adjusting for recent loss-of-exclusivity impacts, including Januvia and Bridion, Merck expects revenue growth of roughly 5% to 8% over time, Davis said.
Davis said Merck will keep looking for deals in oncology, cardiometabolic and immunology, adding it remains focused on the “$1 billion to $15 billion sweet spot,” but would go bigger for the right scientific opportunity.
Merck shares were up nearly 3%.
In 2025, Merck struck two deals in the $10 billion range, buying Cidara Therapeutics and Verona Pharma as part of its push to grow beyond Keytruda, which is set to lose patents later this decade.
“Investors have been warming back up to the Merck story following the Verona and Cidara deal announcements as these are viewed as the right steps to maintaining a solid growth trajectory,” James Harlow, senior vice president at Novare Capital Management, said, adding that the focus will be on the upcoming pipeline readouts.
SOLID FOURTH QUARTER
Merck reported an adjusted profit of $2.04 per share for the fourth quarter ended December 31, ahead of analysts’ average estimate of $2.01. Its sales rose 5% to $16.4 billion, topping estimates of $16.2 billion.
Keytruda sales rose 7% to $8.37 billion in the quarter, above expectations of $8.23 billion. For the year, Keytruda brought in sales of $31.7 billion.
That performance helped offset a steep 34% year-over-year plunge in sales for its human papillomavirus vaccine, Gardasil, which garnered $1.03 billion in revenue for the quarter. The company has been dealing with weak demand for Gardasil in China, prompting it to halt shipments of the shot to the region.
(Reporting by Michael Erman in New Jersey and Mariam Sunny in Bengaluru; Editing by Bill Berkrot and Shinjini Ganguli)
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