Big quarter, bigger forecast tweak
Merck posted $18.1 billion in Q3 sales on Thursday, outpacing Wall Street's view. Adjusted profit per share topped expectations, and the company said it fell from a year earlier because it is spending more on research and new product launches.
Management nudged up the low end of full-year sales guidance by $500 million and now expects adjusted EPS of $2.77 to $2.82, compared with a previous outlook that had peaked at $2.76. At 9:38 a.m. in New York, the stock was up 5.4% on the day. Through Wednesday's close, shares had climbed 34% this year, more than twice the S&P 500's gain.
Keytruda still drives results, and Qlex matters
Keytruda, used across more than a dozen cancers, generated $8.6 billion in combined quarterly sales, slightly ahead of estimates. Qlex, a newer version that can be injected more quickly, brought in $830 million, also beating expectations.
But Qlex's rollout faces friction. A Dutch tribunal ruled earlier this month that Merck's injectable violates a Halozyme Therapeutics Inc. patent and, as a result, prohibited sales in multiple European nations. Merck disputes that decision and is also contesting patent infringement claims in the US.
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Pipeline progress and the succession plan after Keytruda
The quarter adds to momentum from recent oncology studies, but the bigger narrative is what comes after today's leader. Merck is racing to assemble the next wave of high-revenue medicines before Keytruda meets lower-cost rivals later this decade, with its strategy hinging on an easier-to-use formulation of the drug alongside an expanding roster of experimental assets. As Bloomberg Intelligence's John Murphy and Christos Nikoletopoulos put it, the quarterly beat "is a sideshow to the underlying story: its need to build a growth portfolio to initially support, and then replace, lead product Keytruda when it encounters biosimilar competition."
In the last week at a major European cancer meeting, Merck shared new data on several programs. Another candidate, sacituzumab tirumotecan (sac-TMT), showed better results in women with advanced endometrial cancer, and Merck is evaluating it across numerous tumor types as it seeks to establish a further oncology franchise. Outside cancer, Gardasil and Winrevair also topped estimates.
Why it matters for your portfolio
Merck's print shows the cash engine still turning while the company builds its next act. Near term, investors got a beat and a guidance lift; longer term, the valuation story revolves around how quickly the pipeline can backstop and then offset Keytruda as biosimilar pressure approaches. Watch three levers: Qlex's legal track in Europe and the US, clearer read-through on the personalized vaccine beyond melanoma, and the breadth of sac-TMT across tumors.
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