Merck Q3 Results Beat Expectations, Raises Full-Year Earnings Guidance
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Merck posted adjusted EPS of $2.49 in Q3, crushing Wall Street's $2.08 estimate, on revenue of $18.1 billion — up 5% year-on-year — and raised full-year profit guidance, yet investors are looking past the beat toward the 2028 Keytruda patent cliff.
How big was the beat?
Adjusted EPS came in at $2.49, nearly 20% above the Street consensus of $2.08–$2.09; revenue hit $18.1 billion versus the expected $17.3 billion.
The company raised full-year adjusted EPS guidance to $2.77–$2.82, up from $2.66–$2.76 and well above analysts' $2.46 estimate.
This means → Merck is not just winning this quarter — it is telling the market the whole year will come in better than expected.
How did the top drug perform?
Keytruda — Merck's flagship immuno-oncology drug — posted combined sales of $8.6 billion, beating the $7.73 billion estimate.
The subcutaneous version, Keytruda QLex, recorded $830 million, a quarterly record since launch, up 6% year-on-year. In plain terms = QLex is approaching "blockbuster" status (over $1 billion in annual sales), a sign that patients are rapidly switching to the more convenient injection form.
HPV vaccine Gardasil brought in roughly $2.0 billion, topping the $1.76 billion estimate and reversing earlier drag from China inventory build-up.
Any standouts among the other products?
Winrevair, which treats a rare lung disease, delivered $694 million in quarterly revenue — up 93% year-on-year and ahead of the $645 million estimate. It was the fastest-growing single product this quarter.
Animal health revenue of $1.68 billion came in slightly below analyst expectations — one of the few soft spots.
How serious is the 2028 patent cliff?
Keytruda's patent expires in 2028, opening the door to generics and biosimilars — near-identical competitors sold at lower prices.
The precedent is fresh: diabetes drug Januvia saw quarterly sales plunge 39% after its patent expired in May this year.
This means → Keytruda accounts for close to half of Merck's revenue. Without new products stepping in, the loss of patent protection could trigger a revenue cliff.
What is in the pipeline to fill the gap?
CEO Robert Davis flagged the personalized cancer vaccine intismeran autogene as a "major long-term opportunity." It is being co-developed with Keytruda — though a data-leak incident last week already triggered a sell-off.
This quarter includes a $400 million one-time charge (about $0.12 per share) from a global licensing deal with Shanghai-based SciBrunch for a tumor-growth-targeting drug.
Cholesterol-lowering drug Lipfendra recently launched. Goldman Sachs sees "a sizable new product cycle emerging," but this quarter's report did not break out its sales separately.
What does Wall Street think comes next?
Goldman Sachs analyst Asad Haider noted that the market's focus has already shifted to 2027, when Merck itself has signaled a performance slowdown.
He sees clinical data updates in late 2026 to early 2027 as the real stock-price catalyst.
In plain terms = no matter how strong this quarter looks, what investors really need answered is whether the pipeline can deliver before the 2028 patent cliff — that verification window matters more than any single earnings report.
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