Key Takeaways:
Merck & Co. now sees more than $70 billion of human-health revenue by the mid-2030s, a $20 billion upgrade to its own forecast, as the drugmaker builds a replacement for KEYTRUDA (pembrolizumab) ahead of the product's 2028 patent lapse.
"The transformation of Merck's portfolio is underway," Chief Financial Officer Caroline Litchfield said, pointing to the past year's acquisitions of Cidara and Terns alongside growth in animal health.
The New Jersey-based company's flagship immunotherapy generated $31.7 billion in 2025, almost half of total revenue, according to Fierce Pharma. Biosimilar versions of pembrolizumab are already in development. Litchfield said Merck expects "more of a hill with a quick return to strong growth" on a risk-adjusted basis rather than a revenue cliff, and that the company continues to aspire to grow through the loss-of-exclusivity period on a non-risk-adjusted basis.
For 2027, Merck guided to modest top-line growth from recently launched products, partly offset by generic competition on BRIDION, JANUVIA and Adempas, which loses exclusivity at the end of this year. KEYTRUDA growth is slowing as the product matures, and policy changes in Germany are expected to create pricing pressure next year. Expense growth is expected in the mid- to high-single-digit range, excluding business-development upfront payments and funding received for sac-TMT, while interest expense rises after debt issued for deals. Gross margin should improve as a KEYTRUDA royalty expires.
Dean Li, head of R&D and president of Merck Research, said the company is advancing sac-TMT, a TROP2 antibody-drug conjugate, across a broad set of tumor types. Thirteen of 17 trials sit outside breast and lung cancer, the two areas Merck initially emphasized. Li said the endometrial cancer program could make sac-TMT the first TROP2 ADC approved in that setting, and that data from Kelun's Phase III program in China supported pursuing lung cancer more aggressively.
On individualized neoantigen therapy, Li said Phase II melanoma data suggested adding INT to KEYTRUDA "almost double[s]" the number of patients remaining cancer-free versus KEYTRUDA alone. He said investors will look to the Phase III presentation to judge how closely results align with the earlier study, with renal cell carcinoma data serving as another reference point for immune-sensitive tumors including non-small cell lung cancer and head and neck cancer.
Beyond oncology, Merck is developing MK-3000, a Wnt agonist, and MK-8748, an anti-VEGF Tie2 agonist, in ophthalmology. Li said an estimated 30% to 40% of patients either do not respond to anti-VEGF therapies or stop responding, and that MK-8748 is being developed with an ambition to show faster retinal drying than existing options. In immunology, Merck aims to place its TL1A program alongside TNF, IL-23 and IL-17 approaches across gastrointestinal, dermatology and rheumatology indications.
Litchfield said LIPFENDRA, Merck's oral PCSK9 therapy, remains a multibillion-dollar peak-revenue opportunity. She cited 30 million U.S. patients on statins who are not at their LDL target, split roughly evenly between secondary and primary prevention, and said early prescription trends have been encouraging ahead of the SEAFOOT study.
Merck will keep seeking externally sourced science, with transactions in the $1 billion to $15 billion range identified as a continuing sweet spot. Litchfield said the company is not "desperate to do any deal," and named oncology, cardiometabolic disease and immunology as priority areas for available cash.
The pipeline build-out is being funded partly by cost cuts. Merck plans to save $3 billion in annual costs by 2027, a program projected to eliminate roughly 6,000 roles globally. The company filed notice in September 2026 for another 54 layoffs at its Rahway, New Jersey headquarters, effective in two phases in December 2026 and January 2027, following 88 summer cuts that took effect Sept. 4. Merck said it still employs more than 8,000 people in New Jersey.
The $70 billion figure is non-risk-adjusted, meaning it assumes pipeline programs succeed at currently modeled probabilities. That distinction matters for holders: the number that ultimately replaces KEYTRUDA revenue depends on Phase III outcomes for sac-TMT and INT, on LIPFENDRA's commercial uptake, and on whether Merck can keep buying assets at $1 billion to $15 billion without overpaying. Investors will get the next hard checkpoint when Merck reports fourth-quarter and full-year 2026 results, with the INT Phase III presentation the more consequential readout for the pipeline thesis.
This article is for informational purposes only and does not constitute investment advice.
