Merck & Co., Inc. (MRK.US) narrows full-year guidance, strong demand for new drugs drives Q1 revenue beyond expectations.

Merck & Co., Inc. (MRK.US) announced its first-quarter financial report on Thursday, with revenue and profit exceeding expectations, and also narrowing its full-year performance guidance for 2026. Thanks to the increasing demand for new products such as Winrevair and the subcutaneous injection form of the blockbuster cancer drug Keytruda, the company had excellent sales performance in the quarter. Global sales in the first quarter increased by nearly 5% to $16.3 billion, higher than the analysts' average expectation of $15.8 billion. Adjusted for expenses related to the $9.2 billion acquisition of Cidara Therapeutics Inc., the adjusted loss per share was $1.28, better than the analysts' average expectation. As of the time of writing, the stock has dropped by approximately 1%. The company, headquartered in Rahway, New Jersey, adjusted its full-year revenue guidance range to $65.8 billion to $67 billion, narrowing the lower limit from the previous $65.5 billion. The adjusted earnings per share are expected to be between $5.04 and $5.16, higher than the previous forecast of $5.00 to $5.15. Analysts expect normalized earnings per share to be $5.11, with revenue of $66.49 billion. Merck, headquartered in Rahway, New Jersey, faces low price competition for several of its flagship drugs in the coming years, with the most attention on Keytruda. The company has been actively seeking new growth drivers to offset the upcoming revenue gap. One of the new drugs is Winrevair, used to treat pulmonary arterial hypertension. Merck stated that the drug continues to grow in certain overseas markets such as the U.S., Japan, and Europe. Sales of Keytruda and Keytruda Qlex in the quarter increased by 12% to $8 billion. Keytruda Qlex is a key strategy component for the pharmaceutical company to continue tapping into its market value after the Keytruda patent expires starting in 2028, with the subcutaneous injection form resulting in faster and more convenient delivery. Sales of Winrevair, a hypertension drug co-marketed by Merck & Co., Inc. and Bristol-Myers Squibb Company (BMY.US), also increased by 88% to $525 million in the quarter. However, other new drugs from Merck did not perform as expected. Sales of the pulmonary disease treatment drug Ohtuvayre were $131 million, and the pneumonia vaccine Capvaxive had sales of $142 million, both below market expectations. Sales of Merck & Co., Inc.'s human papillomavirus (HPV) vaccine series Gardasil/Gardasil 9 continue to decline, with first-quarter sales down 19% year-over-year to $1.07 billion, affected by weak demand in China and declining sales in Japan. Research and development expenses increased from $3.6 billion in the same period last year to $12.6 billion, primarily due to the $9 billion cost related to the acquisition of Cidara, increased clinical development expenses, and adverse impacts from foreign exchange and restructuring costs. CEO Robert Davis stated, "In the first quarter, we continued to strengthen our pipeline with science-led business development, including the planned acquisition of Terns. We also achieved several important milestones, such as the FDA approval of IDVYNSO, which signifies a new chapter in our long-term commitment to serving HIV patients. I am pleased with our progress and excited about the future as we enter a period of intensive phase III data readouts and deliver on our pipeline commitments to patients." Analyst Stephen Ayers commented on the performance, saying, "Merck & Co., Inc.'s first quarter report shows some early positive signs of transformation before the Keytruda patent cliff. The 88% year-over-year growth of Winrevair validates their diversification efforts. However, the $1.72 GAAP loss driven by acquisitions also tells us that there is still a long way to go."