Even as a wave of clinical trial wins bolsters its momentum, Merck & Co. is prioritizing ongoing pipeline and commercial expansions over near-term margin growth, hoping to gird its long-term prospects past Keytruda's loss of exclusivity.
For 2027, “we see it as another year of investment, as we invest behind our expansive pipeline and our new product launches to drive long-term growth,” Merck’s CFO Caroline Litchfield said on the company’s third-quarter earnings call Thursday.
Litchfield made the comment in response to a question about whether Merck has seen enough R&D progress recently that the company may start to turn its attention to earnings growth as it looks beyond 2030.
At least for 2027, Merck expects underlying operating expenses to increase at a mid- to high-single-digit rate, “reflecting our conviction in the significant opportunity from our expanding pipeline and the growing portfolio of new product launches,” Litchfield said.
“We will continue to invest in value-creating opportunities that drive both near- and long-term growth,” Litchfield said of Merck’s capital allocation plans. “Business development remains an important priority, and we retain financial flexibility within a strong investment-grade credit rating to pursue additional science-driven, value-enhancing transactions.”
One of the key new clinical programs that Merck plans to invest in next year is advancing its PD-1xVEGF bispecific MK-2010, partnered with China’s SBP Group (formerly Sino Biopharmaceutical), into phase 3.
Following “productive discussions” with the FDA and “the totality of data generated to date,” Merck will initiate phase 3 development for MK-2010, including combinations with Kelun-Biotech-partnered TROP2 antibody-drug conjugate sac-TMT, in first-line non-small cell lung cancer in the first half of 2027, Marjorie Green, Merck’s head of oncology global clinical development, told investors during an Oct. 26 event. This plan was confirmed by Merck’s R&D chief Dean Li, M.D., Ph.D., on Thursday’s call.
The decision comes as sac-TMT, used alongside Keytruda, delivered a 51% progression-free survival benefit against Keytruda-chemo in first-line, PD-L1-negative NSCLC in a China phase 3. In parallel, sac-TMT’s first global phase 3 readout, in endometrial cancer, also showed consistent data with previous China results.
Beyond sac-TMT, positive phase 3 results from Moderna-partnered mRNA cancer vaccine intismeran autogene and diabetic macular edema candidate remigromig drew some recent investor scrutiny.
On the mRNA immunotherapy specifically, jacked-up investor expectations have overshadowed the otherwise strong data themselves.
During Thursday’s call, Li called the INTerpath-001 melanoma trial “a landmark study in its own right,” citing a comment from Antoni Ribas, M.D., Ph.D., a leading melanoma clinical researcher from the University of California Los Angeles.
“Because of that, we would hope that upon approval that the NCCN guidelines would potentially define this as a new standard of care,” Li said.
Looking into 2027, Merck expects some top-line pressure, as Litchfield flagged the potential for more “moderate” growth thanks to more than $2 billion of negative impact from generic competition affecting Bridion, the Januvia family and Bayer-partnered Adempas.
Keytruda, while still a major pillar of Merck’s business, will “see growth moderating” as it has reached peak penetration in several indications, she said. Total Keytruda sales, including the subcutaneous Keytruda Qlex, reached $8.6 billion during the third quarter, up 6% year over year.
Merck is locked in a patent fight with Halozyme over Keytruda Qlex. An injunction was recently ordered by a Dutch patent court that affects the subcutaneous drug’s rollout in eight European nations.
The injunction was put in place until a hearing is held, and it “doesn’t speak to the merits of our belief,” Merck’s CEO Rob Davis noted on the call. “We continue to feel very, very good that we have a position both in the U.S. and in Europe.”
Meanwhile, in the vaccines business, Merck’s HPV vaccine Gardasil enjoyed a rally thanks to “favorable public-sector purchasing patterns and higher net pricing” in the U.S., with 14% year-over-year growth to $2 billion, according to an earnings release.
For vaccines overall, Litchfield said a $250 million buy-in from the CDC this year will unwind in 2027.
On other recent launch progress, pulmonary arterial hypertension med Winrevair nearly doubled sales to $694 million in the third quarter, and kidney cancer drug Welireg grew sales by 56% to $307 million.
Also in the infectious disease department, sales of Merck’s RSV preventive Enflonsia jumped 138% year over year to $187 million as inventory builds ahead of a new RSV season.
For 2026, Merck narrowed the range of its full-year revenue guidance to between $66.8 billion and $67.3 billion.