On February 3, 2026, Merck released its fourth-quarter and full-year financial performance report for 2025. The report revealed solid growth in a challenging market environment, with total global sales reaching $65.01 billion, a 1% increase from $64.17 billion in 2024 (or a 2% increase at constant exchange rates). The fourth-quarter sales were $16.4 billion, reflecting a 5% year-over-year growth (or 4% at constant exchange rates). This performance was driven by the strong continued sales of its core product, KEYTRUDA, the contribution of newly launched products like WINREVAIR and CAPVAXIVE, and growth in the animal health business. However, some vaccine products, including the GARDASIL series, experienced a decline due to changing market demand. Non-GAAP earnings per share (EPS) for the year were $8.98, up 17%, reflecting improvements in cost control and operational efficiency. This article offers a comprehensive analysis of Merck's 2025 performance highlights and challenges, based on the official report, covering financial performance, product performance, research and development pipeline, business development, and future outlook.
Merck's total global sales for 2025 were $65.01 billion, a 1% increase from $64.17 billion in 2024. At constant exchange rates, the increase was 2%, indicating the company's resilience amid currency fluctuations. Fourth-quarter sales were $16.4 billion, up 5% year-over-year (or 4% at constant exchange rates), outpacing the full-year growth rate and signaling an acceleration in the year-end performance.
Looking at business segments, pharmaceutical sales for the year totaled $58.14 billion, growing by 1%, while animal health sales reached $6.35 billion, growing by 8% (or 9% at constant exchange rates), making it the fastest-growing segment.
In terms of profitability, GAAP net income for the year was $18.25 billion, an increase of 7%, while non-GAAP net income was $22.51 billion, up 16%. GAAP EPS for the year was $7.28, an 8% increase, and non-GAAP EPS was $8.98, reflecting a 17% growth. For the fourth quarter, GAAP EPS was $1.19, down 20% year-over-year, while non-GAAP EPS was $2.04, up 19%. Non-GAAP metrics exclude one-time items (such as acquisition-related costs and restructuring expenses) to more accurately reflect operating performance. Notably, the increase in non-GAAP EPS was primarily driven by the optimization of the business portfolio and operational leverage, partially offset by acquisition-related costs.
Regarding cost structure, R&D expenses totaled $15.79 billion for the year, a decrease of 12% mainly due to reduced spending on business development activities. Sales and marketing expenses were $10.73 billion, down 1%. Non-GAAP gross margin improved by 0.7 percentage points to 81.5%, compared to 80.8% in 2024, reflecting a shift toward higher-margin products. Currency fluctuations had a negative impact on both sales and EPS, but the company offset some of this pressure through pricing and volume growth.
The U.S. market continues to be Merck's largest revenue source, accounting for a significant portion of total sales. Within the pharmaceutical business, core products like KEYTRUDA saw stable demand in the U.S., while international markets, particularly Europe and Asia, were impacted by currency fluctuations. However, emerging markets such as China saw growth following the launch of new drugs. In the animal health business, livestock product sales grew by 13%, while companion animal products rose by 2%, reflecting the strong global demand for pet healthcare. Other revenues, such as third-party manufacturing, declined by 42% due to reduced income from hedging activities.
KEYTRUDA/KEYTRUDA QLEX: Sales for the year totaled $31.7 billion, a 7% increase, making it Merck's largest revenue driver. The growth was driven by the global penetration of earlier-stage indications (e.g., triple-negative breast cancer, non-small cell lung cancer) and continued demand for metastatic indications (e.g., urothelial carcinoma, gastric cancer). Fourth-quarter sales were $8.37 billion, up 7% year-over-year.
WINREVAIR (Cardiovascular Product): Annual sales were $1.44 billion, up significantly from $419 million in 2024 (exact growth percentage not specified in the document). This growth was primarily driven by the U.S. launch and international promotion. WINREVAIR became an important growth driver for Merck in 2025.
CAPVAXIVE (Vaccine): Annual sales reached $759 million, up from $97 million in 2024, benefiting from adoption in the U.S. market.
GARDASIL/GARDASIL 9 (HPV Vaccine): Annual sales were $5.23 billion, down 39%, primarily due to reduced demand in China and the conclusion of vaccination programs in Japan.
Animal Health Products: Total sales were $6.35 billion, up 8%, with livestock products growing by 13% and companion animal products rising by 2%. The BRAVECTO product line generated $1.1 billion in sales, a 1% increase.
Other Products: Lynparza (Ovarian Cancer Treatment) had sales of $1.45 billion, up 11%, and Lenvima (Liver Cancer Treatment) generated $1.05 billion, up 4%. The vaccine business overall was impacted by the decline in GARDASIL, but new vaccines like CAPVAXIVE partially offset the negative impact.
Merck's product portfolio is transitioning from traditional vaccines toward specialty drugs and animal health. New products like WINREVAIR and CAPVAXIVE are contributing to growth, while older products like LAGEVRIO (an antiviral drug) saw a significant 61% decline in sales. The company is maintaining growth in its core products through lifecycle management, such as the expansion of KEYTRUDA's indications.
Merck made significant progress in its R&D pipeline in 2025. The company announced positive phase 3 trial results for 18 programs and initiated 21 new phase 3 studies, with approximately 80 phase 3 trials currently underway. Notable milestones included:
Oncology: The FDA approved KEYTRUDA in combination with other therapies for muscle-invasive bladder cancer (MIBC), and sac-TMT (anti-TROP2 ADC) received FDA priority review.
Cardiovascular and Metabolic Diseases: enlicitide (oral PCSK9 inhibitor) showed significant LDL-C reduction in phase 3 trials, receiving FDA priority review.
Vaccines: WINREVAIR received EU approval for pulmonary arterial hypertension, and CAPVAXIVE was successfully launched in the U.S.
Partnerships and Acquisitions: Merck enhanced its respiratory and antiviral pipeline through the acquisitions of Cidara Therapeutics and Verona Pharma.
Merck has been strengthening its pipeline through external collaborations, such as with Moderna on mRNA-based personalized cancer vaccines. The company focuses on differentiated innovations, with WINREVAIR as the first activin receptor IIA-Fc fusion protein for pulmonary arterial hypertension, demonstrating breakthrough potential. Although R&D expenses decreased due to reduced business development spending, clinical development spending increased, reflecting the prioritization of pipeline advancement.
In 2025, Merck completed the acquisition of Cidara Therapeutics for approximately $9.2 billion, gaining MK-1406, a long-acting antiviral drug, which adds to its vaccine pipeline. The company also entered into a financing agreement with Blackstone Life Sciences to support the development of sac-TMT. These acquisitions aim to complement Merck's internal R&D efforts and rapidly bring new technologies to market.
Merck undertook restructuring efforts to optimize operations, with restructuring expenses of $889 million for the year, mainly for facility consolidation. After excluding these one-time costs from non-GAAP metrics, operating margins improved. Additionally, Merck reached an agreement with the U.S. government to lower drug costs while committing to invest $70 billion in the U.S. to strengthen supply chain resilience.
Merck holds a cautiously optimistic view for its 2026 performance, considering the patent cliffs for several products and the significant progress in its R&D pipeline. The company expects global sales to range between $65.5 billion and $67 billion, with a median growth of approximately 3%. Non-GAAP EPS is expected to be between $5.00 and $5.15, including approximately $3.65 per share in one-time expenses related to the Cidara acquisition. Excluding this expense, the core EPS growth potential is strong. Key growth drivers include:
Continued growth of KEYTRUDA and expansion into new indications.
International market expansion for WINREVAIR and CAPVAXIVE.
Steady demand in the animal health business.
Challenges include expected currency fluctuations, which could negatively impact sales and EPS by around 2% and 3%, respectively. Increased competition and patent cliffs, such as the upcoming expiration of KEYTRUDA's patent, may exert long-term pressure. Merck plans to navigate these uncertainties through pipeline innovation and cost control measures.
