Merck & Co., Inc. (NYSE: MRK) has reported its first-quarter financial results for 2025, showcasing steady progress amidst a dynamic pharmaceutical landscape. This analysis delves into the key financial metrics, product performance, pipeline developments, and outlook, providing an authoritative and data-rich perspective on Merck’s recent performance and future trajectory.
Total worldwide sales were \(15.53 billion, reflecting a slight 2% decline from \)15.77 billion in Q1 2024. However, excluding foreign exchange effects, sales actually grew by 1%, signaling organic growth momentum.
GAAP net income increased by 7% to \(5.08 billion, with diluted EPS rising 7% to \)2.01 from $1.87.
Non-GAAP net income grew 6% to \(5.61 billion and non-GAAP EPS rose 7% to \)2.22, adjusted for acquisition-related costs and other items.
Gross margin improved slightly to 78.0% from 77.6%, primarily due to favorable product mix and lower restructuring costs.
SG&A expenses increased 3%, reaching $2.55 billion, driven by higher administrative and promotional spending.
R&D expenses decreased 9% to \(3.62 billion, reflecting a \)656 million acquisition charge in 2024 and favorable exchange rates, partially offset by increased clinical and discovery efforts.
KEYTRUDA, Merck’s flagship oncology drug, achieved sales of $7.2 billion, up 4% year-over-year, and 6% excluding FX. Growth was bolstered by uptake in early-stage and metastatic cancer indications including triple-negative breast cancer and MSI-H cancers.
GARDASIL/GARDASIL 9 sales declined 41% to $1.33 billion, mainly due to reduced demand in China. Excluding China, sales increased 14%.
Animal Health segment grew 5% to $1.59 billion, led by livestock products and the acquisition of Elanco’s aqua business.
Notable recent product launches like WINREVAIR (\(280 million sales) and **CAPVAXIVE** (\)107 million sales) contributed positively to portfolio diversification.
Merck advanced critical programs with Phase 3 trials for subcutaneous pembrolizumab combined with berahyaluronidase alfa, targeting faster, more convenient administration than intravenous KEYTRUDA. Regulatory submissions target U.S. and Europe, with U.S. FDA PDUFA date set for September 23, 2025.
The cardiovascular drug WINREVAIR demonstrated a 76% reduction in all-cause mortality, lung transplantation, and hospitalization risk in pulmonary arterial hypertension patients, leading to early trial stoppage for efficacy.
Initiation of Phase 3 trial waveLINE-010 for zilovertamab vedotin in diffuse large B-cell lymphoma underscores Merck’s strong oncology pipeline.
Infectious disease pipeline includes promising Phase 3 results for an oral two-drug HIV regimen (doravirine/islatravir), with marketing applications planned for mid-2025.
The exclusive license agreement with Hengrui Pharma for an oral small molecule Lipoprotein(a) inhibitor represents strategic pipeline expansion, expected to close in Q2 2025.
With tariffs adding an estimated \(200 million in costs, partly reflected in gross margins, Merck anticipates total sales for 2025 between \)64.1 billion and $65.6 billion.
The company now projects non-GAAP EPS between \(8.82 and \)8.97, factoring in a \(0.06 per share impact from the upfront license payment to Hengrui Pharma and \)0.09 per share related to LaNova milestone payments.
Non-GAAP gross margin is expected to hover around 82% for the full year, with operating expenses forecasted at \(25.6 billion to \)26.6 billion.
In line with prior earnings calls, Merck continues to prioritize innovation and commercial execution across oncology and vaccines, progressively offsetting challenges such as generic competition and geopolitical impacts on vaccine sales (notably Gardasil in China). CEO Robert M. Davis emphasized a dual focus on near-term revenue drivers and pipeline advancement, a theme echoed in the strong uptake of KEYTRUDA across indications and the promising cardiovascular and HIV assets emerging in Phase 3 trials.
Merck’s Q1 2025 financial results underscore resilient operational performance marked by strategic growth in key franchises, effective cost management, and significant pipeline progress. Despite a minor sales decline influenced by currency and international demand shifts, the company’s outlook remains robust, with expected full-year sales growth and continued investment in innovation.
For investors and stakeholders, Merck’s blend of strong oncology growth, innovative pipeline advancements, and strategic acquisitions positions it well for sustained value creation.
Source: Merck Q1 2025 Financial Results - SEC Filing
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