Merck Strengthens Oncology Pipeline as Keytruda Faces 2028 Patent Expiry
Merck & Co. is bolstering its oncology pipeline with acquisitions like Terns Pharmaceuticals and Cidara Therapeutics, while Keytruda remains the key growth driver. It expects Keytruda peak sales of $35 billion by 2028 and aims to launch 20 new drugs by 2030.
Merck & Co., Inc. continues to lean on its blockbuster cancer immunotherapy Keytruda and a broad late-stage pipeline to shape its long-term growth story. Oncology generates more than 60% of the company's pharmaceutical revenues, with Keytruda contributing roughly 55% of pharmaceutical sales. As Keytruda faces patent expiry in 2028, Merck has accelerated acquisitions, including the 2026 buyouts of Cidara Therapeutics and Terns Pharmaceuticals, adding late-stage influenza and hematology/cancer pipeline assets, respectively.
Merck's phase III pipeline has almost tripled since 2021, supported by in-house progress and the addition of candidates through M&A deals. The company expects to launch 20 new drugs by 2030, with many already launched. Its 2025 acquisition of Verona Pharma added the COPD drug Ohtuvayre. The company also expects Keytruda to achieve peak sales of $35 billion by 2028.
Other oncology products contributing to top-line growth include Welireg, AstraZeneca-partnered Lynparza and Eisai-partnered Lenvima. Merck's pipeline also includes programs in prostate cancer, renal cell carcinoma and hematologic malignancies, alongside next-generation vaccines. Some key new products with blockbuster potential are Capvaxive, a 21-valent pneumococcal conjugate vaccine, and the pulmonary arterial hypertension drug Winrevair, both of which have witnessed a strong launch.
Merck's second-largest product, the HPV vaccine Gardasil, has seen declining sales due to continued weak demand in China and lower demand in Japan. The company's Animal Health business is also a key contributor, with sales expected to more than double by the mid-2030s.
Financially, Merck trades on a P/E of 35.8x, higher than the broader pharmaceuticals industry average of 15.4x and the peer average of 26.9x. A Discounted Cash Flow estimate points to an intrinsic value of about $239 per share, implying Merck is roughly 45.9% undervalued. Merck produces about $14.0 billion in free cash flow over the latest twelve months and generated $16.47 billion in operating cash flow in 2025.
Lawmakers are investigating Merck's clinical trial work in China, which some investors may be applying as a risk discount. The company's dividend yield recently stood close to 3%, and its market capitalization was about $281.65 billion as of June 18, 2026, when shares traded on the NYSE at $114.04.