Merck & Co reports Q2 2025 results with strong Oncology growth and strategic pipeline investments

Overview

Merck & Co., Inc. delivered solid operational performance in Q2 2025 despite a slight decline in total revenue, reflecting robust oncology and cardiovascular growth offset by weaker vaccine sales. The company continued to advance its strategy with a focus on pipeline expansion and high-value acquisitions, including Verona Pharma, while initiating a multiyear optimization program expected to generate $3bn in annual savings by 2027, fully reinvested into research and growth initiatives.

“Earlier this month, we were pleased to announce our pending acquisition of Verona Pharma, which augments our portfolio and pipeline and is another example of acting decisively when science and value align. Today, we announced a multiyear optimization initiative that will redirect investment and resources from more mature areas of our business to our burgeoning array of new growth drivers, further enable the transformation of our portfolio, and drive our next chapter of productive, innovation-driven growth. With these actions, I am confident that we are well positioned to generate near- and long-term value for our shareholders and, most importantly, deliver for our patients”, said Robert M. Davis, chairman and chief executive officer.

Q2 2025 vs. Q2 2024:

Total worldwide sales were $15.8bn (-2% YoY on both a reported and constant currency basis), driven by vaccine softness and FX headwinds.
Pharmaceuticals revenue was $14.1bn (-2% YoY), driven by vaccine weakness offset by oncology and cardiovascular growth.
- KEYTRUDA generated $8.0bn in revenue (+9% YoY), supported by expanded indications in both metastatic and early-stage cancers.
- GARDASIL/GARDASIL 9 declined to $1.1bn (-55% YoY), mainly due to lower China demand and timing of shipments in ex-U.S. markets.
- WINREVAIR contributed $336m, continuing its strong U.S. launch momentum since 2024.
- Alliance revenues from Lynparza and Lenvima rose 17% and 6%, respectively, driven by higher U.S. demand.
Animal Health revenue reached $1.65bn (+11% YoY), supported by increased livestock demand and contributions from the Elanco aqua portfolio.
GAAP diluted EPS was $1.76, which decreased from $2.14 in Q2 2024 due to higher R&D and restructuring charges.
Non-GAAP diluted EPS was $2.13 (compared to $2.28 last year), reflecting continued investment in the pipeline and one-time licensing charges.
Operating cash flow remained strong, enabling continued shareholder returns and strategic reinvestment.

Merck narrowed its full-year 2025 guidance, reflecting continued investment in its pipeline and the evolving market environment. Total sales are expected to reach $64.3bn-$65.3bn, including an estimated 0.5% foreign exchange headwind. Non-GAAP EPS is projected to be $8.87-$8.97, which includes approximately $0.16 in one-time charges related to the Hengrui and LaNova agreements. The company also anticipates a non-GAAP tax rate of 15%-16% for the year. This guidance does not include the expected impact of the Verona Pharma acquisition, which is anticipated to close in Q4 2025. Merck reiterated its focus on advancing its oncology, vaccines, and cardiovascular portfolios, while reinvesting cost savings from its multiyear optimization initiative to drive sustainable long-term growth.

The technical analysis for Merck & Co. (MRK) shows a moderate recovery phase after a prolonged downtrend. The stock is currently trading at $80.60, with the 50-day SMA at $80.40 and the 200-day SMA at $89.81, indicating that the stock remains below its long-term trend, but the short-term average is starting to stabilize. A potential bullish crossover could occur if price strength continues, although the stock is still under the 200-day SMA, suggesting resistance around the $90 level. The RSI at 47.82 indicates a neutral stance, neither overbought nor oversold, implying that momentum is balanced with room for further upside if buying pressure increases. Overall, the chart suggests cautious optimism, with the need for a sustained breakout above the 200-day SMA to confirm a trend reversal.