Core Insights - Merck (MRK) announced a multi-year optimization initiative aimed at saving $3 billion in annual costs by the end of 2027, coinciding with its second-quarter results on July 29 [1][12] - The restructuring will involve job cuts in administrative, sales, and R&D sectors, as well as a reduction in global real estate footprint, with savings reinvested into high-growth areas of pipeline development [2][12] - The initiative is part of Merck's strategy to diversify its revenue base, which is currently heavily reliant on Keytruda, a PD-L1 inhibitor that accounts for approximately 50% of its pharmaceutical sales [3][4] Financial Performance - Keytruda generated sales of $7.96 billion in Q2 2025, reflecting a 9% year-over-year increase [4] - Sales of Gardasil, Merck's second-largest product, fell by 55% in Q2 2025 to $1.13 billion, primarily due to decreased demand in China and timing of public-sector purchases [5] - Merck's new products, including Capvaxive and Winrevair, are showing promising sales growth, with Capvaxive generating $129 million (up 20.6% sequentially) and Winrevair generating $336 million (up 20% sequentially) in Q2 2025 [10] Strategic Initiatives - Merck is actively pursuing mergers and acquisitions (M&A) to bolster its pipeline, with its phase III pipeline nearly tripling since 2021 [6] - The company announced a definitive agreement to acquire Verona Pharma for approximately $10 billion, expected to close in Q4 2025, which will enhance its cardio-pulmonary portfolio [7][8] - Recent multi-billion-dollar deals with Chinese biotechs aim to diversify Merck's product offerings across various therapeutic areas [9] Market Position - Year-to-date, Merck's shares have declined by 16.9%, contrasting with a 1% increase in the industry [15] - Merck's price/earnings ratio stands at 8.87, which is lower than the industry average of 15.11 and its 5-year mean of 12.80, indicating an attractive valuation relative to peers [16] Earnings Estimates - The Zacks Consensus Estimate for Merck's 2025 earnings has decreased from $8.93 to $8.87 per share, while the estimate for 2026 has dropped from $9.74 to $9.64 over the past 60 days [19]

Core Insights - Merck (MRK) reported Q2 2025 adjusted EPS of $2.13, exceeding estimates, but a 7% decline year-over-year on a reported basis due to a $200 million upfront payment for a license agreement with Hengrui Pharma [2][9][17] - Revenues decreased 2% year-over-year to $15.81 billion, aligning with consensus estimates [3][9] Sales Performance of Oncology Drugs - Keytruda sales reached $7.96 billion, a 9% increase, driven by strong uptake in various cancer indications, surpassing estimates [4][9] - Alliance revenues from Lynparza and Lenvima contributed positively, with Lynparza sales up 15% to $370 million and Lenvima revenues totaling $265 million, up 5% [5] Sales Performance of Other Key Products - HPV vaccine sales (Gardasil and Gardasil 9) fell 55% to $1.13 billion due to reduced demand in China, missing estimates [7] - Sales of other vaccines showed mixed results, with Vaxneuvance increasing 20% to $229 million, while Rotateq and Pneumovax 23 saw significant declines [8][10] Animal Health Segment - The Animal Health segment generated $1.65 billion in revenues, an 11% increase year-over-year, driven by higher demand and the inclusion of Elanco aqua business sales [12] Cost and Margin Discussion - Adjusted gross margin improved to 82.2%, up 130 basis points year-over-year, attributed to a favorable product mix [13] - Adjusted R&D spending rose 15% to $3.99 billion, influenced by the upfront payment to Hengrui Pharma and increased compensation costs [14] 2025 Guidance - Merck narrowed its 2025 revenue guidance to $64.3-$65.3 billion, reflecting a less negative currency impact [15] - Adjusted EPS guidance is now between $8.87 and $8.97, accounting for a revised negative impact from foreign exchange [16] Acquisition Plans - Merck announced plans to acquire Verona Pharma for approximately $10 billion, expected to close in Q4 2025, which will enhance its portfolio in chronic obstructive pulmonary disease [19]

Core Insights - Merck reported $15.81 billion in revenue for Q2 2025, reflecting a year-over-year decline of 1.9% and an EPS of $2.13, down from $2.28 a year ago, with a slight revenue surprise of -0.02% against estimates [1] - The consensus EPS estimate was $2.01, resulting in an EPS surprise of +5.97% [1] Financial Performance Metrics - Merck's stock has returned +6.2% over the past month, outperforming the Zacks S&P 500 composite's +3.6% [3] - The company holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3] Sales Performance by Product - Keytruda (Oncology) U.S. sales reached $4.75 billion, exceeding the average estimate of $4.67 billion, with a year-over-year increase of +7.6% [4] - Keytruda (Oncology) International sales were $3.21 billion, surpassing the $3.16 billion estimate, marking a +12.2% year-over-year change [4] - Janumet (Diabetes) U.S. sales were $68 million, significantly above the $45.63 million estimate, reflecting a +300% year-over-year increase [4] - Lynparza (Oncology) U.S. alliance revenue was $174 million, exceeding the $140.82 million estimate, with a +13.7% year-over-year change [4] - Lynparza (Oncology) international alliance revenue reached $370 million, surpassing the $321.44 million estimate, representing a +16.7% year-over-year increase [4] - Winrevair (Cardiovascular) sales were $336 million, slightly below the $343.79 million estimate [4] - Lenvima (Oncology) alliance revenue was $265 million, exceeding the $244.01 million estimate, with a +6.4% year-over-year change [4] - Keytruda (Oncology) total sales were $7.96 billion, slightly above the $7.9 billion estimate, reflecting a +9.4% year-over-year change [4] - Animal health sales reached $1.65 billion, exceeding the $1.55 billion estimate, with an +11.1% year-over-year increase [4] - Gardasil (Vaccines) sales were $1.13 billion, below the $1.3 billion estimate, showing a -54.6% year-over-year decline [4] - Welireg (Oncology) sales were $162 million, exceeding the $154.16 million estimate [4] - Lagevrio (Virology) sales were $83 million, surpassing the $55.63 million estimate, but reflecting a -24.6% year-over-year decline [4]

Financial Data and Key Metrics Changes - The company reported total revenues of $15.8 billion, a decrease of 2% both nominally and excluding foreign exchange impact [17] - Earnings per share were $2.13, with gross margin at 82.2%, an increase of 1.3 percentage points driven by favorable product mix [24][23] - The company expects full year revenue for 2025 to be between $64.3 billion and $65.3 billion, representing growth of 1% to 2% [26] Business Line Data and Key Metrics Changes - Oncology sales, particularly from Keytruda, increased by 9% to $8 billion, driven by robust demand for metastatic indications [18] - Sales of Gardasil decreased by 55% to $1.1 billion, primarily due to a decline in China [19] - The Animal Health business saw an 11% increase in sales, reflecting higher demand across all species [22] Market Data and Key Metrics Changes - Global growth excluding Gardasil in China was 7%, primarily driven by strength in oncology and animal health [17] - In the U.S., Vaxnuvance sales increased by 20%, benefiting from CDC stockpile activity [20] - The company anticipates a more significant headwind to growth in Japan for Gardasil in the second half of the year [28] Company Strategy and Development Direction - The company is focusing on a multi-year optimization initiative to redirect $3 billion of cost savings from lower growth areas to higher potential areas [25] - The acquisition of Verona Pharma is expected to enhance the cardiopulmonary program and reflects the company's commitment to transformative science [12] - The company aims to leverage its scientific expertise to deliver the next wave of innovations that can save and improve lives [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth in 2025 and highlighted the strong clinical momentum and new product launches [9] - The company is entering a period of rapid transformation, with a diversified pipeline and over 20 new growth drivers [14] - Management acknowledged challenges in the Chinese market for Gardasil but remains focused on new product launches to drive growth [28] Other Important Information - The FDA approved Inflonsia for RSV prevention in infants, marking a significant milestone for the company [38] - The company is conducting over 80 phase three studies across various therapeutic areas, indicating strong clinical development activity [10] Q&A Session Summary Question: Context for outcomes in the Cadence trial - Management indicated that the most important signal for success is the PVR, with the six-minute walk also being important [52] Question: Market size for Winrevir and ex-U.S. strategy - Management noted that the patient population for Winrevir is underdiagnosed, and they expect growth in the ex-U.S. market as reimbursements come in [64] Question: $3 billion restructuring announcement - Management clarified that the $3 billion is a reallocation of resources from slower growth areas to fund faster-growing segments, with an expectation of overall growth in spending [70][72] Question: Gardasil demand dynamics and ACIP recommendations - Management expressed confidence in Gardasil's safety and efficacy but noted the high evidentiary standard set by the FDA for any changes in dosing recommendations [77] Question: Diligence in assets between Chinese and Western companies - Management emphasized a high standard for diligence regardless of the origin of the assets, highlighting the strategic advantage of the Verona acquisition [86] Question: Progress on Winrevir and patient adoption - Management reported steady growth in patient adds for Winrevir and increasing adoption among less severe patients [96]

Financial Data and Key Metrics Changes - The company reported total revenues of $15.8 billion, a decrease of 2% both nominally and excluding foreign exchange impact [16] - Earnings per share were $2.13, reflecting strong fundamentals despite revenue decline [23] Business Line Data and Key Metrics Changes - Oncology sales, particularly from Keytruda, increased by 9% to $8 billion, driven by robust demand in both US and international markets [17] - Sales of Gardasil decreased by 55% to $1.1 billion, primarily due to a decline in China [18] - Winrevir achieved global sales of $336 million, with cumulative sales exceeding $1 billion in just over a year since launch [20] - The Animal Health business saw an 11% increase in sales, reflecting higher demand across all species [21] Market Data and Key Metrics Changes - Global growth, excluding Gardasil sales in China, was 7%, driven by strength in oncology and animal health [16] - The company noted that Gardasil channel inventories in China remain elevated, with soft demand impacting sales [28] Company Strategy and Development Direction - The company announced a multi-year optimization initiative to redirect $3 billion in cost savings from lower growth areas to higher potential areas [25] - The acquisition of Verona Pharma is expected to enhance the cardiopulmonary program and reflects the company's commitment to transformative science [10][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth in 2025, supported by new product launches and a strong pipeline [7][26] - The company anticipates challenges in the second half of the year, particularly with Gardasil in Japan and China [28] Other Important Information - The company is conducting over 80 phase three studies across various therapeutic areas, indicating strong clinical momentum [8] - The FDA approved Inflonsia for RSV prevention in infants, marking a significant milestone for the company [9] Q&A Session Summary Question: Context for Cadence outcomes - Management indicated that the most important signal for success in the Cadence study is the PVR, with the six-minute walk also being significant [51][52] Question: Ex-US uptake of Winrevir - Management noted that growth in the ex-US market is expected to accelerate in the second half of the year, with recent approvals in Japan [61][62] Question: Impact of $3 billion restructuring - Management clarified that the $3 billion will be reinvested into high-potential areas, with a focus on funding the pipeline and commercial launches [67][69] Question: Gardasil demand dynamics - Management expressed confidence in Gardasil's safety and efficacy, but noted challenges in the CDC purchasing dynamics and soft demand in China [72][78] Question: Valuation for Chinese partner Lenovo - Management confirmed that the Lenovo program is progressing as planned, with no issues reported [88][89]

Company Overview - Proactive is a financial news publisher that provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The company has a team of experienced and qualified news journalists who produce independent content [2] Market Focus - Proactive specializes in medium and small-cap markets while also covering blue-chip companies, commodities, and broader investment stories [3] - The news team delivers insights across various sectors including biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto, and emerging digital and EV technologies [3] Technology Adoption - Proactive is recognized for its forward-looking approach and enthusiastic adoption of technology to enhance workflows [4] - The company utilizes automation and software tools, including generative AI, while ensuring that all content is edited and authored by humans [5]

Financial Performance - Q2 Worldwide Sales reached $15.8 billion, a decrease of 2% nominally and ex-FX[10, 24] - Non-GAAP EPS was $2.13, a decrease of 7%[10] - KEYTRUDA sales increased by 9% to $8.0 billion, driven by strong demand[25] - GARDASIL sales decreased by 55% to $1.1 billion, primarily due to China[31] - Animal Health sales increased by 11% to $1.6 billion[45] Pipeline and Regulatory Updates - FDA approved ENFLONSIA for RSV prevention in infants[14, 61] - FDA accepted NDA for doravirine + islatravir for HIV-1 treatment[14, 61] - Positive topline results were announced for enlicitide in hyperlipidemia and WINREVAIR in PAH[14, 59, 60] Future Outlook - Updated 2025 revenue guidance is $64.3 billion to $65.3 billion, implying +0% to +2% nominal growth[49] - The company anticipates a commercial opportunity exceeding $50 billion by the mid-2030s from recent launches and the late-phase pipeline[20]

Core Viewpoint - Merck reported quarterly earnings of $2.13 per share, exceeding the Zacks Consensus Estimate of $2.01 per share, but down from $2.28 per share a year ago, indicating a +5.97% earnings surprise [1][2] Financial Performance - The company posted revenues of $15.81 billion for the quarter ended June 2025, slightly missing the Zacks Consensus Estimate by 0.02%, and down from $16.11 billion year-over-year [2] - Over the last four quarters, Merck has surpassed consensus EPS estimates four times and topped revenue estimates three times [2] Stock Performance - Merck shares have declined approximately 15.5% since the beginning of the year, contrasting with the S&P 500's gain of 8.6% [3] - The current Zacks Rank for Merck is 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The consensus EPS estimate for the upcoming quarter is $2.41 on revenues of $17.21 billion, and for the current fiscal year, it is $8.87 on revenues of $64.96 billion [7] - The outlook for the industry, particularly the Large Cap Pharmaceuticals sector, is favorable, ranking in the top 26% of over 250 Zacks industries [8]

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) [Consolidated Statement of Income (GAAP)](index=1&type=section&id=Consolidated%20Statement%20of%20Income%20%28GAAP%29) Merck's Q2 and YTD 2025 GAAP results show declining sales and net income, with increased R&D expenses | Metric | 2Q 2025 (Millions) | 2Q 2024 (Millions) | % Change (2Q) | YTD 2025 (Millions) | YTD 2024 (Millions) | % Change (YTD) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Sales | $15,806 | $16,112 | -2% | $31,335 | $31,887 | -2% | | Net Income Attributable to Merck & Co., Inc. | $4,427 | $5,455 | -19% | $9,506 | $10,217 | -7% | | Earnings per Common Share Assuming Dilution | $1.76 | $2.14 | -18% | $3.77 | $4.02 | -6% | | Cost of sales | $3,557 | $3,745 | -5% | $6,976 | $7,285 | -4% | | Research and development | $4,048 | $3,500 | 16% | $7,669 | $7,492 | 2% | | Income Before Taxes | $4,999 | $6,006 | -17% | $10,902 | $11,675 | -7% | | Tax Rate | 11.4% | 9.1% | - | 12.7% | 12.4% | - - Research and development expenses increased by **16% in Q2 2025 to $4,048 million** and by **2% YTD 2025 to $7,669 million**, indicating continued investment in innovation despite overall sales decline[2](index=2&type=chunk) [GAAP to Non-GAAP Reconciliation](index=2&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation) This section reconciles GAAP to non-GAAP measures, excluding specific items to highlight core business performance, with non-GAAP figures generally higher due to adjustments | Metric | GAAP 2Q 2024 (Millions) | Non-GAAP 2Q 2024 (Millions) | GAAP YTD 2024 (Millions) | Non-GAAP YTD 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Net Income Attributable to Merck & Co., Inc. | $5,455 | $5,809 | $10,217 | $11,087 | | Earnings per Common Share Assuming Dilution | $2.14 | $2.28 | $4.02 | $4.36 | | Tax Rate | 9.1% | 14.1% | 12.4% | 15.0% | - Non-GAAP adjustments primarily exclude expenses for amortization of intangible assets in cost of sales and R&D, integration/transaction costs in SG&A, employee separation costs, and accelerated depreciation from restructuring programs[6](index=6&type=chunk)[7](index=7&type=chunk) - A significant tax benefit was recognized due to a reduction in reserves for unrecognized income tax benefits resulting from the expiration of the statute of limitations for assessments related to the 2019 federal tax return year[8](index=8&type=chunk) [Product and Segment Sales Analysis](index=3&type=section&id=Product%20and%20Segment%20Sales%20Analysis) [Franchise / Key Product Sales - Second Quarter 2025](index=3&type=section&id=Franchise%20%2F%20Key%20Product%20Sales%20-%20Second%20Quarter%202025) Q2 2025 global sales decreased by 2% due to international declines, despite strong U.S. growth and Keytruda's performance, while Gardasil/Gardasil 9 sales significantly dropped | Product/Segment | Global 2Q 2025 (Millions) | Global 2Q 2024 (Millions) | % Change (Global) | U.S. 2Q 2025 (Millions) | U.S. 2Q 2024 (Millions) | % Change (U.S.) | International 2Q 2025 (Millions) | International 2Q 2024 (Millions) | % Change (International) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | TOTAL SALES | $15,806 | $16,112 | -2% | $8,836 | $7,876 | 12% | $6,969 | $8,236 | -15% | | PHARMACEUTICAL | $14,050 | $14,408 | -2% | $8,328 | $7,399 | 13% | $5,722 | $7,009 | -18% | | Keytruda | $7,956 | $7,270 | 9% | $4,749 | $4,412 | 8% | $3,207 | $2,858 | 12% | | Gardasil/Gardasil 9 | $1,126 | $2,478 | -55% | $545 | $536 | 2% | $581 | $1,941 | -70% | | Winrevair | $336 | $70 | * | $323 | $70 | * | $12 | - | - | | ANIMAL HEALTH | $1,646 | $1,482 | 11% | $499 | $455 | 9% | $1,147 | $1,027 | 12% | | Other Revenues | $110 | $222 | -50% | $9 | $22 | -59% | $100 | $200 | -50% | - Winrevair, a new cardiovascular product, showed exceptional growth, increasing from **$70 million in Q2 2024 to $336 million in Q2 2025 globally**[10](index=10&type=chunk) - The significant decline in Gardasil/Gardasil 9 sales, particularly **internationally (-70%)**, was a major factor in the overall pharmaceutical sales decrease[10](index=10&type=chunk) [Franchise / Key Product Sales - June Year-to-Date 2025](index=5&type=section&id=Franchise%20%2F%20Key%20Product%20Sales%20-%20June%20Year-to-Date%202025) YTD 2025 global sales decreased by 2%, driven by international declines, while U.S. sales and Keytruda grew, and Winrevair showed strong performance despite Gardasil/Gardasil 9's significant drop | Product/Segment | Global YTD 2025 (Millions) | Global YTD 2024 (Millions) | % Change (Global) | U.S. YTD 2025 (Millions) | U.S. YTD 2024 (Millions) | % Change (U.S.) | International YTD 2025 (Millions) | International YTD 2024 (Millions) | % Change (International) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | TOTAL SALES | $31,335 | $31,887 | -2% | $17,359 | $15,354 | 13% | $13,977 | $16,533 | -15% | | PHARMACEUTICAL | $27,688 | $28,415 | -3% | $16,254 | $14,336 | 13% | $11,434 | $14,079 | -19% | | Keytruda | $15,161 | $14,217 | 7% | $9,057 | $8,531 | 6% | $6,104 | $5,686 | 7% | | Gardasil/Gardasil 9 | $2,453 | $4,727 | -48% | $1,082 | $1,024 | 6% | $1,371 | $3,702 | -63% | | Winrevair | $615 | $70 | * | $591 | $70 | * | $24 | - | - | | ANIMAL HEALTH | $3,234 | $2,993 | 8% | $1,001 | $929 | 8% | $2,233 | $2,064 | 8% | | Other Revenues | $413 | $479 | -14% | $104 | $89 | 17% | $310 | $390 | -21% | - Winrevair's year-to-date sales reached **$615 million**, demonstrating continued strong performance since its introduction[20](index=20&type=chunk) - Total Vaccines sales globally decreased by **29.7% YTD 2025 ($4,977 million)** compared to YTD 2024 (**$7,080 million**), primarily due to the decline in Gardasil/Gardasil 9[24](index=24&type=chunk) [Pharmaceutical Geographic Sales](index=7&type=section&id=Pharmaceutical%20Geographic%20Sales) Global pharmaceutical sales declined in Q2 and YTD 2025, with strong U.S. growth offset by a dramatic 77% drop in China, primarily due to Gardasil/Gardasil 9 sales | Region | 2Q 2025 (Millions) | 2Q 2024 (Millions) | % Change (2Q) | YTD 2025 (Millions) | YTD 2024 (Millions) | % Change (YTD) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | TOTAL PHARMACEUTICAL | $14,050 | $14,408 | -2% | $27,688 | $28,415 | -3% | | United States | $8,328 | $7,399 | 13% | $16,254 | $14,336 | 13% | | China | $407 | $1,790 | -77% | $1,075 | $3,534 | -70% | | Eastern Europe/Middle East/Africa | $451 | $353 | 28% | $886 | $747 | 19% | - The decline in China's pharmaceutical sales is largely attributed to Gardasil/Gardasil 9 sales, which were **$0 in Q2 2025** compared to **$1,312 million in Q2 2024**[31](index=31&type=chunk) - The U.S. market's share of pharmaceutical sales increased from **51.4% in Q2 2024 to 59.3% in Q2 2025**, highlighting its growing importance[30](index=30&type=chunk) [Other Financial Details](index=8&type=section&id=Other%20Financial%20Details) [Other (Income) Expense, Net (GAAP)](index=8&type=section&id=Other%20%28Income%29%20Expense%2C%20Net%20%28GAAP%29) Other (income) expense, net, shifted to a net expense in Q2 and YTD 2025, driven by increased exchange losses and reduced miscellaneous income | Item | 2Q 2025 (Millions) | 2Q 2024 (Millions) | YTD 2025 (Millions) | YTD 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Interest income | $(69) | $(69) | $(178) | $(141) | | Interest expense | $305 | $310 | $618 | $613 | | Exchange losses | $78 | $60 | $167 | $144 | | Income from investments in equity securities, net | $(100) | $(56) | $(189) | $(200) | | Net periodic defined benefit plan (credit) cost other than service cost | $(152) | $(159) | $(300) | $(319) | | Other, net | $(69) | $(44) | $(161) | $(85) | | Total | $(7) | $42 | $(43) | $12 | - Exchange losses increased from **$60 million in Q2 2024 to $78 million in Q2 2025**, and from **$144 million YTD 2024 to $167 million YTD 2025**[33](index=33&type=chunk) - Net income from investments in equity securities decreased from **$(56) million in Q2 2024 to $(100) million in Q2 2025**, indicating a decline in investment performance[33](index=33&type=chunk)

美国制药巨头默克公司宣布裁员计划，预计通过重组节省30亿美元成本。默克公司还更新了全年销售指 引，预计全年销售额为643亿美元至653亿美元，此前预计为641亿美元至656亿美元。 ...