Merck & Co., Inc. (NYSE: MRK), known as MSD outside the United States and Canada, released its financial results for the second quarter of 2025. The company reported an overall decrease in sales but showed significant growth in key products and advanced long-term strategic initiatives, including acquisitions and substantial cost optimization.

Financial Performance: Sales Challenges Amidst Key Product Growth

Merck’s total worldwide sales in the second quarter of 2025 were $15.8 billion, a decrease of 2% both nominally and excluding the impact of foreign exchange, compared to the second quarter of 2024. The overall decline was primarily due to vaccines and immunology, partially offset by growth in oncology and cardiology. GAAP EPS was $1.76, while non-GAAP EPS was $2.13. These figures include a charge of $0.07 per share for an upfront payment to Jiangsu Hengrui Pharmaceuticals Co., Ltd. (Hengrui Pharma) upon the closing of a license agreement.

Despite the overall sales decrease, KEYTRUDA, Merck’s flagship oncology drug, continued to show strong growth, with sales of $8.0 billion, a 9% increase both nominally and excluding the impact of foreign exchange. This growth was driven by continued strong global demand from metastatic indications, including bladder, endometrial, and gastric cancers, and increased global uptake in earlier-stage indications, such as triple-negative breast cancer, renal cell carcinoma (RCC), and cervical cancer, as well as non-small cell lung cancer in the U.S.. WINREVAIR, a new treatment for pulmonary arterial hypertension (PAH), had sales of $336 million, reflecting continued uptake since its second-quarter 2024 launch in the U.S.. Animal Health sales reached $1.6 billion, an 11% growth. In contrast, GARDASIL/GARDASIL 9 vaccine sales declined by 55% to $1.1 billion, primarily due to lower demand in China. The GAAP gross margin was 77.5% for the second quarter of 2025, up from 76.8% for the second quarter of 2024, primarily due to the favorable impact of product mix.

Pipeline and Clinical Developments: Significant Progress

Merck continued to advance its broad and diverse pipeline with multiple regulatory and clinical milestones in the second quarter. The company received FDA approval for ENFLONSIA for the prevention of respiratory syncytial virus (RSV) lower respiratory tract disease in infants. ENFLONSIA is the first and only RSV preventive option administered to infants using the same dose regardless of weight. Additionally, the CDC’s Advisory Committee on Immunization Practices (ACIP) recommended ENFLONSIA for the prevention of RSV in infants younger than 8 months of age.

In cardiovascular disease, Merck announced positive topline results from two Phase 3 CORALreef trials (CORALreef HeFH and CORALreef AddOn) for enlicitide decanoate, an investigational PCSK9 inhibitor for the treatment of adults with hyperlipidemia. The drug demonstrated statistically significant and clinically meaningful reductions in low-density lipoprotein cholesterol, and if approved, it would be the first marketed oral PCSK9 inhibitor. Furthermore, the FDA granted priority review for WINREVAIR, with a PDUFA date set for October 25, 2025. Merck also initiated a Phase 3 trial to evaluate V181, a single-dose quadrivalent vaccine candidate for the prevention of dengue disease. Additionally, the FDA accepted a New Drug Application (NDA) for doravirine/islatravir, an investigational, once-daily, oral, two-drug regimen for the treatment of adults with virologically suppressed HIV-1.

Strategic Initiatives and Cost Optimization: Focus on Future Growth

Merck announced a new multiyear optimization initiative, anticipated to result in approximately $3.0 billion of annual cost savings by the end of 2027. These savings will be fully reinvested into strategic growth areas, such as new product launches and the pipeline. As part of this initiative, the company approved a new restructuring program in July 2025, which includes eliminating certain administrative, sales, and R&D positions. However, Merck will continue to hire employees into new roles across strategic growth areas. Additionally, the company will reduce its global real estate footprint and continue to optimize its manufacturing network. The cumulative pretax costs related to the program are anticipated to be approximately $3.0 billion. This initiative represents a significant strategic move, designed to enable the company to reallocate resources from more mature areas toward new and developing growth drivers, thereby securing its future as an innovative leader in biopharmaceuticals.

Investments in U.S. manufacturing and R&D capabilities continue, including the start of construction for a $1.0 billion, 470,000-square-foot state-of-the-art biologics center of excellence in Wilmington, Delaware, which will serve as a launch and commercial production facility and the primary U.S. manufacturing site for KEYTRUDA. An $895 million expansion of its Animal Health manufacturing facility in De Soto, Kansas, was also announced to increase capacity for Animal Health vaccines and biologic products.

Full-Year 2025 Financial Outlook

Merck narrowed its expected worldwide sales range for 2025 to between $64.3 billion and $65.3 billion. The expected non-GAAP EPS range was also narrowed to between $8.87 and $8.97. These outlook figures do not include the anticipated impact of the announced acquisition of Verona Pharma , a transaction announced in early July 2025 for approximately $10 billion, aimed at adding Ohtuvayre, an innovative COPD treatment, to Merck’s cardio-pulmonary pipeline. The transaction is anticipated to close in the fourth quarter of 2025.

Robert M. Davis, chairman and CEO of Merck, stated, “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”.

Conclusion

Merck’s quarterly reports reflect a company undergoing a transformation. Despite a slight decrease in overall sales, the growth of core products, advancements in the development pipeline, and a commitment to cost optimization and strategic investments position Merck for continued innovative and sustained growth in the global healthcare sectors.