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August 6, 2025 • 4 min read
Global pharmaceutical powerhouse Merck & Co. (MRK) recently released its second-quarter 2025 financial results, offering a detailed look into the company's performance. In this post, we'll delve into the numbers from the company's latest 10-Q filing to understand the key trends shaping its business, from blockbuster drug sales to strategic investments in its future.
For the three months ending June 30, 2025, Merck reported total sales of $15.8 billion, a slight 2% decrease from the $16.1 billion recorded in the same period last year. Net income attributable to the company came in at $4.4 billion, or $1.76 per share, down from $5.5 billion, or $2.14 per share, in Q2 2024.
To better understand how Merck generates revenue and where the money goes, the following flow diagram illustrates the company's income statement for the first six months of 2025.
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A closer look at Merck's Pharmaceutical segment, which accounts for the vast majority of its revenue, reveals a dynamic portfolio in transition.
Oncology Remains the Engine: The company's cancer-fighting drug Keytruda continues its impressive run, with sales growing 9% to nearly $8.0 billion for the quarter. This single drug now represents over half of Merck's total pharmaceutical sales, highlighting its critical importance to the company's bottom line.
Vaccines Face Headwinds: The vaccine portfolio presented a more challenging picture. Sales of Gardasil, the HPV vaccine, saw a significant 55% drop to $1.1 billion compared to $2.5 billion in the prior year's quarter. This was partially offset by the launch of Capvaxive, a new pneumococcal vaccine, which brought in $129 million in its debut quarter.
Growth from New Launches: In the cardiovascular space, the new drug Winrevair is showing strong momentum. Its sales surged to $336 million from just $70 million a year ago, signaling a potential new growth driver for Merck.
The Impact of Exclusivity Loss: On the other end of the product lifecycle, sales of immunology drugs Simponi and Remicade fell to zero, down from a combined $207 million in Q2 2024. This stark drop illustrates the "patent cliff" phenomenon, a persistent challenge in the pharmaceutical industry where revenue from a drug evaporates after it loses market exclusivity.
Merck's expense profile reveals a clear strategy of investing heavily in its future pipeline to counteract these pressures.
Research and Development (R&D) expenses climbed 16% to $4.0 billion for the quarter. This substantial investment is vital for discovering and developing the next generation of drugs that will replace revenue from older products facing generic competition.
Simultaneously, the company recorded a sharp increase in Restructuring Costs, which jumped to $560 million from $80 million in the prior year. These costs are primarily associated with programs designed to streamline operations and reallocate resources, likely towards more promising growth areas.
These significant one-off costs, like restructuring, are why companies often report non-GAAP (Generally Accepted Accounting Principles) earnings. By excluding such items, non-GAAP figures aim to provide a clearer view of underlying operational performance. For Q2 2025, Merck reported a non-GAAP EPS of $2.13, which tells a different story than the GAAP EPS of $1.76.
Merck's second-quarter performance paints a picture of a company in active transition. While headline numbers show a slight decline, the underlying results are a mix of impressive strength, notable challenges, and aggressive investment. The continued dominance of Keytruda and the successful launch of new products like Winrevair and Capvaxive are bright spots. However, the company is also navigating the steep declines of former blockbuster vaccines and immunology drugs.
The significant uptick in R&D and restructuring spending underscores Merck's focus on building a robust pipeline for the future. For investors and industry watchers, the key question remains whether these new investments can generate the next wave of blockbusters to ensure long-term growth.
Last updated: August 6, 2025