Merck's Q3 2025 10-Q: Keytruda Fuels Growth, Profit Jumps 83%

Global pharmaceutical giant Merck & Co. recently published its financial results for the third quarter of 2025, giving us a clear view of its current performance. By examining their latest 10-Q filing with the SEC, we can unpack the key trends shaping the company's financial health, from blockbuster drug sales to significant shifts in expenses.

Keytruda Leads, New Products Emerge

At a high level, Merck's total sales saw a modest 4% increase, reaching $17.3 billion for the quarter. However, a deeper look reveals a more dynamic story driven by its core Pharmaceutical and Animal Health segments.

• Pharmaceuticals: This division, the company's main revenue engine, reported sales of $15.6 billion. The cancer immunotherapy drug Keytruda continues to be the star performer, with sales climbing 10% to $8.1 billion. This single product now makes up nearly half of the company's total revenue.
• Animal Health: This segment delivered a solid 9% sales increase to $1.6 billion, with strong performance in its Livestock products providing stable, diversified growth.

While Keytruda's dominance is clear, the filing also points to the growing contribution of newer products. The cardiovascular drug Winrevair saw sales grow to $360 million, and the new vaccine Capvaxive brought in $244 million. These successes are crucial as other major products face headwinds; sales for the HPV vaccine Gardasil declined 24% to $1.7 billion, and the COVID-19 antiviral Lagevrio saw a 64% drop to $138 million.

The following flow diagram provides a visual breakdown of how Merck's sales from its various product lines and associated costs translated into its bottom-line profit for the quarter.

The diagram includes a small "unallocated" revenue category of $50 million, which primarily represents revenue from miscellaneous corporate activities and third-party manufacturing arrangements not allocated to the main business segments.

A Closer Look at the Profit Surge

The most notable figure in the report is the significant jump in profitability. Net income attributable to Merck surged 83%, rising from $3.2 billion in Q3 2024 to $5.8 billion in Q3 2025. This boosted diluted earnings per share (EPS) to $2.32, up from $1.24 in the prior-year period.

This dramatic increase in profit was primarily driven by a 28% year-over-year decline in Research and Development (R&D) expenses, which totaled $4.2 billion. However, this doesn't signal a pullback in innovation. The filing clarifies that R&D costs in Q3 2024 were significantly higher due to large, one-time charges related to acquisitions, most notably the $1.35 billion acquisition of EyeBio. The current quarter's R&D spending, while lower by comparison, still reflects a substantial investment in the company's future. This highlights how major, event-driven costs like acquisitions can create significant volatility in reported quarterly earnings.

Looking Ahead

Merck's third-quarter results underscore a company in transition. It continues to rely heavily on its powerhouse drug, Keytruda, while simultaneously cultivating a new generation of products like Winrevair and Capvaxive to fuel future growth. The sharp rise in net income, largely a result of lapping last year's high acquisition-related costs, reveals strong underlying profitability. For investors and industry watchers, the focus remains on Merck's ability to manage the lifecycle of its existing blockbusters while ensuring its promising pipeline can deliver the next wave of growth.