Why did MRK's EPS surprises shrink throughout 2024?

Merck's EPS experienced a significant drop in 2024 compared to the previous year, raising questions about the factors contributing to this decline. 1. **Patent Expirations and Market Uncertainty**: Merck has faced challenges due to patent expirations and market uncertainty. The company's adjusted operating result fell by 14% to just under 5.9 billion euros, primarily due to the cyclical slowdown in demand for semiconductor materials and the significant decline in Covid-19-related demand. These factors likely impacted the company's profitability, leading to a decrease in EPS. 2. **Sluggish Demand and Foreign Exchange Effects**: Merck faced a challenging market environment, with higher sales in the Healthcare business sector being offset by weakness in Life Science and Electronics. Additionally, foreign exchange effects are expected to drag earnings lower by between 1% and 4%. These factors, combined with sluggish demand, contributed to the decrease in EPS. 3. **Strategic Roadmap and Organizational Changes**: Merck is focusing on a gradual return to growth and is defining a strategic roadmap for long-term and sustainable growth. These strategic shifts and potential organizational changes could have temporarily impacted the company's financial performance, leading to a decrease in EPS. In summary, Merck's EPS decline in 2024 can be attributed to a combination of patent expirations, market uncertainty, foreign exchange effects, and strategic shifts. These factors, either directly or indirectly, affect the company's profitability, leading to a decrease in EPS.