Merck Announces $3B in Annual Cost Cuts Amid Keytruda Patent Cliff

Merck plans to cut $3 billion from annual expenses as it prepares for generic competition to its cancer drug Keytruda. The company will reduce administrative, sales, and research roles, and scale back its global real estate. The move aims to mitigate the impact of the patent cliff, which is expected to erode Keytruda's sales.

Merck & Co., Inc. (NYSE: MRK) announced its second-quarter 2025 financial results, highlighting a 2% decrease in total worldwide sales to $15.8 billion, compared to $16.1 billion in the same period last year. The company also reported GAAP EPS of $1.76 and Non-GAAP EPS of $2.13, which included a $0.07 per share charge for the closing of the Hengrui Pharma license agreement [1].

Keytruda, a significant revenue driver, saw a 9% increase in sales to $8.0 billion, driven by continued strong global demand for metastatic indications. However, GARDASIL/GARDASIL 9 experienced a 55% decline to $1.1 billion, primarily due to lower demand in China. Animal Health sales grew by 11% to $1.6 billion, while other revenues decreased by 50% to $110 million [1].

Merck also announced a multiyear optimization initiative, aiming to achieve approximately $3.0 billion in annual cost savings by the end of 2027. This initiative includes reducing administrative, sales, and research roles, as well as scaling back global real estate. The move is intended to mitigate the impact of the patent cliff and generic competition on Keytruda's sales [1].

The company's full-year 2025 financial outlook projects worldwide sales to range between $64.3 billion and $65.3 billion, with Non-GAAP EPS expected to be between $8.87 and $8.97. These projections do not include the anticipated impact of the announced acquisition of Verona Pharma [1].

References:
[1] Merck & Co., Inc. (2025). Merck Co., Inc. Rahway, N.J., USA announces second-quarter 2025 financial results. Retrieved from https://www.merck.com/news/merck-co-inc-rahway-n-j-usa-announces-second-quarter-2025-financial-results/