What Merck Stopped Saying About GARDASIL Should Change What You Watch

Merck (MRK) has returned about 85% over the past year and at about $150 trades roughly 4% below its 52-week high. A year ago, management spent earnings calls managing fallout from a steep drop in GARDASIL sales. That problem has left the lead. What management opens with instead is a much larger claim, and it settles years from now.

Merck Used To Explain A Vaccine In Decline

Early in 2025, the CEO was already warning investors that market conditions for GARDASIL in China remained challenging. By the second-quarter 2025 call, management faced the full impact: sales dropped 55% to $1.1 billion. The vaccine was hardly a footnote.

The vaccine reads differently on the second-quarter 2026 call. GARDASIL appears once, as a single line in the CFO’s revenue walk: $1.2 billion, up 3% excluding currency. China still comes up on that call, for a regulatory review of a new cholesterol drug and for a partner’s cancer trials. Neither of those sits beside the vaccine. The lead moved to the pipeline.

Now Merck Leads With A $70 Billion Commercial Opportunity On Paper

The vaccine did not stop selling. It stabilized, and the growth came from abroad: international sales grew 6% while the U.S. was roughly flat, lower demand and CDC purchase timing largely offset by price. At $1.2 billion inside a $16.6 billion quarter, GARDASIL is about 7% of Merck. The vaccine no longer commands center stage, which is why management’s replacement narrative now becomes the critical signal to watch.

What replaced GARDASIL in the lead is Merck’s answer to a far bigger question: what happens when KEYTRUDA loses exclusivity. Management now opens on a stated commercial opportunity of more than $70 billion across over 20 new products, and its proof points are clinical and regulatory rather than commercial: FDA approval for LIPFENDRA, which Merck calls the first and only oral PCSK9 inhibitor, and the first positive Phase III readout for sac-TMT, its TROP2-directed antibody-drug conjugate. Both are real events.

The remaining doubt is commercial, and an analyst raised it: injectable PCSK9 drugs see low use in the primary care setting. Merck is still working toward broad access for the oral one. A pill removes the needle. It does not remove the prescribing habit.

Underwriting KEYTRUDA’s Replacement

KEYTRUDA and KEYTRUDA QLEX sold $8.4 billion in the second quarter of 2026, about half of all Merck revenue. The CFO said on the same call that U.S. growth for KEYTRUDA will moderate as it reaches peak penetration across several key indications. Asked what the patent transition does to earnings, the CEO pointed back to those 20-plus products and called it a hill rather than a cliff. That is a forecast, and it is the central assumption underpinning the stock today.

The near-term numbers look softer even after adjusting for the $5.7 billion Terns charge, which accounts for most—but not all—of the margin compression. Merck raised and narrowed its full-year 2026 revenue guidance to between $66.3 billion and $67.3 billion, and it posted a loss for the same quarter only because of a $5.7 billion charge for the Terns Pharmaceuticals acquisition.

The vaccine silence is reassuring, but the actual test of Merck’s post-Keytruda pipeline—a revenue-producing LIPFENDRA line—lies ahead. In the meantime, management signaled near-term confidence where it counts today: by lifting full-year guidance. If that is the signal you want to track more broadly, our guidance-driven momentum screen ranks the companies whose guidance is actually moving up.

Waiting On A Pipeline Takes Patience

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