Does The Move In Merck Stock Change Anything?

Merck (MRK) stock returned 69.6% over the year to October 8, 2026, against 16.3% for the S&P 500. The gain built up over a year of drug approvals and clinical trial results, arriving just as the company prepares for the patent loss on Keytruda, its top-selling drug. So what did Merck show investors over those twelve months?

What Merck Showed Investors About Its Newer Drugs

The pharmaceutical company demonstrated progress on the treatments meant to succeed Keytruda, delivering some trial results sooner than planned. At the same time, it continued to widen the applications for Keytruda itself: the FDA approved a combination treatment for bladder cancer in November 2025. Then, in February 2026, the Wall Street Journal reported that Merck would establish a separate cancer business to support new product launches ahead of the patent loss.

The clearest evidence emerged on the August 4, 2026 earnings call. Executives reported that two experimental cancer drugs had produced positive trial results that the company had not expected until 2027. Management also noted that a pipeline of more than 20 new products gives Merck over $70 billion of commercial opportunity.

Merck stock also outpaced other large drugmakers over the same window, with Johnson & Johnson returning 38.3% during the period.

Merck’s Business Has Not Grown Like Its Stock

Merck posted $66.6 billion of revenue over the last twelve months, up 4.6% from the twelve months before. Profit, however, moved in the opposite direction. Merck retained just 4.8% of its revenue as net profit, compared to 26% a year ago. Part of this decline reflects a $5.7 billion charge for the acquisition of Terns Pharmaceuticals, a deal Merck completed in the second quarter of 2026. Still, the charge alone does not explain all of it.

Ultimately, the stock’s rise reflects what investors are willing to pay for Merck today rather than what the company currently earns. The stock trades at 5.3 times sales, placing it near its ten-year high of 5.9. The price appears to assume that the newer drugs will grow into large businesses.

For now, those newer treatments remain small beside Keytruda. WINREVAIR, Merck’s drug for pulmonary arterial hypertension, grew 75% to reach $588 million in the second quarter of 2026. By contrast, sales of the Keytruda family of products were $8.4 billion in the same quarter.

Merck Still Gets Half Its Sales From Keytruda

Merck reported $16.6 billion of revenue for the second quarter of 2026, and the Keytruda family of products still brought in about half of it. Keytruda sales grew 4% in that quarter. Yet management expects U.S. Keytruda growth to moderate, because the drug is reaching peak use in several of its main cancers.

Competitors are also positioning themselves for the patent loss. Reuters reported on September 3, 2026 that the U.S. unit of Cipla had agreed to license a Keytruda biosimilar, a near-copy of the drug, for the U.S. market.

Merck plans to host an investor event on October 26, 2026, at the European Society for Medical Oncology in Madrid. The evidence, though, will show up in the sales figures. Keytruda falling clearly below half of Merck’s quarterly revenue while total sales still grow would show the newer drugs taking its place.

Does This Mean You Should Act On MRK?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

There is a smarter approach. Since its inception, the Trefis High Quality (HQ) Portfolio has returned 105%, beating the benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking. If that is how you want to invest, the HQ Portfolio is the place to start.