Merck Shifts Focus from GARDASIL to KEYTRUDA Replacement Opportunity

Merck's stock has returned around 85% in the past year and currently trades at about $150, roughly 4% below its 52-week high. However, just a year ago, management was dealing with the fallout from a significant drop in GARDASIL sales, which had plummeted by 55% to $1.1 billion in the second quarter of 2025.

But on the second-quarter 2026 call, GARDASIL was mentioned only briefly as part of the CFO's revenue walk, with sales growing 3% excluding currency. The vaccine is no longer the main focus for Merck, and instead, management now opens with a larger claim: the company's answer to the question of what happens when KEYTRUDA loses exclusivity.

The commercial opportunity presented by this scenario is estimated to be over $70 billion across more than 20 new products. One key development in this area is the FDA approval for LIPFENDRA, an oral PCSK9 inhibitor that Merck calls the first and only of its kind. Additionally, a Phase III readout was recently positive for sac-TMT, a TROP2-directed antibody-drug conjugate.

However, there are still some doubts about the commercial success of these new products, with one analyst noting that injectable PCSK9 drugs tend to see low use in primary care settings. Merck is working towards broader access for LIPFENDRA, which could help address this issue.