Meanwhile, Merck & Co., Inc. increased its per-share profit forecast for the year. They are looking at a $200 million impact from tariffs, plus an expense from a new licensing agreement. The pharmaceutical giant narrowed its adjusted earnings for the year to a range of $8.82 and $8.97 per share. This is a modest drop from the previous $8.88 to $9.03 per share projection.
In the face of a spectacular first-quarter earnings beat, Merck nevertheless made this move. The company released news of revenue and profit that blew past analysts’ projections. As a result, the company beat its own guidance, demonstrating strong growth across its oncology portfolio. Moreover, its animal health products raised its earnings surprise to higher highs.
In Q1, Merck’s sole blockbuster drug Keytruda generated a jaw-dropping $7.21 billion in revenue alone. This is a pretty measly 4% increase compared to this time last year. The company’s other vaccine product, Gardasil, had a much rockier road. It generated just $1.33 billion in revenues, down a staggering 41% from the first quarter of 2024. The decline in demand is almost entirely due to lower Chinese sales. This country accounts for about 76% of Gardasil’s worldwide sales.
Despite these fluctuations in product performance, Merck reported a net income of $3.51 billion for the quarter, translating to earnings per share of $1.38. Those figures exclude a one-time charge of approximately 6 cents per share tied to its licensing agreement with Hengrui Pharma. This charge had a huge depressing effect on the new profit guidance.
Management has noted that rising tariff expenses and licensing costs will continue to hit Merck’s bottom line for multiple quarters. This impact is likely to remain in effect for the remainder of the fiscal year. The current trade climate has made the prospect of new operating costs less tenable, forcing Merck to recalibrate its profitability targets.
Merck goes to the mats on these issues. The company remains committed to expanding its product pipelines, with a focus on oncology and animal health products. Yet the wannabe world-beater’s leadership apparently remains undeterred, pointing to a deep pipeline of products and a future rich in potential even as they face today’s obstacles.