Merck

Does anyone have a good read on how the Daiichi Sankyo ADC collaboration revenue gets recognized and how lumpy that could make quarterly numbers going forward? I keep seeing analysts model it differently and it's messing up my comparisons.

The IRA drug pricing negotiation is going to hit Merck harder than people think — Januvia was already selected for negotiation and while the diabetes franchise is mature, it signals that Keytruda itself could be on the list once it becomes eligible. The political trajectory on drug pricing doesn't favor large-cap pharma.

The Gardasil situation in China deserves more attention — HPV vaccine volumes have been declining significantly there as the government promotes a domestic competitor from Walvax Biotechnology. Merck's international vaccine segment has taken a real hit and management guidance on China recovery has been consistently optimistic relative to actual results.

Keytruda is still an absolute juggernaut — over $7 billion in quarterly revenue and label expansions keep coming. The subcutaneous formulation approval is a massive deal because it extends the commercial runway well past the 2028 IV patent cliff that bears keep obsessing over. This pipeline execution has been underappreciated.

Merck announced FDA approval of V116, its pneumococcal vaccine for adults 18 and older, entering direct competition with Pfizer's Prevnar 20 in a market worth several billion annually. The vaccine covers 21 serotypes including several not in Prevnar 20, which gives their commercial team a real differentiation story to tell payers.

It's interesting that Merck's animal health segment Organon was spun out but they kept their animal health business Merck Animal Health which quietly does around $1.5 billion per quarter. That segment competes directly with Zoetis and Elanco and tends to be a steady, high-margin contributor that rarely gets discussed in earnings calls.

The market is completely sleeping on the Keytruda concentration risk here — that single drug represents roughly 40% of total company revenue. When biosimilar competition hits in the US after 2028, even a 30% erosion scenario is catastrophic for earnings per share without a credible replacement at scale.

Winrevair's launch in pulmonary arterial hypertension has genuinely surprised to the upside and it's going up against Johnson and Johnson's Opsumit and United Therapeutics' Tyvaso in a market where patients cycle through multiple therapies. The mechanism of action as an activin signaling inhibitor is differentiated enough that it can stack with existing therapies rather than replace them.

People forget Merck has been one of the most disciplined capital allocators in large-cap pharma — the Prometheus deal, the Acceleron deal that gave them Winrevair, the Daiichi partnership, these were all done at reasonable valuations before the assets became obvious winners. They buy science not hype.

With the PROMETHEUS acquisition giving them the oral PCSK9 inhibitor MK-0616, how seriously should I be taking this as a Repatha and Leqvio competitor? The oral delivery is a huge patient convenience advantage but the LDL reduction data looked modest compared to injectable PCSK9s.