Merck plans $3 billion cost cuts by end of 2027, narrows full-year outlook
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The multi-year effort comes as Merck prepares to offset revenue losses from the upcoming patent expiration of its blockbuster cancer drug Keytruda.
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July 29, 2025
10:31 AM
CNBC
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What's particularly noteworthy is What stands out here is In this articleMRK your favorite stocksCREATE FREE ACCOUNTMerck & Co
Furthermore, Signage on the floor of the New York Stock Exchange (NYSE) in New York, US, on Tuesday, April 8, 2025
Furthermore, Michael Nagle | Bloomberg | Getty ImagesMerck on Tuesday said it will slash $3 billion in costs by the end of 2027 to be fully reinvested to support new duct launches and its drug pipeline
The multi-year effort comes as Merck prepares to offset revenue losses from the upcoming patent expiration of its blockbuster cancer drug Keytruda in 2028, in this volatile climate
Moreover, It also comes as drugmakers brace for President Donald Trump's planned tariffs on pharmaceuticals imported into the U. , which has mpted Merck and other companies to invest billions to boost their manufacturing foots in the U. "Today, we announced a multiyear optimization initiative that will redirect investment and resources from more mature areas of our to our burgeoning array of new growth drivers, further enable the transformation of our portfolio, and drive our next chapter of ductive, innovation-driven growth," said Merck CEO Rob Davis in a release
Nevertheless, As part of the effort, Merck in July apved a new restructuring gram that will eliminate certain administrative, sales and re and development positions
The company will also reduce its global real estate foot and continue to pare back its manufacturing network (fascinating analysis)
Merck expects actions under the restructuring gram to generate around $1. 7 billion in annual cost savings, most of which will kick in by the end of 2027
The company expects pretax costs related to the restructuring gram to be apximately $3 billion in total
For its second quarter, Merck recorded a $649 million charge related to the gram
Also on Tuesday, Merck reported second-quarter revenue that came in short of Wall Street estimates, in light of current trends
It was the first time that metric had missed expectations since April 2021
While Keytruda sales grew during the period, Merck continued to see trouble with China sales of Gardasil, a vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the U (this bears monitoring), in today's market environment
Furthermore, In February, Merck announced a decision to halt shipments of Gardasil into China beginning that month and going through at least mid-2025
Moreover, In prepared remarks on Tuesday, Merck CFO Caroline Litchfield said the company will not resume shipments to China through at least the end of 2025, noting that inventories remain high and demand is still soft
The company also narrowed its full-year guidance (which is quite significant), amid market uncertainty
Nevertheless, Merck now expects its 2025 adjusted earnings to come in between $8
That compares to its previous outlook of $8
On the other hand, Merck expects revenue for the year to come in between $64 (this bears monitoring)
Additionally, 3 billion and $65
However, 3 billion, narrowed on both ends from its previous guidance of $64
However, 1 billion to $65
Here's what Merck reported for the second quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: Earnings per : $2 (quite telling). 13 adjusted
Furthermore, That figure may not be comparable to estimates of $2
Furthermore, Revenue: $15
Additionally, 81 billion vs
Nevertheless, 89 billion expectedMerck said its guidance includes the previously announced $200 million estimated impact associated with the tariffs Trump has implemented to date (fascinating analysis)
Furthermore, Furthermore, In April, the company said the expected tariff charge primarily reflects levies between the U
And China, but did not account for sector-specific pharmaceutical tariffs
The outlook also includes one-time charges related to the company's license agreements with Hengrui Pharma and LaNova, but not its recently announced acquisition of Verona Pharma
Additionally, The company posted net income of $4. 43 billion, or $1. 76 per, for the quarter
That compares with net income of $5 (remarkable data). 46 billion, or $2. 14 per, during the year-earlier period
Excluding acquisition and restructuring costs, Merck earned $2. 13 per for the second quarter, in this volatile climate
That includes a charge of 7 cents per for closing the license agreement with Hengrui Pharma
At the same time, Merck raked in $15
Conversely, 81 billion in revenue for the quarter, down 2% from the same period a year ago
In contrast, Pharmaceutical, animal health salesMerck's pharmaceutical unit, which develops a wide range of drugs, booked $14 (an important development). 05 billion in revenue during the second quarter
That's down 2% from the same period a year earlier
On the other hand, 96 billion in revenue during the quarter, up just 9% from the year-earlier period
That increase was driven by higher uptake of Keytruda for earlier-stage cancers and strong demand for the drug for metastatic cancers, which spread to other parts of the body, the company said, in light of current trends
Analysts had expected the drug to see $7
Additionally, 9 billion in sales, according to StreetAccount estimates
Gardasil generated sales of $1
Furthermore, 13 billion for the quarter, down 55% from the same period a year ago due to lower demand in China, in this volatile climate
Analysts had expected Gardasil to book sales of $1
Additionally, 33 billion, StreetAccount estimates said
Additionally, The Chinese market makes up the majority of the blockbuster shot's international revenue (something worth watching), amid market uncertainty
Merck is hoping that Gardasil's expanded apval for men ages 9 to 26 in China will help boost uptake of the vaccine
Nevertheless, Sales of Gardasil in the U
Conversely, Increased 2% during the second quarter
Meanwhile Merck's newer drug Winrevair, which is used to treat a rare, deadly lung condition, recorded $336 million in sales for the quarter
Analysts had expected the drug to bring in $324, in today's market environment. 7 million, according to StreetAccount estimates
Merck's animal health division, which develops vaccines and medicines for dogs, cats and cattle, posted nearly $1, considering recent developments. 65 billion in sales, up 11% from the same period a year prior (quite telling), considering recent developments
Moreover, The company said higher demand for stock ducts and sales from Elanco's aqua, which it acquired last year, drove that growth.
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