Can Keytruda Sustain Merck's Growth in the Second Half of 2026?

Merck’s MRK strong foothold in the oncology space is backed by its biggest revenue driver, Keytruda. The blockbuster PD-L1 inhibitor alone accounts for more than 55% of the company’s total pharmaceutical sales.

In the United States, Keytruda is approved for 44 indications spanning 19 tumor types, along with two tumor-agnostic approvals as well as for many of these indications worldwide. Notably, more than 2,800 clinical studies are currently evaluating Keytruda across multiple cancer types and treatment settings.

Keytruda, approved for several types of cancers, has played an instrumental role in driving Merck’s steady revenue growth over the past few years. The drug recorded sales worth $16.40 billion in the first half of 2026, up almost 4.2% year over year. Keytruda Qlex, the subcutaneous formulation of Keytruda, contributed $590 million during this period. Keytruda Qlex can offer substantially quicker administration time than the intravenous infusion of Keytruda.

Keytruda sales are being driven by strong global uptake in earlier-stage indications and higher global demand in metastatic indications. Importantly, management expects the growth to continue till Keytruda loses patent exclusivity in 2028.

We expect Keytruda to remain a key revenue driver for the company in the second half of 2026, along with the Animal Health business and new product launches. Recent label expansions, including Keytruda’s use in combination with Pfizer’s Padcev in muscle-invasive bladder cancer, have broadened its patient base and should support sales growth.

However, Keytruda is expected to face significant biosimilar competition around 2028-2029. Once biosimilars enter, Keytruda’s sales are likely to decline sharply.

With Keytruda set to face patent loss in 2028, Merck is working on different strategies to drive the drug’s long-term growth. These include innovative immuno-oncology combinations, including Keytruda with LAG3 and CTLA-4 inhibitors.

In the next few years, competitive pressure might increase for Keytruda from dual PD-1/VEGF inhibitors that inhibit both the PD-1 pathway and the VEGF pathway at once. They are designed to overcome the limitations of single-target therapies like Keytruda.

PD-L1 Inhibitors Competing With MRK's Keytruda

Keytruda faces competition from other PD-L1 inhibitors, including Bristol Myers’ BMY Opdivo, Roche’s RHHBY Tecentriq and AstraZeneca’s AZN Imfinzi.

BMY’s Opdivo, like Keytruda, is approved across multiple cancer types, including lung, melanoma and kidney cancers. Bristol Myers recorded $4.63 billion in Opdivo sales in the first half of 2026, down 3.9% year over year.

Tecentriq is Roche’s leading immuno-oncology drug approved for multiple cancer indications. RHHBY recorded CHF 1.70 billion in Tecentriq sales in the first half of 2026, up 6% year over year.

AZN’s Imfinzi generated sales of $3.55 billion in the first half of 2026, up 29%, driven by strong demand growth across all regions from established indications and new launches. Imfinzi has strategically expanded its use across multiple cancer indications, strengthening AstraZeneca’s oncology portfolio.

MRK's Price Performance, Valuation and Estimates

Year to date, shares of Merck have rallied 28.1% compared with the industry’s 14.3% rise. The stock has also outperformed the sector and the S&P 500 during the same time frame, as seen in the chart below.

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From a valuation standpoint, Merck appears to be trading at a premium compared to the industry. Going by the price/earnings ratio, MRK’s shares currently trade at 18.92 forward earnings, higher than 18.73 for the industry. The stock is also trading above its 5-year mean of 12.86.

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The Zacks Consensus Estimate for 2026 earnings per share has declined from $3.76 to $3.25 while the same for 2027 has declined from $9.85 to $9.67 over the past 30 days.

Image Source: Zacks Investment Research

MRK's Zacks Rank

Merck currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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