Merck Reports 2% Sales Decline in Q2 2025, Plans $10 Billion Acquisition of Verona Pharma

Merck & Co., Inc. reported a decline in its financial performance for the second quarter of 2025, with total sales reaching $15.8 billion, a decrease of 2% compared to $16.1 billion in the same period of 2024. For the first half of 2025, sales totaled $31.3 billion, down from $31.9 billion year-over-year. The company's net income for the second quarter was $4.4 billion, or $1.76 per share, compared to $5.5 billion, or $2.15 per share, in the prior year. The decline in revenue was attributed to lower sales in vaccines, immunology, and virology, which were partially offset by growth in oncology and cardiovascular segments.

Merck's operational metrics showed significant changes, particularly in its vaccine sales, which fell sharply due to reduced demand for Gardasil and Gardasil 9 in China and Japan. The company has paused shipments to China due to elevated inventory levels and lower demand. In contrast, oncology products, particularly Keytruda, saw a 9% increase in sales, driven by higher demand and pricing in the U.S. The company also reported a 16% increase in research and development expenses, primarily due to a $200 million upfront payment related to a licensing agreement with Jiangsu Hengrui Pharmaceuticals.

Strategically, Merck announced its intention to acquire Verona Pharma for approximately $10 billion, which will enhance its respiratory disease portfolio with the addition of Ohtuvayre, a treatment for chronic obstructive pulmonary disease. The acquisition is expected to close in the fourth quarter of 2025, pending regulatory approvals. Additionally, Merck has been actively pursuing collaborations and licensing agreements to bolster its research capabilities, including a recent exclusive license agreement for an investigational Lipoprotein(a) inhibitor.

The company’s restructuring efforts are ongoing, with a new program approved in July 2025 aimed at optimizing its workforce and manufacturing footprint. This program is expected to incur approximately $3 billion in costs, with anticipated annual savings of $1.7 billion by the end of 2027. Merck's total employee headcount and operational efficiency are being adjusted to align with its strategic growth areas, reflecting a commitment to enhancing productivity while managing costs.

Looking ahead, Merck anticipates continued challenges in the market, particularly due to pricing pressures from government regulations and competitive dynamics. The company expects to navigate these challenges while focusing on its pipeline of innovative therapies and strategic acquisitions to drive future growth.