MRK
Merck & Co
Dividend / Cash flow
★ Quality 71/100Price today
$150.33
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What this business is made of
The business
A gold mine called Keytruda with an eviction scheduled for 2028.
Merck sells prescription drugs and vaccines. Keytruda, its cancer immunotherapy, brings in $29.5B — nearly half the business. The rest: Gardasil, Winrevair (pulmonary hypertension, growing fast) and animal health.
Patents, decades of clinical trials and a global sales force few can replicate. But the moat has an expiration date: Keytruda loses exclusivity in 2028. A moat that empties itself if you don't dig another one in time.
Revenue history
From $48.0B to $64.2B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $65.0B · FY2025
Of every $100 in sales, $72 goes to costs and operations; $28 is left as net profit (28% margin).
Catalysts and risks
Winrevair accelerating sales — potential blockbuster $5B+ by 2030.
Post-Keytruda oncology pipeline: approved subcutaneous version extends partial exclusivity.
FCF per share $7.09 supports growing dividend and buybacks.
Keytruda's 2028 cliff: $29.5B at risk, pipeline execution is not optional.
$17.9B annual R&D with no guarantee of replacing the lost revenue.
Price pressure in the US via the IRA and Medicare negotiation.
Charlie's note
“You pay 23x for a business with 82% gross margins, but half the profits expire with Keytruda in 2028 and it only grows at 7%. The multiple doesn't discount that cliff: you need to see how they dig the next moat before getting excited.”
Analysis · May 2026
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