In this articleMRKFollow your favorite stocksCREATE FREE ACCOUNTMerck & Co. signage on the floor of the New York Stock Exchange (NYSE) in New York, US, on Tuesday, April 8, 2025. 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 product 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. It also comes as drugmakers brace for President Donald Trump’s planned tariffs on pharmaceuticals imported into the U.S., which has prompted Merck and other companies to invest billions to boost their manufacturing footprints in the U.S. Shares of the pharmaceutical giant fell roughly 3% in premarket trading on Tuesday.”Today, we announced a multiyear optimization initiative that will redirect investment and resources from more mature areas of our business to our burgeoning array of new growth drivers, further enable the transformation of our portfolio, and drive our next chapter of productive, innovation-driven growth,” said Merck CEO Rob Davis in prepared remarks for the company’s earnings call.He added that his confidence in Merck’s ability to navigate Keytruda’s loss of exclusivity increases with every new product launch, data readout and business deal. Davis said he sees that patent expiration “as more of a hill than a cliff, and I’m confident in our ability to grow over the long-term.”As part of the effort, Merck in July approved a new restructuring program that will eliminate certain administrative, sales and research and development positions. But the company will continue to hire employees in new roles across growth areas of its business. Merck will also reduce its global real estate footprint and continue to pare back its manufacturing network. Merck expects actions under the restructuring program 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 program to be approximately $3 billion in total. For its second quarter, Merck recorded a $649 million charge related to the program. Also on Tuesday, Merck reported second-quarter revenue that came in short of Wall Street estimates. 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.S.In February, Merck announced a decision to halt shipments of Gardasil into China beginning that month and going through at least mid-2025. In prepared remarks, 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. Merck now expects its 2025 adjusted earnings to come in between $8.87 and $8.97 per share. That compares to its previous outlook of $8.82 to $8.97 per share.Merck expects revenue for the year to come in between $64.3 billion and $65.3 billion, narrowed on both ends from its previous guidance of $64.1 billion to $65.6 billion. Here’s what Merck reported for the second qu …
