Merck & Co., Inc. (MRK): A Bull Case Theory

We came across a bullish thesis on Merck & Co., Inc. on Darius Dark Investing’s Substack. In this article, we will summarize the bulls’ thesis on MRK. Merck & Co., Inc.’s share was trading at $101.03 as of December 2nd. MRK’s trailing and forward P/E were 13.47 and 10.83 respectively according to Yahoo Finance.

Merck & Co. (MRK) stands at a pivotal crossroads as its success with Keytruda, one of the most profitable drugs in history, has created both immense wealth and an existential challenge. Keytruda generated nearly $29.5 billion in 2024—about half of Merck’s total revenue—but its primary patents expire in 2028, setting up a severe patent cliff that could erase a significant portion of earnings.

Compounding this, other key franchises like Lenvima (2025), Januvia (2026), Lynparza (2027), and Gardasil (2028) also face loss of exclusivity, creating simultaneous revenue pressures. Merck’s third-quarter 2025 results captured this duality: Keytruda’s sales rose 10% YoY to $8.1 billion, but Gardasil revenue fell 24%, mainly due to a collapse in Chinese demand, forcing shipment halts and withdrawal of long-term guidance.

To mitigate the 2028 impact, Merck is executing a three-pronged strategy. Defensively, it launched Keytruda Qlex, a subcutaneous version offering unmatched convenience and intended to retain patients as biosimilars emerge, potentially extending franchise life beyond 2030. Offensively, it is building new growth pillars through Winrevair (from Acceleron; peak >$6 billion) for pulmonary hypertension, Ohtuvayre (from Verona; peak ~$4 billion) for COPD, and Welireg for renal cell carcinoma.

Supported by 80+ late-stage programs and next-generation antibody-drug conjugates with Daiichi Sankyo, Merck is diversifying aggressively. Acquisitions remain central to this plan, with management targeting further deals in the $15 billion range to accelerate portfolio renewal. Merck is also pursuing $3 billion in cost savings by 2027 and cutting 6,000 jobs to streamline operations. Trading at ~11x earnings versus the sector’s ~18x, the market largely prices in the worst-case Keytruda loss. Bulls view this as an opportunity—betting on flawless execution of its transition and sustained innovation—while its 3.8% dividend yield rewards patience during the rebuild.

Previously we covered a bullish thesis on Merck & Co., Inc. (MRK) by Charly AI in April 2025, which highlighted the company’s strong revenue growth, margin expansion, and disciplined execution in oncology and cardiovascular franchises. The company’s stock has appreciated approximately 23.34% since our coverage as the thesis played out. The thesis still stands as Merck’s fundamentals remain solid. Darius Dark Investing shares a similar view but emphasizes the 2028 patent cliff and Merck’s strategic response.

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Disclosure: None.