Tariffs and Falling Vaccine Sales Dim Merck's Outlook

Merck has trimmed its full-year profit forecast, citing a $200 million hit from global tariffs and a one-time licensing charge. The vaccines titan now expects adjusted earnings between $8.82 and $8.97 per share in 2025, a notable downgrade from earlier projections. 

The adjustment carries the weight of cross-border levies, particularly between the U.S. and China, where Merck has critical manufacturing and research hubs. The reduced new guidance does not yet include any impact from President Trump’s proposed pharmaceutical tariffs, which will surely also squeeze the sector.

Despite the softer outlook, Merck beat first-quarter expectations, reporting earnings of $2.22 per share on revenue of $15.53 billion, just ahead of the $15.31 billion consensus. Net income climbed to $5.08 billion, or $2.01 per share, up from $4.76 billion last year. Pharmaceutical sales fell 3% year-over-year to $13.64 billion, driven by a 41% decline in Gardasil revenue, which slid to $1.33 billion due to shipment halts in China. 

Keytruda revenue increased 4% to $7.21 billion, slightly below expectations, as investors eye the drug’s looming patent expiry in 2028. Meanwhile, newer treatments like Winrevair and Capvaxive showed early promise. 

What Does This Mean for Me?

With $12 billion already invested in U.S. manufacturing and another $9 billion committed by 2028, Merck is betting big on domestic production to navigate rising geopolitical tensions. Investors will be watching future performance guidancesclosely.