Merck and Pfizer Beat and Raised Guidance. The Real Test Arrives in 2028

Two of the Dow’s biggest drugmakers reported June-quarter results on Tuesday, and both delivered the same surprise. Merck’s revenue rose 5 percent to $16.61 billion, ahead of the $16.36 billion Wall Street expected, and it lifted its full-year sales forecast. Pfizer beat too, raised its own revenue guidance, and deepened a cost-cutting drive already running into the billions. Yet a shadow hangs over both stocks. Their best-selling medicines lose patent protection in 2028. So Tuesday sharpened a question the sector cannot dodge: are these companies cheap, durable cash machines, or names buying time before the cliff?

Keytruda grew again, and the savings targets kept climbing

Merck’s beat ran through the drug it always leans on. Keytruda, its cancer immunotherapy, brought in $8.37 billion in the quarter, up 5 percent, with $463 million of that from a newer under-the-skin version called Qlex that launched only last year. That format matters. It can carry patent protection the original infusion is about to lose. Merck raised its 2026 revenue outlook to a range of $66.3 billion to $67.3 billion.

Pfizer’s quarter leaned on a different engine. Stripping out its fading COVID products, revenue grew 18 percent on an operational basis, led by the blood thinner Eliquis at more than $2.43 billion. The company lifted the midpoint of its full-year revenue guidance by $500 million, to a band of $60.5 billion to $62.5 billion. It also widened its restructuring, adding to a program it calls Realigning Our Cost Base and pushing targeted savings there to $6.7 billion through 2029, with further manufacturing cuts that bring the combined goal to $9.7 billion. Lower costs flow straight to earnings, and for a sector priced cheaply against the broad market, that cash can fund dividends and deals while the top line holds.

A $29 billion drug loses its patent shield in 2028

The reason the market stays wary is written on a calendar. Keytruda’s main U.S. patent expires in December 2028, and the drug sold about $29.5 billion last year, close to half of Merck’s total revenue. No medicine has entered loss of exclusivity at that scale. Biosimilar copies typically strip 40 to 60 percent of a biologic’s volume within a year of the first competitor. Merck’s defense, the Qlex format plus a run of acquisitions, carries a bill of its own: the company cut its 2026 adjusted earnings outlook to $2.66 to $2.76 a share, down from $5.04 to $5.16, absorbing charges of $3.62 and $2.31 a share for its purchases of Cidara and Terns.

Pfizer faces its own cluster. Eliquis, Ibrance, Xtandi and Prevnar all lose exclusivity by 2028. Eliquis alone sold $14.4 billion in 2025, and one industry forecast sees that figure sinking toward $205 million by 2031. Policy tightens the vise further. Eliquis was among the first ten drugs subject to Medicare price negotiation under the Inflation Reduction Act, with the lower government-set price taking effect this year.

What the data shows

Going into the prints, the two stocks already told different stories. Merck closed Monday at $127.77, down 1.9 percent on the session but up about 7 percent over the past three months, near the upper end of a 52-week range that runs from $76.66 to $135.05. The market prizes its pipeline. Pfizer closed at $25.03, essentially flat on the day, and has slipped roughly 8 percent over the same stretch; its 52-week range runs from $23.11 to $28.75, and the stock sits in the lower third of that band, close to its floor for the year. The same earnings surprise met two very different starting points.

What would settle it

The decisive dates are fixed. Keytruda’s U.S. exclusivity runs until December 2028, and Merck has said biosimilar pressure should build across 2028 and 2029; how fast patients move to Qlex before then is the figure to watch, along with results from the assets Merck just bought. Eliquis lost European protection in May and faces U.S. generics in 2027 and 2028, so each Pfizer quarter now measures how quickly its newer, non-COVID products can fill the hole. Both companies report third-quarter results this fall. Those prints are the next test of whether cost discipline and fresh launches are outrunning the expirations.

The quarter gave both the optimists and the doubters something real. Merck and Pfizer grew, beat, and raised guidance, and their cost programs and newer drugs are throwing off cash now. Those same drugs must also replace products worth tens of billions before the decade ends. The dates do not move. The next few quarters will show whether the launches and the savings are closing the gap fast enough. The cliff is coming; the open question is how much of it each company has already climbed.

This is a general-market summary for information only — not investment advice, and not a recommendation regarding any security.