Merck's keytruda set to plunge in revenue after 2028 patent expiration

In recent years, Merck's Keytruda has emerged as a pharmaceutical powerhouse, propelling the company's sales to extraordinary heights. This oncology drug's sales skyrocketed from $17 billion in 2021 to $29 billion in just one year, underpinning Merck's remarkable annual revenue growth, which averages in double digits over the past three years. However, the future of this growth is under threat as competition in the oncology market intensifies. Keytruda's U.S. market exclusivity is expected to terminate in 2028, which is a looming deadline that analysts caution will bring inevitable biosimilar competition into the arena. Historical examples from the pharmaceutical sector indicate dramatic impacts on sales once a drug loses its patent. For instance, AbbVie's Humira saw a staggering 60% reduction in sales within a few years post-patent expiration, while Roche's Herceptin experienced a similar trend, with sales plummeting from $7 billion in 2018 to $3.7 billion two years later. With expectations for Keytruda’s sales to peak around $36 billion by 2028, analysts anticipate the revenues could fall to between $20 billion to under $15 billion annually in subsequent years. This forecast presents a significant concern for Merck since Keytruda constitutes nearly half of the company's total revenues. The reliance on this single blockbuster underscores both the strength and vulnerability of Merck's business model. As the pharmaceutical landscape remains unpredictable, the company's ability to sustain its financial health may hinge on diversifying its portfolio through strategic acquisitions or innovative licensing agreements to offset potential losses from Keytruda. The intensifying competitive environment and the looming expiration of Keytruda's patent serve as crucial reminders of the challenges inherent in the pharmaceutical industry, where success can swiftly turn into vulnerability when patent cliffs approach.