Merck lowers profit forecast as tariffs take a toll

In the U.S., pharmaceutical giant Merck has revised its full-year profit guidance on April 24, 2025, primarily due to an expected $200 million impact from tariffs. The tariffs mainly stem from trade relations between the U.S. and China, though lesser charges relate to Canada and Mexico. Merck's updated forecast anticipates adjusted earnings between $8.82 and $8.97 per share, a slight decline from the previous projection of $8.88 to $9.03. This reduction occurs despite the company reporting stronger-than-expected first-quarter results, driven by its oncology products and growth in animal health. However, it is important to note that the new guidance excludes potential impacts from President Donald Trump's projected pharmaceutical tariffs, prompting some drug manufacturers to enhance their U.S. manufacturing operations. Merck maintains its overall revenue forecast between $64.1 billion and $65.6 billion for the year, showcasing resilience in its business despite vulnerability to external economic pressures. Additionally, Merck faces specific challenges in its China sales, particularly regarding the HPV vaccine Gardasil, which is witnessing declining demand. This downturn is evident, as Gardasil’s sales plummeted by 41% year-on-year, largely influenced by the recent halt of shipments into China amid reduced demand. Despite these struggles, Merck reported net income of $5.08 billion for the first quarter, slightly up from $4.76 billion in the same quarter last year, and revenue of $15.53 billion, which fell by 2% from the previous year. Merck's Keytruda therapy, significant in its revenue stream with $7.21 billion recorded in the last quarter, is also under scrutiny as it faces the impending loss of exclusivity in 2028. The company emphasizes the need for success in various recently launched drugs to offset these potential losses. Overall, Merck's outlook reflects mixed aspects of financial strength amid global uncertainties and domestic tariff impacts.