Merck Defies Trade Headwinds: Q1 Profits Surge Past Estimates Despite $200M Tariff Toll

Image Source: CEO Outlook Magazine

Merck has begun 2025 with a strong financial performance despite kicking off the year with higher-than-predicted profits while global trade tensions inflict a $200 million hit on its bottom line. The pharma giant's Q1 performance highlights strong growth in prime divisions, but also underscores the increasing cost of tariffs and changing global demand.

Major Highlights

Profit Tops Estimates: Merck's adjusted first-quarter profit increased 7% to $2.22 per share, beating analyst estimates. Net income rose to $5.61 billion, lifted by robust sales in oncology and animal health segments.
Tariff Expenses Rise: The company lowered its full-year profit guidance, now expecting between $8.82 and $8.97 adjusted earnings per share. This is a reflection of an expected $200 million in added costs from tariffs, mainly due to US-China trade tension, with additional effects from Canadian and Mexican tariffs.
Sales Performance: Worldwide sales fell 2% to $15.5 billion, although they increased 1% if currency effects are stripped. Merck's lead cancer treatment drug Keytruda recorded a 4% rise in sales to $7.2 billion, while animal health sales increased 5% to $1.6 billion. Gardasil vaccine sales tumbled 41%, primarily because of lower demand in China.
Strategic Moves: Merck's view also includes a one-time charge from a licensing deal with Hengrui Pharma. The company is accelerating U.S. manufacturing investments, with $12 billion already on the books and another $9 billion to come by 2028, as it prepares for possible new tariffs under changing U.S. trade policy.
Pipeline Momentum: Encouraging late-stage trial data and launch of new products, such as Winrevair and Capvive, point to ongoing innovation and future growth potential.