Merck (MRK): pharma and rate exposure

How global shocks reach MRK

None of the tracked sector channels map to Merck (Pharmaceuticals), so only geography applies. Stories centered on the United States register as exposure, because the company is registered in the United States.

Direction is a tendency across cycles, not a forecast. Sector mapping uses the Finnhub industry classification; geography uses country of registration, not revenue by region.

What actually moves Merck

Merck's rate exposure is a refinancing stack, not the drug cycle. Total debt was $49.3 billion at the end of 2025, up after $14.0 billion of notes issued that year. About $2.3 billion of notes come due in 2026. Most notes are fixed. About $1.0 billion float with SOFR, and swaps convert another $1.75 billion. The business shock the filing actually ranks first is patent and policy, which none of the six macro themes capture cleanly.

Trade and geopolitics are international and China-specific. International markets were 44% of sales and fell 11%. The filing added tariffs to its list of international risks. Gardasil shipments to China have been paused since February 2025 because the commercial partner held too much inventory, and worldwide Gardasil sales fell 39% to $5.2 billion. The company does not expect China Gardasil sales to rise materially in 2026.

The less obvious concentration is one product and three wholesalers. Keytruda was about 49% of sales, with biosimilar pressure expected between 2028 and 2029 after the compound patent expires in December 2028. McKesson, Cencora and Cardinal held about 22%, 21% and 13% of receivables. A credit problem at a wholesaler is a different event from a rate move.

Drawn from the annual filing cited below. Not a forecast and not investment advice.

What Merck sells and where it earns

Merck is a drugmaker that leans heavily on one product. Sales were $65.0 billion in 2025, up 1%. Pharmaceutical sales were $58.1 billion, or 89%, and Keytruda, the cancer immunotherapy, sold $31.6 billion on its own, about 49% of total sales. Merck expects Keytruda sales to be materially hurt by biosimilars between 2028 and 2029 and says competition could begin in December 2028, when the primary compound patent expires. A subcutaneous version, Keytruda Qlex, won FDA approval in September 2025, and the filing lists U.S. patent protection for it to 2043. The second problem is China. Merck paused Gardasil shipments there in February 2025 because its commercial partner held too much inventory, and worldwide Gardasil sales fell 39% to $5.2 billion. Januvia loses U.S. exclusivity in May 2026. Newer products such as Winrevair, at $1.4 billion, and Ohtuvayre, from the October 2025 Verona Pharma deal, are the offsets. Animal Health, which sells livestock and pet products including Bravecto, brought in $6.4 billion, or 10%. The U.S. produced 56% of sales and international markets 44%, and international sales fell 11%.

Customer concentration

U.S. drug wholesalers dominate receivables. The filing says its customers with the largest receivable balances are "McKesson Corporation, Cencora, Inc. and Cardinal Health, Inc., which represented approximately 22%, 21% and 13%, respectively, of total accounts receivable at December 31, 2025." Pharmaceutical products are sold primarily to wholesalers and retailers, hospitals, government agencies and managed care providers.

Debt

Total debt was $49.3 billion at December 31, 2025: $2.6 billion of loans payable and current debt, including $2.3 billion of notes due in 2026, and $46.8 billion of long-term debt, up from $34.5 billion after Merck issued $14.0 billion of notes in September and December 2025. Most of the notes are fixed rate. About $1.0 billion are floating rate notes tied to SOFR, and swaps convert another $1.75 billion of fixed-rate notes to floating.

Risk factors that moved this year

• Most-favored-nation pricing. In December 2025 Merck signed an MFN Agreement with the U.S. government to sell key products, starting with Januvia and Janumet, through a direct-to-patient program at lower prices. The filing warns that some products may not launch, or may launch late, in the MFN reference countries as a result.
• Gardasil in China. The China risk factor, which last year described China as a growing business, now says the China business declined significantly after Gardasil sales fell, that shipments have been paused since February 2025 because of excess inventory at the commercial partner, and that China Gardasil sales are not expected to rise materially in 2026.
• Tariffs. The list of international operating risks now includes the imposition of tariffs by the U.S. or other governments, an item the prior year's filing did not include.

How this changes the exposure read

Merck sits under Health Care, but its sales are concentrated in one drug. Its biggest swings come from the Keytruda patent cliff starting in December 2028 and from U.S. drug pricing policy, which none of the six shock types capture. Of those, trade/tariff and conflict risk matter most: the filing adds tariffs to its international risks, China is already a drag through Gardasil, and 44% of sales are international. Rates and the Fed affect the cost of refinancing $49.3 billion of debt but little else. Credit stress runs through three wholesalers holding 56% of receivables. Oil shocks and chip or export rules barely touch it.

Source: Merck 10-K, FY2025. Checked 2026-10-07. Figures are from the filing and may differ from the live stats above.

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