Merck & Co. (NYSE: MRK) is one of the world's largest pharmaceutical companies, with ~$65B in annual revenue. Its primary products span oncology, vaccines, animal health, and hospital acute care. Merck operates in over 140 countries and employs ~71,000 people globally.

Keytruda (pembrolizumab) is the dominant revenue driver — the world's best-selling oncology drug with ~$29B in 2025 global sales, representing ~45% of total company revenue. Keytruda faces U.S. patent expiration in 2028, with biosimilar entry expected in 2028-2029. Merck is developing a subcutaneous formulation (QLEX) which, if approved, could extend commercial exclusivity several years.

Pipeline offsets: Winrevair (sotatercept, PAH) launched in 2024 and ramped to nearly $1B in its first year. Capvaxive (pneumococcal vaccine) has $2B+ peak sales potential. MK-1654 (RSV mAb) and Efineptazone are in late-stage. Animal Health (~$5.9B revenue) is a growing, higher-multiple segment. Merck spent $17.9B on R&D in 2024 and has made significant acquisitions (Prometheus, Harpoon) to bolster the post-Keytruda pipeline.

2026 outlook: EPS expected to dip to ~$5.18 (non-GAAP basis differs; GAAP reflects acquisition charges) as Keytruda growth moderates and R&D investment peaks. Recovery expected in 2027+ as pipeline drugs scale and Keytruda erosion is offset by new launches.

Green = >10% above current price. Red = >10% below. Gold = within ±10%.

Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.

The core question: Is the Keytruda cliff already priced in at $117? Yes — and then some. MRK fell from $125 to $73 in 2025 on patent cliff fears, then recovered. At 16x trailing EPS and 23x forward (trough year), the stock is pricing in meaningful pain.

Bull case: Subcutaneous Keytruda (QLEX) gets approved and extends commercial exclusivity well past 2028. Winrevair ($1B run-rate in year 1) is a blockbuster with room to grow. Capvaxive, the next-gen pneumococcal vaccine, could be a $2B+ product. Animal Health trades at 20x+ earnings as a standalone — it's a hidden gem inside MRK. At $117, you get the #1 oncology drug, a growing pipeline, 3% yield, and 15 years of dividend growth for 16x earnings.

Bear case: Keytruda accounts for ~45% of revenue. Even with subQ, biosimilars will erode sales starting 2028-2029. R&D spend of $17-18B/year is enormous — if acquisitions (Prometheus, Harpoon) disappoint, there's no backstop. The 2026 EPS trough (~$5.18 consensus) reflects the inflection point — if the pipeline doesn't deliver, multiple compression follows.

My take: Accumulate. MRK is the rare large-cap pharma where the bear case is well-understood and well-discounted. The dividend is safe, the pipeline is credible, and subQ Keytruda is a legitimate optionality event. Ex-dividend date is March 16 — worth noting for timing. I'd build a full position at current levels. Strong Buy below $110.