Merck's Bold Move: Navigating the Keytruda Cliff
In a strategic maneuver, Merck & Co. is preparing for life beyond its oncology megablockbuster, Keytruda. With the patent cliff looming, the company is taking a proactive approach by splitting its core pharmaceutical business into two distinct units, each with a focused mission.
A New Chapter for Merck's Oncology Journey
Merck has announced a reorganization of its human health business, creating a dedicated oncology division. This division will oversee Merck's current and experimental cancer medications, including the star player, Keytruda. Despite the expected loss of exclusivity in the U.S. in 2028, Merck remains optimistic, predicting peak annual sales of $35 billion for Keytruda that same year. The drug's performance is impressive, contributing over half of Merck's $58.1 billion in pharmaceutical sales in 2025, with a staggering $31.7 billion generated last year.
Diversifying for Growth
While the oncology unit takes center stage, Merck is also establishing a separate specialty, pharma, and infectious diseases unit. This unit will manage non-cancer products, such as the newer growth driver, Winrevair, and the established diabetes medication, Januvia. Additionally, Merck's portfolio of vaccines will fall under this unit's purview, according to The Wall Street Journal. By diversifying its focus, Merck aims to strengthen its launch execution and build upon its post-Keytruda growth plan.
Elevating Leadership and Expanding Horizons
With the business split, Merck is promoting new leaders to drive these focused units. Jannie Oosthuizen, an insider at the company, has been appointed as the executive vice president and president of the new oncology unit and Merck's international business. Oosthuizen brings valuable experience in strategy and commercialization from his previous role as senior vice president and president of Merck's U.S. human health business.
Additionally, Merck has recruited Brian Foard, a veteran from Sanofi, to take on the role of EVP and president of the specialty, pharma, and infectious diseases business. Foard's expertise in managing products across immunology, neurology, oncology, and rare disease indications will be a valuable asset. Chirfi Guindo, formerly the SVP and chief marketing officer at Merck, has also been promoted to the role of EVP for strategic access, policy, and communications.
The Post-Keytruda Landscape
Keytruda has long been a top-selling medicine worldwide, and Merck's approach to navigating its patent cliff has been a topic of interest. However, Merck's CEO, Robert Davis, remains confident. During an earnings call earlier this month, Davis highlighted Merck's "broadest and widest pipeline" in years, with the potential for over $70 billion in annual revenue by the middle of the next decade. He attributes this ambition to new growth drivers and upcoming launches acquired through recent biotechs acquisitions, such as Verona Pharma and Cidara Therapeutics.
"Our belief in our ability to have substantial growth once we get closer to the [loss of exclusivity] is as high as it's ever been," Davis asserted. "And we're not done."
Merck's overall revenue increased by 1% in 2024, reaching $65 billion. This figure includes sales from Merck's animal health business, which is not part of Monday's reorganization announcement.
While Keytruda remains Merck's top seller, other drugs are gaining traction. Cancer drug Welireg saw a 37% increase in sales during the fourth quarter, as its international launch gained momentum. Additionally, Winrevair, a pulmonary arterial hypertension medication acquired through Merck's $11.5 billion buyout of Acceleron in 2021, surpassed the blockbuster threshold with $1.4 billion in sales in 2025.
Industry Precedents and Merck's Strategy
Splitting a large pharmaceutical business into more focused units, particularly along oncology lines, is not a novel idea in the industry. Novartis, for example, made a similar move in 2016 after acquiring GSK's cancer business, establishing distinct Novartis Pharmaceuticals and Novartis Oncology divisions. Similarly, Pfizer outlined its goals for a new innovative oncology organization following its buyout of Seagen in 2024, acquiring cancer medications such as Adcetris, Padcev, Tivdak, and Tukysa, and doubling its oncology pipeline to 60 programs.
A Thought-Provoking Conclusion
Merck's decision to split its business and focus on new growth areas is a strategic move that could shape the future of the company. As the industry evolves, it will be interesting to see how Merck navigates the post-Keytruda landscape and whether its diversified approach pays off. What are your thoughts on Merck's strategy? Do you think this move will help them sustain long-term leadership in oncology? Share your insights and opinions in the comments below!
