Merck & Co (MRK) BofA Securities 2025 Healthcare Conference summary

Policy and regulatory environment

• Significant internal resources are dedicated to monitoring and responding to policy changes, especially regarding Most-Favored Nation (MFN) and IRA regulations.

• Uncertainty remains about MFN implementation, including whether it will require legislation or executive action and its ultimate objectives.

• There is optimism that U.S. government engagement could address international pricing disparities and the role of PBMs in drug pricing.

• Concerns exist about potential commercial spillover from government price cuts, particularly for products reimbursed based on ASP, which could affect broader market segments.

• FDA interactions remain stable despite some senior departures, with continuity across divisions supporting ongoing regulatory processes.

Oncology portfolio and Keytruda outlook

• Keytruda continues to show strong growth, with recent launches maturing and new indications expected to drive further expansion.

• Subcutaneous Keytruda is not expected to significantly increase market share but may improve patient compliance and access.

• Regulatory changes may subject both IV and SubQ Keytruda to IRA negotiation, but financial impact is expected to be limited due to planned pricing strategies.

• Loss of exclusivity (LOE) for Keytruda is anticipated at the end of 2028, with possible patent extensions into 2029; planning assumes biosimilar entry in December 2028.

• The company is focused on pipeline expansion and new launches to offset Keytruda LOE, with a tripling of phase III assets since 2021 and a projected $50 billion in mid-2030s revenue from late-stage pipeline.

Competitive landscape and innovation in oncology

• The company is investing in PD-1/VEGF bispecifics, viewing the approach as scientifically promising and providing portfolio optionality.

• Early data from competitors in the bispecific space is encouraging, but it remains uncertain if PFS benefits will translate into overall survival gains.

• The company is confident in its differentiated development strategy for Trop-2 ADCs and sees ongoing innovation as beneficial for patients.

• Conversion rates from IV to SubQ Keytruda internationally are expected to mirror U.S. rates, around 30-40%, with efficiency gains for practices.