Financial Report Forecast | PFE.US (PFE.US) and MSD (MRK.US) released the list on the same day: Under the patent cliff and growth engine switching, the pharmaceutical industry faces valuation tests

The Zhitong Finance App learned that before the market on Tuesday, the two major US pharmaceutical giants Pfizer (PFE.US) and MSD (MRK.US) will release financial reports for the second quarter of 2026 on the same day. Although both companies are facing joint pressure from patent expiration and a shift in growth engines, the market's expectations show a very different story: Pfizer is expected to continue the trend of declining profits after the pandemic, while MSD stands at the crossroads of performance due to the strategic layout and volume of new products released before the Keytruda patent cliff.

According to Wall Street consensus expectations, Pfizer's Q2 earnings per share after adjustment are expected to be 0.68 US dollars (down about 13% year over year), with revenue of about 14.4 billion US dollars (down about 1.6% year over year); MSD Q2 is expected to record a loss of 0.26 to 0.29 US dollars per share (down more than 112% year over year), and revenue of about 16.3 billion to 16.4 billion US dollars (year-on-year increase of about 3.5% to 3.7% year over year). Both companies have maintained 100% EPS exceeding expectations and 88% revenue exceeding expectations in the past two years, but this time, the focus of the market is far more than “whether to exceed expectations.”

Both healthcare giants are facing the same challenge — finding new growth drivers to offset the slowing growth of traditional products and portfolios.

Pfizer: The 6.9% dividend rate became the last line of defense after the “stress test” of COVID-19

Pfizer is in the throes of a structural transformation. As revenue from COVID-related products continues to shrink and patents for various core drugs are about to expire, the market is scrutinizing the pharmaceutical giant's profit quality more strictly.

The continued decline in revenue from the pandemic is a core drag on the decline in profits. Analysts expect global sales of the COVID-19 vaccine Comirnaty to be about US$278 million, a sharp drop of 27% year on year; sales of the antiviral drug Paxlovid were about US$119 million, a sharp drop of 72% year on year. Pfizer has previously lowered its 2026 COVID-19 business guidelines from US$6.5 billion to US$5 billion. Management made a clear statement in May that after strong Q1 performance, they considered raising their full-year guidance but ultimately stayed on hold — which means this financial report will be a key window for testing whether their full-year performance guidelines need to be adjusted.

The non-COVID-19 business is becoming the main growth force, and whether the growth of the oncology business can hedge against the decline is the biggest highlight of this financial report. On July 10, the FDA approved Pfizer's PadCEV in combination with MSD Keytruda for muscle-invasive bladder cancer, extending the indications previously limited to patients not suitable for cisplatin to all patients. This is a key asset that Pfizer acquired in 2023 with Seagen and is one of the fastest-growing segments of its oncology pipeline. Seagen's oncology product portfolio has grown 20% in the first quarter, and investors are hoping to confirm whether this trend will continue during this season's conference call — this will partially hedge against the setback of its ADC drug, Sigvotatug vedotin, which failed to meet the standards in the non-small cell lung cancer phase 3 trial at the end of June.

Second, sales of the anticoagulant drug Eliquis in collaboration with BMS increased 22% in the last quarter, and analysts expect the alliance's revenue to be around US$1.98 billion this quarter. Furthermore, Pfizer's layout in the diet medicine sector is beginning to show potential. The company entered the chronic weight management market after acquiring Metsera at the end of 2025. The core drug berobenatide can reduce placebo-adjusted weight by 10.0% to 12.3% within 28 weeks.

The 6.9% dividend ratio is currently the most watched indicator for Pfizer by income investors. The company announced in June that it would maintain a quarterly dividend of $0.43, which is its 351st consecutive dividend. After the management change, whether the ability to generate cash flow can support this high level of dividends will be one of the core topics of this conference call.

In late June, Pfizer's sigvotatug vedotin failed to reach the main end point in the non-small cell lung cancer phase III clinical trial, causing many institutions to lower target prices. This year, Pfizer is also facing a revenue gap of about 1.5 billion US dollars due to the expiration of old product patents.

Wall Street rated Pfizer a “buy,” with an average target price of around $28.75. However, profit expectations for the past two months were only slightly raised by 0.27%, and revenue expectations fell slightly by 0.17%, indicating that analysts are still divided on whether improved profit margins can fully hedge revenue pressure. Pfizer's current price-earnings ratio is only 8.5 times, and the discounted valuation reflects the market's full pricing of its short-term uncertainty.

MSD: A “race against time” before the Keytruda patent cliff, the number of new products released is a key variable

Unlike Pfizer's “post-pandemic” narrative, MSD is facing a more strategic transformation — whether it can successfully complete the transition from a “single heavy product dependency” to a “multi-pipeline drive” before the Keytruda patent cliff (expected 2028) hits.

Keytruda itself is still the “ballast stone” of performance. Q2 expects Keytruda's global sales to reach approximately US$8.06 billion (up about 1.3% year over year). The Qlex injection time is only about 1 minute, which is far less than 30 minutes for an intravenous infusion. However, the core patent will expire in December 2028, and will face fierce competition for biosimilar drugs at that time. MSD is establishing “dosage form viscosity” through Qlex, with the intention of delaying the decline in revenue when the patent cliff hits.

Keytruda's subcutaneous dosage form Qlex began to be released after receiving a permanent reimbursement code in April. BMO Capital expects Q2 Qlex sales to reach US$363 million, higher than the consensus estimate of US$334 million. Qlex's success extended Keytruda's exclusive sales rights until 2039, providing a valuable window of time for the transition after the patent expires.

The number of new products released is the core focus of this financial report. Lipfendra, the first oral PCSK9 inhibitor approved by the FDA in July (priced at $315/30 day dosage), is expected to reshape the cholesterol-lowering market pattern. Furthermore, the TROP2 ADC drug Sacituzumab tirumotecan, in collaboration with Colombotai, reached a major end in the phase III lung cancer trial, and Bank of America Securities expects peak sales of this asset to reach 2 billion to 4 billion US dollars. Market access for the pulmonary hypertension drug Winrevair is also continuing to advance.

The market is significantly divided on MSD's profit expectations. EPS is expected to plummet 68% over the past 60 days, reflecting market concerns about reduced profit margins or one-time costs. However, revenue expectations remain strong, which means that the market believes that the release of new products can support revenue growth, but profitability may be under pressure in the short term.

Although losses are expected to be recorded in Q2, this is a significant improvement from Q1's loss of $1.28 per share. Out of 28 analysts, 19 gave a “buy” rating, with an average target price of $135.19. However, the stock is close to a 52-week high of $135.05, which means that the market has set a fair amount of expectations for a favorable price.

The Q2 financial reports of Pfizer and MSD reflect the typical plight of the global pharmaceutical industry in the alternation of patent cliffs and innovation cycles. Under the double pressure of a patent cliff and a shift in growth engines, the valuation logic of pharmaceutical companies is shifting from “heavy bomb dependency” to a comprehensive contest between “pipeline depth and commercialization execution.” Pfizer needed to prove the sustainability of the 6.9% dividend with business growth outside of COVID-19; MSD needed to prove to the market that new products such as Lipfendra, QLex, and Sacituzumab tirumotecan can fill the $30 billion revenue gap before Keytruda's patent expires. The two financial reports of August 4 will be key footnotes to this transformative narrative.