Pharma stocks slump as Pfizer and Merck report earnings

U.S. stocks pointed to a positive open on Tuesday, with S&P 500 and Nasdaq $NDAQ futures nudging into the green. But shares of Merck $MRK & Co. and Pfizer $PFE bucked the trend, with Merck falling 1% and Pfizer falling almost 5%.

The culprit? Solid but unspectacular results as tech and gold rally. Still, together, their earnings give us a pretty good read on the pharmaceutical sector and the broader economy.

For Merck, fourth-quarter worldwide sales rose 5% to $16.4 billion, or 4% excluding currency effects, while full-year revenue topped $65 billion. Oncology remained the backbone of the business, with Keytruda sales climbing 7% to nearly $32 billion for the year — nearly half Merck’s total annual revenue —pointing to its status as one of the world’s most important cancer drugs even as Merck prepares for eventual loss of exclusivity later this decade.

What could replace such a huge chunk of overall sales? Merck highlighted growing contributions from newer therapies. Winrevair, a hypertension drug, generated $1.4 billion in sales in its first year, while pneumococcal vaccine Capvaxix brought in just under $800 million. Animal Health was another bright spot, with sales up 8% to $6.4 billion.

Looking to this year, Merck is guiding for 2026 revenue of around $66 billion —or roughly flat vs. this year.

Pfizer, for its part, saw full-year 2025 revenue slip 2% to roughly $63 billion. But beneath the headline decline, oncology was a standout as it was for Merck, with growth in drugs like Padcev and Lorbrena helping offset drops elsewhere. Adjusted EPS rose 4% to $3.22 for the year as margins expanded and costs stayed the same.

For 2026, Pfizer reiterated guidance, predicting revenue of $59.5 billion to $62.5 billion and adjusted EPS of $2.80 to $3.00, even as patent expirations and pricing pressure remain ongoing challenges. Management is betting that a busy pipeline — roughly 20 pivotal study starts planned for this year — can eventually restore growth. For now, business ticks over as usual, no matter the chaotic news cycle. Big pharma has a way of managing constant transitions without grabbing headlines, and that can only look like a virtue right now.