Pull to refresh
Logo
Daily Brief
Following Why Ranks Sign Up
Merck races to rebuild its drug portfolio before Keytruda's patent expires

Merck races to rebuild its drug portfolio before Keytruda's patent expires

Money Moves

Three multibillion-dollar acquisitions in under a year signal the scale of Merck's challenge — and its willingness to spend to survive it

March 25th, 2026: Merck agrees to buy Terns Pharmaceuticals for $6.7 billion

Overview

Keytruda, the world's best-selling drug, generated $31.7 billion for Merck in 2025 — roughly 40% of the company's total revenue. Its key U.S. patents expire in 2028, and when they do, cheaper copies will enter the market and that revenue will begin to evaporate. Merck has now spent over $25 billion on three acquisitions in nine months to build the portfolio that will need to replace it.

On March 25, Merck announced a $6.7 billion deal for Terns Pharmaceuticals, which makes an experimental leukemia pill that could rival Novartis's Scemblix, expected to become a multibillion-dollar franchise. Two more deals followed: a $10 billion buy for respiratory drugmaker Verona Pharma and a $9.2 billion deal for flu-drug developer Cidara Therapeutics. Together, the three acquisitions represent an aggressive portfolio rebuild — Merck's response to what may be the industry's largest single-drug patent cliff.

Why it matters

Keytruda's $31.7 billion in annual revenue begins to decline in 2028, forcing the world's largest drugmaker to rebuild its portfolio through acquisitions.

Questions about this story

No questions yet — be the first to ask.

Play on this story Voices Debate Who Said What? Predict

Key Indicators

$31.7B
Keytruda 2025 revenue
The single drug that accounts for roughly 40% of Merck's total sales, all of it at risk when patents expire in 2028
$25.9B
Spent on three acquisitions since July 2025
Verona Pharma ($10B), Cidara Therapeutics ($9.2B), and now Terns Pharmaceuticals ($6.7B)
74%
TERN-701 major molecular response rate
In early clinical trials, 74% of heavily pretreated leukemia patients achieved major molecular response by 24 weeks
$300B+
Industry-wide revenue at risk by 2030
Nearly 200 drugs across the pharmaceutical industry will lose patent protection between 2025 and 2030

Voices

Curated perspectives — historical figures and your fellow readers.

Ever wondered what historical figures would say about today's headlines?

Sign up to generate historical perspectives on this story.

Log in Sign Up

Play

Exploring all sides of a story is often best achieved with Play.

Log in to play. Track your picks, climb the leaderboards. Log in Sign Up
Predict 4 ways this could play out. Contrarian picks score more — points lock when the scenario resolves. Log in to play
Timeline Five events from this story — drag them oldest to newest. Log in to play
Connections Sixteen names from the news. Find the four hidden groups of four. Log in to play

People Involved

Robert M. Davis
Robert M. Davis
Leading Merck's patent-cliff strategy
 Amy Burroughs
Amy Burroughs
Leading Terns through acquisition by Merck

Organizations Involved

Merck & Co.
Merck & Co.
Pharmaceutical Company
Acquirer — executing multiyear pipeline-rebuilding strategy

One of the world's largest pharmaceutical companies, headquartered in Rahway, New Jersey, facing the industry's most consequential single-drug patent cliff.
Terns Pharmaceuticals, Inc.
Terns Pharmaceuticals, Inc.
Clinical-stage biotech
Being acquired by Merck

A clinical-stage biotech founded in 2017 to treat liver disease, which pivoted to oncology in 2024 and developed TERN-701, an experimental leukemia drug now at the center of a $6.7 billion acquisition.
Novartis Pharmaceuticals
Novartis Pharmaceuticals
Pharmaceutical Company
Incumbent competitor in CML market with Scemblix

The Swiss pharmaceutical giant whose leukemia drug Scemblix is the current market leader that TERN-701 is designed to challenge.

Timeline

January 2017 March 2026

9 events Latest: March 25th, 2026 · 4 months ago
Tap a bar to jump to that date

  1. Merck agrees to buy Terns Pharmaceuticals for $6.7 billion

    Latest Acquisition

    Merck announces its third multibillion-dollar acquisition in nine months, paying $53 per share for Terns — a 31% premium to its 60-day average — to gain TERN-701 for its oncology pipeline. The deal is expected to close in the second quarter of 2026.

  2. Merck announces $3 billion cost-cutting plan

    Corporate

    Alongside its acquisition spree, Merck launches a $3 billion cost-reduction initiative to prepare for the Keytruda revenue decline.

  3. TERN-701 data impresses at ASH meeting

    Clinical

    Terns presents Phase 1 results at the American Society of Hematology annual meeting showing a 74% major molecular response rate in heavily pretreated leukemia patients, drawing significant investor and industry attention.

  4. Merck acquires Cidara Therapeutics for $9.2 billion

    Acquisition

    Merck's second major deal targets Cidara's experimental long-acting flu antiviral, paying a 109% premium over Cidara's stock price.

  5. Merck acquires Verona Pharma for $10 billion

    Acquisition

    Merck signs its first major patent-cliff deal, buying UK-based Verona Pharma and its newly approved lung disease drug Ohtuvayre for $10 billion.

  6. TERN-701 enters dose expansion

    Clinical

    Terns begins the dose expansion portion of the CARDINAL trial, randomizing patients to 320 mg or 500 mg daily dose cohorts.

  7. TERN-701 completes dose escalation with no toxicity limits

    Clinical

    The Phase 1 dose escalation portion of the CARDINAL trial finishes with no dose-limiting toxicities observed at doses up to 500 mg daily.

  8. Terns pivots to oncology under new CEO

    Corporate

    Amy Burroughs takes over as CEO and redirects Terns toward its TERN-701 leukemia program, abandoning the original liver disease focus.

  9. Terns Pharmaceuticals founded

    Corporate

    Weidong Zhong founds Terns with $30 million in Series A funding from Lilly Asia Ventures, initially focused on metabolic liver disease.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

March-December 2023

Pfizer's acquisition of Seagen (2023)

Facing the loss of $17 billion in annual revenue from expiring patents by 2030, Pfizer paid $43 billion to acquire Seagen, an antibody-drug conjugate specialist, in the largest pharmaceutical acquisition in years. The deal doubled Pfizer's oncology pipeline to 60 programs overnight.

Then

Pfizer took on significant debt and faced integration challenges, with investors initially punishing the stock over the price tag and execution risk.

Now

The deal reshaped Pfizer's identity from a COVID-era vaccine company back toward oncology, though the full revenue impact of the acquired pipeline won't be clear until the late 2020s.

Why this matters now

Merck's current strategy directly mirrors Pfizer's playbook: spend aggressively on acquisitions before the patent cliff hits, betting that new drug revenue will ramp up as legacy revenue declines. The question is whether Merck's more diversified approach — multiple mid-sized deals rather than one mega-deal — reduces or compounds the risk.

June 2019 - May 2020

AbbVie's acquisition of Allergan (2019-2020)

With its $20 billion-per-year blockbuster Humira facing U.S. patent expiration in 2023 (57% of total revenue), AbbVie paid $63 billion for Allergan, gaining Botox and a broader aesthetics portfolio. At the time, it was the largest pharmaceutical deal in a decade.

Then

AbbVie nearly doubled its revenue base and reduced dependence on Humira from 57% to roughly 35% of total sales.

Now

When Humira biosimilars launched in 2023, AbbVie weathered the decline better than many analysts expected, with Allergan-derived products and new immunology drugs partially offsetting the losses. The company's stock recovered after an initial post-cliff dip.

Why this matters now

AbbVie's experience is the closest template for what Merck is attempting. Both companies face the loss of a dominant franchise that generated an outsized share of revenue. AbbVie's relative success suggests the strategy can work — but Merck's Keytruda cliff is roughly 50% larger in absolute dollar terms.

May 2001

Novartis transforms CML treatment with Gleevec (2001)

The Food and Drug Administration approved Gleevec (imatinib), the first targeted therapy for chronic myeloid leukemia, developed by Novartis researcher Brian Druker. The drug turned CML from a near-certain death sentence into a manageable chronic condition, achieving complete remission in the majority of patients.

Then

Gleevec became a $4.7 billion-per-year blockbuster and established Novartis as the dominant player in CML treatment.

Now

Gleevec spawned an entire class of tyrosine kinase inhibitors, but many patients eventually developed resistance. Novartis stayed ahead with next-generation drugs, most recently Scemblix (2021), which targets resistant forms of the disease.

Why this matters now

TERN-701 is designed to challenge the treatment paradigm that Novartis has controlled for 25 years. The drug targets the same protein pocket as Scemblix but aims for better efficacy against resistant mutations — the same evolutionary dynamic that drove each previous generation of CML drugs.

Sources

(11)
+5
Merck & Co. CNBC STAT News Fierce Biotech BioSpace BioPharma Dive Blood (American Society of Hematology) PharmaVoice STAT News CNBC Merck & Co.