Merck's KEYTRUDA Patent Cliff Explained: What 2028 Could Mean for MRK and MRKON

Summary

KEYTRUDA is Merck's most important drug franchise and one of the world's largest pharmaceutical products.

Merck's 2025 Form 10-K lists 2028 as the U.S. compound-patent expiration for conventional KEYTRUDA.

This creates a major long-term question for Merck investors:

What happens when biosimilar competition begins challenging a franchise responsible for roughly half of current quarterly company sales?

The answer involves several moving parts:

• KEYTRUDA QLEX;
• new cancer indications;
• combination therapies;
• individualized cancer vaccines;
• ADCs and other oncology assets;
• WINREVAIR and non-oncology growth;
• acquisitions and pipeline expansion.

For MRKON investors, the patent cliff matters because MRKON ultimately reflects the market's valuation of MRK.

What Is a Patent Cliff?

A patent cliff occurs when a major drug loses important intellectual-property or regulatory protection and becomes exposed to generic or biosimilar competition.

Branded pharmaceutical products often generate very high revenue while protected.

When lower-cost competition enters, market share and pricing can decline significantly.

The larger the drug, the larger the potential revenue gap.

Why KEYTRUDA Creates an Unusually Large Patent Cliff

In Q2 2026, KEYTRUDA and KEYTRUDA QLEX generated $8.366 billion of Merck's $16.607 billion in worldwide sales.

The franchise therefore represented approximately half of quarterly revenue.

Merck's 2026 shareholder materials cite consensus estimates of roughly $35 billion of combined KEYTRUDA and KEYTRUDA QLEX sales in 2028.

Replacing even part of a franchise of that scale is a major strategic challenge.

Why 2028 Is Important

Merck's current patent table lists:

Patent expiration does not mean revenue instantly goes to zero on a specific date.

Actual competitive timing can depend on:

• additional patents;
• regulatory exclusivity;
• litigation;
• biosimilar development;
• settlement agreements;
• manufacturing and launch timing.

But 2028 remains a major reference point for long-term MRK valuation.

How Biosimilars Could Affect KEYTRUDA

KEYTRUDA is a biologic therapy.

Competition therefore involves biosimilars rather than conventional small-molecule generics.

If biosimilar pembrolizumab products enter successfully, they could compete through:

• lower prices;
• payer incentives;
• formulary placement;
• hospital purchasing decisions.

The speed of erosion will depend on market behavior and regulatory outcomes.

Can KEYTRUDA QLEX Reduce the Patent-Cliff Impact?

KEYTRUDA QLEX is strategically important.

Merck's 10-K lists a 2043 U.S. compound patent for QLEX, much later than the conventional KEYTRUDA patent.

The formulation also offers subcutaneous administration.

Q2 2026 QLEX sales reached $463 million, compared with $128 million in Q1.

However, investors should avoid assuming that longer QLEX protection automatically preserves the entire KEYTRUDA franchise.

Future economics will depend on:

• physician adoption;
• payer behavior;
• patient preference;
• pricing;
• biosimilar competition;
• applicable intellectual-property outcomes.

New Indications Can Extend the Economic Life of the Franchise

KEYTRUDA has expanded across a large number of tumor types and treatment settings.

Merck said in its Q1 2026 prepared remarks that KEYTRUDA had 44 FDA-approved indications across 19 tumor types, plus two tumor-agnostic approvals.

Earlier-stage cancer settings can increase the number of eligible patients and extend the commercial opportunity.

But new indications do not eliminate the fundamental biosimilar issue surrounding the molecule.

Combination Therapies Are Another Defense

Merck increasingly combines KEYTRUDA with:

• antibody-drug conjugates;
• targeted therapies;
• individualized cancer treatments.

These combinations can potentially create differentiated treatment regimens even as the underlying pembrolizumab market evolves.

The strategy shifts the commercial question from:

"Can Merck preserve old KEYTRUDA revenue?"

toward:

"Can Merck build new oncology platforms around KEYTRUDA and its successors?"

The Moderna Cancer Vaccine Could Matter

The Phase 3 INTerpath-001 study of intismeran autogene plus KEYTRUDA met its primary recurrence-free survival endpoint and key distant metastasis-free survival endpoint in August 2026.

Earlier five-year Phase 2b follow-up showed:

• 49% lower risk of recurrence or death;
• 59% lower risk of distant metastasis or death

versus KEYTRUDA alone.

If regulatory approval and commercial adoption eventually follow, personalized cancer therapy could become another way to extend Merck's oncology ecosystem beyond KEYTRUDA monotherapy.

Merck Needs Growth Outside Oncology Too

A credible response to the patent cliff cannot rely on one replacement drug.

WINREVAIR is therefore particularly important.

Q2 2026 sales were $588 million, up 75%.

Merck also has growth programs across:

• cardiovascular disease;
• respiratory medicine;
• HIV;
• immunology;
• ophthalmology;
• vaccines.

What Does Merck Say the New Pipeline Could Be Worth?

Merck's 2026 shareholder materials estimate more than $70 billion of non-risk-adjusted annual sales opportunity by the mid-2030s from potential new growth drivers.

The phrase non-risk-adjusted is essential.

It does not mean Merck expects or guarantees $70 billion of additional annual revenue.

Some programs may:

• fail clinically;
• receive narrower labels;
• launch later;
• face competition;
• generate lower sales than expected.

Pipeline value needs probability adjustment.

How the Patent Cliff Could Affect MRK Valuation

Several scenarios are possible.

Scenario 1: Smooth Transition

QLEX converts a meaningful share of the franchise, WINREVAIR scales rapidly and multiple pipeline products succeed.

MRK could receive a higher valuation because future earnings become more diversified.

Scenario 2: Partial Replacement

New products grow, but not fast enough to offset KEYTRUDA erosion.

Revenue may temporarily stagnate or decline.

Scenario 3: Pipeline Disappointment

Several important programs fail while biosimilar competition arrives aggressively.

The market could lower long-term earnings estimates and the valuation multiple simultaneously.

What Does This Mean for MRKON?

MRKON does not avoid the patent cliff.

It tokenizes exposure linked to MRK.

Therefore:

KEYTRUDA competition

↓

Merck earnings expectations

↓

MRK valuation

↓

MRKON

Tokenization changes the wrapper, not the underlying patent economics.

Sarah Chen: The Market Will Judge the Slope, Not Just the Cliff

MEXC senior analyst Sarah Chen says investors often think about patent expirations too mechanically.

"The important question is not whether KEYTRUDA revenue eventually declines. That is widely anticipated. The more important question is the slope of that decline relative to the growth curve of QLEX, WINREVAIR and Merck's broader pipeline."

Chen argues that valuation will increasingly depend on evidence that replacement revenue is becoming real rather than theoretical.

"Pipeline slides can support a long-term thesis, but commercial launches, regulatory approvals and Phase 3 success gradually convert probabilities into cash flow. MRK will respond to that conversion years before the full patent cliff is visible in reported revenue."

FAQ

When does KEYTRUDA's U.S. patent expire?

Merck's 2025 Form 10-K lists 2028 for the U.S. compound patent.

Does KEYTRUDA revenue disappear in 2028?

No. Patent expiration is not the same as immediate revenue disappearance. Competitive timing depends on biosimilar development, legal factors and commercial adoption.

Does KEYTRUDA QLEX have longer patent protection?

Merck lists a U.S. compound patent expiration of 2043 for KEYTRUDA QLEX.

Can WINREVAIR replace KEYTRUDA?

It could become an important growth franchise, but KEYTRUDA's scale is enormous. Merck will likely need multiple successful products rather than one replacement.

Why does the patent cliff matter to MRKON?

MRKON provides economic exposure linked to MRK, so anything that changes long-term Merck earnings expectations can affect MRKON.

Conclusion

The KEYTRUDA patent cliff is not a single-day event.

It is a multiyear transition.

Merck's challenge is to convert:

QLEX

WINREVAIR

new oncology combinations

cancer vaccines

cardiometabolic drugs

infectious-disease programs

into enough durable revenue to offset eventual KEYTRUDA competition.

For MRKON investors, that transition may be the single most important long-term fundamental story behind the tokenized equity.