EU clears subcutaneous Keytruda across all adult indications, modestly strengthening Merck’s oncology moat

What happened

Merck announced that the European Commission has approved a new subcutaneous (SC) solution-for-injection formulation of Keytruda for all adult indications currently authorized in the EU, allowing administration under the skin instead of exclusively via intravenous infusion. This follows prior U.S. approval of the SC formulation and is a key lifecycle-management step for Merck’s $29.5 billion Keytruda franchise as it heads toward 2028 U.S. loss of exclusivity and increasing PD‑(L)1 competition. The SC route should improve patient and provider convenience, reduce chair time in oncology clinics, and potentially expand use in community and outpatient settings, reinforcing Keytruda’s backbone status in multiple tumor types. Operationally, the new form leverages Merck’s existing oncology commercial infrastructure and supports the company’s broader restructuring and efficiency agenda by enabling more flexible care delivery and potentially improving mix and adherence. While economic terms are not disclosed and pricing will be shaped by EU payers, the decision validates Merck’s lifecycle-defense strategy highlighted in our prior work and adds a modest incremental support to Keytruda’s medium-term revenue durability in Europe.

Implication

For investors, the EC’s approval of subcutaneous Keytruda across all adult indications is a strategically positive but not thesis-changing catalyst that slightly improves the visibility and resilience of Merck’s largest profit driver. The SC formulation should support share retention versus current and emerging PD‑(L)1 competitors by raising switching costs for providers and patients who value faster, more convenient administration. Over time, broader adoption in community settings could modestly expand volume and sustain high-margin oncology cash flows, which underpin Merck’s ability to fund pipeline development, restructuring-driven reinvestment, and capital returns. However, the ruling does not fundamentally alter looming 2028 U.S. LOE and IRA-related pricing risks, so longer-term valuation still depends on execution in combinations, new indications, and non-Keytruda assets (notably vaccines and late-stage cardiometabolic and immunology programs). In valuation terms, this news tilts risk/reward slightly further in Merck’s favor within our existing framework, but is better viewed as incremental support for a discounted BUY rather than a reason to meaningfully re-rate the shares on its own.

Thesis delta

This development is directionally consistent with and modestly strengthens our existing BUY thesis, which already assumed global rollout and uptake of a subcutaneous Keytruda formulation as a key lifecycle-defense lever. The EC’s broad, all-adult-indication approval slightly de-risks our medium-term Keytruda revenue trajectory in Europe and increases our confidence in Merck’s ability to defend share and maintain attractive economics against intensifying PD‑(L)1 competition. We do not change our rating or base-case valuation, but we see a small upward bias to our Keytruda durability assumptions and to the probability that Merck manages the LOE/IRA transition without more severe erosion than currently modeled.