Keytruda and the 2028 Patent Cliff: Merck’s Pipeline Bet

A Number Worth Sitting With

Some numbers are worth sitting with. Pembrolizumab — Merck’s Keytruda — generated $29.5 billion in revenue in 2024, making it the highest-grossing pharmaceutical product on earth and, by most analyst estimates, roughly 40 percent of Merck’s entire pharmaceutical revenue base. It carries approval across some forty cancer indications, built up steadily since its first melanoma approval in September 2014, an indication-by-indication expansion that took a decade of sequential trials and that no biosimilar entrant will need to repeat, since a biosimilar inherits the reference product’s full label rather than having to earn each indication independently.

In the United States, its core patent expires in 2028, with the European loss of exclusivity arriving on a similar timeline. There is no precedent in the industry’s history for a single molecule this large facing a cliff this steep — the closest historical comparisons, adalimumab’s (Humira’s) US patent cliff in 2023 chief among them, involved a smaller revenue base and a less concentrated dependence within the originator’s overall business. Keytruda’s cliff is, by a meaningful margin, the largest single revenue-replacement event the pharmaceutical industry has ever had to plan around, and how Merck responds is, functionally, a live case study in pharmaceutical lifecycle management that every oncology investor should be watching regardless of whether Merck itself is investable.

How a Cliff Actually Plays Out

The mechanics of what happens next are reasonably well mapped by comparable biologic patent cliffs, even if the scale here is unprecedented. Biosimilar entrants — already lining up, led by Samsung Bioepis, Amgen, and a cluster of Indian manufacturers — typically follow an adoption S-curve, slow at first while physicians and payers build confidence in comparability data, then accelerating once a critical mass of prescribers and formularies switch. The curve’s shape differs sharply by region. Europe’s tender-driven procurement systems reward the lowest bidder quickly and mechanically, producing price erosion of 15 to 30 percent in the first year after loss of exclusivity, deepening to 45 to 60 percent by the third year. The United States moves more slowly, constrained by rebate structures and pharmacy-benefit-manager contracting that create genuine friction even after a biosimilar is approved and priced competitively — net price declines there have tended to run a shallower 10 to 25 percent over a comparable window, a difference that mostly reflects how differently the two markets actually purchase drugs rather than any difference in the underlying biosimilar science.

Applied to a $29.5 billion revenue base, even the shallow end of that range represents one of the largest single revenue-replacement problems any pharmaceutical company has ever had to plan around — a 15 percent US decline alone, on the low end of the historical range, would represent more than $4 billion in annual revenue, a figure larger than the total annual revenue of most standalone oncology biotech companies. That framing is useful for understanding the scale of Merck’s defensive spending: it is not defending a product line, it is defending an amount of money larger than most of its competitors’ entire businesses.

Defense Track One: Reformulation

Merck’s defense runs on three simultaneous tracks, and it is worth walking through each in enough detail to understand why they are genuinely distinct strategies rather than variations on a theme. The first is reformulation: a subcutaneous version of pembrolizumab, co-formulated with hyaluronidase, that can be administered in minutes via injection rather than the roughly thirty-minute intravenous infusion the current formulation requires. Hyaluronidase is the specific enabling technology here — an enzyme that temporarily breaks down the connective tissue under the skin, allowing a much larger volume of drug to be absorbed subcutaneously than would otherwise be possible, a formulation trick that has become a fairly standard playbook move across the biologics industry precisely because it works and because it generates genuinely new, defensible intellectual property.

Beyond the patient-convenience argument — a meaningful one in its own right, since a subcutaneous injection administered in minutes at an infusion center or even, eventually, at home is a substantially lower-burden experience than a thirty-minute IV infusion repeated every three to six weeks for the remainder of a patient’s treatment course — the subcutaneous formulation carries its own, legally distinct patent protection, exclusivity that has nothing to do with the core pembrolizumab molecule patent expiring in 2028. It is a genuinely effective lifecycle tool precisely because it does not merely extend the old product’s life, it creates a new product with its own intellectual property clock, one that a biosimilar manufacturer copying the original IV molecule cannot simply substitute into.

Defense Track Two: The Fixed-Dose Combination

The second track is the fixed-dose combination — bundling pembrolizumab with a co-administered agent, whether a VEGF inhibitor, a CTLA-4 antagonist, or a targeted kinase inhibitor, into a single formulation or co-packaged product. These combination patents, filed well after the original molecule patent, can in principle extend meaningful commercial exclusivity on specific regimens out past 2042, a full fourteen years beyond the core patent’s own expiration. It is a strategy that trades a simpler biosimilar substitution decision — swap one pembrolizumab for a cheaper one — for a much harder one, since a biosimilar manufacturer cannot simply substitute into a patented combination regimen without infringing a separate, independently valid patent covering the specific co-formulation.

The practical effect of this strategy, if executed well, is to shift an increasing share of pembrolizumab prescribing volume away from the plain, soon-to-be-genericizable molecule and toward branded combination regimens that a physician has genuine clinical reasons to prefer — better efficacy in a specific indication, simpler dosing, fewer separate infusion visits — reasons that exist independently of any patent-strategy motivation but that happen to align conveniently with one. That alignment between genuine clinical value and defensive patent strategy is, in fact, the entire point of a well-executed fixed-dose combination program, and it is why regulators and payers generally do not view the practice as abusive in the way they sometimes view narrower “evergreening” tactics that add no genuine clinical value.

Defense Track Three: Buying the Future

The third track is the one most relevant to venture investors: aggressive pipeline acquisition and licensing, aimed at building genuinely new revenue that does not depend on pembrolizumab at all. The $10.8 billion acquisition of Prometheus Biosciences brought a TL1A-targeting immunology asset into Merck’s pipeline, diversifying away from oncology entirely and into inflammatory bowel disease — a deliberate hedge against the possibility that Merck’s oncology pipeline alone cannot fully replace Keytruda’s revenue, by building a genuinely separate therapeutic-area revenue base that rises or falls independently of oncology market dynamics.

The Harpoon Therapeutics acquisition added T-cell engager technology, a bispecific platform directly relevant to the next-generation immuno-oncology mechanisms discussed elsewhere in this issue. The licensing deal with Kelun-Biotech for sacituzumab tirumotecan — MK-2870, the TROP2 ADC also discussed elsewhere in this issue — gave Merck a genuinely differentiated oncology asset with multiple ongoing Phase 3 programs across breast, lung, and gastroesophageal cancer, several of them explicitly designed to combine with pembrolizumab rather than compete against it, extending pembrolizumab’s own clinical relevance even as its patent protection lapses. WELIREG, Merck’s HIF-2α inhibitor, has been advancing through priority review for rare tumor indications on a parallel track, adding a smaller but genuinely novel-mechanism revenue stream. Merck and Moderna’s personalized neoantigen vaccine program, covered in detail in this issue’s piece on cancer vaccines, is itself best understood as part of this same defensive architecture — a mechanism designed from the outset to be given alongside pembrolizumab, extending the franchise’s clinical relevance into a genuinely novel modality that a biosimilar cannot replicate at all.

None of these assets individually replaces $29.5 billion. Collectively, spanning oncology diversification within the category, therapeutic-area diversification beyond it, and combination strategies that keep pembrolizumab itself clinically relevant even as its exclusivity lapses, they are the closest thing to an answer Merck currently has, and the coming eighteen months of additional trial readouts across this portfolio will determine how much of the eventual revenue gap actually gets filled.

The View From India, Kenya, and the Corridor

The biosimilar side of this story matters just as much to our own operating geographies as the originator defense does, and deserves treatment on its own terms rather than as a footnote to Merck’s strategy. India-based manufacturers are among the biosimilar developers preparing pembrolizumab submissions timed to the 2028 exclusivity loss, and Indian biologics manufacturing capacity — increasingly aligned with US FDA and EMA quality standards through CDSCO’s Schedule M modernization, discussed at greater length in this issue’s India CDMO piece — positions the country as both a supply base and, plausibly, a source of first-to-file biosimilar entrants rather than only fast-followers arriving years after the original loss of exclusivity.

For public health systems across India, East Africa, and the wider corridor OceansGled operates in, a pembrolizumab biosimilar is not a threat to originator revenue; it is the mechanism by which the world’s most effective cancer immunotherapy becomes affordable to a national insurance scheme for the first time, extending genuine survival benefit to patient populations that originator pricing has, to date, simply placed out of reach. Both readings of the same event — threat to Merck, access unlock for patients across our own markets — are correct simultaneously, and a fund with feet in both the innovation and access sides of this market has to hold both at once rather than picking whichever framing suits a given conversation.

The Investment Lens

For venture investing specifically, the Keytruda cliff is less an opportunity to invest in Merck than a lens for evaluating everything adjacent to it. TROP2 and other next-generation ADC platforms, bispecific T-cell engager companies positioning as successors to PD-1 monotherapy rather than competitors to it, personalized vaccine platforms designed to extend rather than replace checkpoint-inhibitor efficacy, and biosimilar-focused manufacturing and comparability-testing businesses in India all sit downstream of the same $29.5 billion event. Every oncology term sheet that crosses our desk between now and 2030 is, in some sense, a bet on how that revenue redistributes — and understanding Merck’s own defense in detail, track by track, is the sharpest available tool for making that bet well, since each of the three defensive tracks implies a different category of downstream winner: reformulation favors delivery-technology and drug-device combination specialists, fixed-dose combinations favor companies with complementary mechanisms Merck might want to license or acquire, and pipeline diversification favors the specific platform types — TROP2 ADCs, T-cell engagers, personalized vaccines — Merck has already demonstrated a willingness to pay premium prices for.