⚠ Growth Bought as Much as EarnedLow threat

Merck & Co. (MRK) — threat to the moat

Animal Health grew about 1% in two years before Merck bought Elanco's fish business, and its 2025 growth is not all its own.

Animal Health's growth accelerated only after Merck started buying. Segment sales moved from $5,568 million in 2021 to $5,625 million in 202312, about 1% in two years3. Then Merck paid $1,303 million in cash for Elanco's aqua business in 20244, and sales grew to $6,354 million in 20255.

Animal Health growth by line, 2025 (%)+12.5%Livestock+1.8%CompanionCalculated from Merck Form 10-K FY2025 Animal Health sales
The acquired side grew.

The purchases continue. TARGAN, a poultry biodevice company, was acquired in 20266. Buying growth is a legitimate strategy, but it means the reported growth rate says less about the underlying franchise.

The filings do not separate acquired sales from organic ones for the segment. The livestock line, where the aqua business sits, rose about 12.5% in 2025 while companion animals grew about 1.8%7.

The purchases are part of a wider pattern. In 2024 Merck spent $1,303 million on the Elanco aqua business alongside $1,344 million on EyeBio and $746 million on Harpoon in its human business8. Animal Health is one more place where Merck's cash buys growth that its own research has not yet produced.

The number to watch is companion animal growth, the part of the segment untouched by the recent purchases. If it stays near 2% while livestock slows once the aqua business is fully in the base, the segment's organic growth is closer to the flat years than to 2025.

References
  1. ReportedSegment sales moved from $5,568 million in 2021 to $5,625 million in 2023, about 1% in two years.
    Merck & Co. Form 10-K for fiscal 2025 - Item 7 MD&A and product sales note: sales by product, segment and country. — FY2025 · publ. 24 February 2026 · source ↗
  2. ReportedSegment sales moved from $5,568 million in 2021 to $5,625 million in 2023, about 1% in two years.
    Merck & Co. Form 10-K for fiscal 2023 - product sales for 2021-2023, the Prometheus, Daiichi Sankyo and Imago charges, impairments, receivables concentration and the Zhifei distribution arrangement in China. — FY2023 · publ. February 2024 · source ↗
  3. Moat Explorer calcSegment sales moved from $5,568 million in 2021 to $5,625 million in 2023, about 1% in two years.
    Moat Explorer calculation from Merck's reported sales, segment and financial statement figures ($ millions unless stated). Lines 2025: Keytruda 31,641 + Keytruda Qlex 40 = 31,681; other pharmaceutical 58,142 - 31,681 - 5,233 = 21,228; Animal Health 6,354; other revenue 515; total 31,681 + 5,233 + 21,228 + 6,354 + 515 = 65,011. 2024: 29,482; 57,400 - 29,482 - 8,583 = 19,335. 2023: 53,583 - 25,011 - 8,886 = 19,686. 2022: 52,005 - 20,937 - 6,897 = 24,171. 2021: 42,754 - 17,186 - 5,673 = 19,895. Everything else 2025: 65,011 - 31,681 = 33,330. Keytruda share of sales: 11,084 / 39,121 = 28.3% (2019, continuing basis); 17,186 / 48,704 = 35.3% (2021); 25,011 / 60,115 = 41.6% (2023); 31,681 / 65,011 = 48.7% (2025); Q2 2026 8,366 / 16,607 = 50.4%. Keytruda and Gardasil Q2 2026 (8,366 + 1,169) / 16,607 = 9,535 / 16,607 = 57.4%. Qlex 463 / 8,366 = 5.5%. Keytruda growth: 31,641 / 29,482 - 1 = 7.3% (2025); 29,482 / 25,011 - 1 = 17.9% (2024); 31,641 / 17,186 = 1.84, compound (1.84)^(1/4) - 1 = 16.5% a year; 31,641 / 11,084 = 2.85 (2019-2025). US share of Keytruda 18,829 / 31,641 = 59.5%. International Keytruda 12,812 / 11,610 - 1 = 10.4%; US Keytruda 18,829 / 17,872 - 1 = 5.4%. US Keytruda share of total sales 18,829 / 65,011 = 29.0%. Royalty: 2.5% x 31,681 = 792; 6.5% x 31,681 = 2,059. Gardasil US royalty 7% x 2,641 = 185. Winrevair royalty 22% x 1,443 = 317; 22% x 419 = 92; Winrevair Q2 2026 588 x 4 = 2,352, 22% x 2,352 = 517. Segment margins: Pharmaceutical 45,754 / 58,142 = 78.7% (2025); Q2 2026 11,612 / 14,760 = 78.7% (recast basis). Animal Health 2,131 / 6,354 = 33.5% (2025); 1,938 / 5,877 = 33.0% (2024); 1,737 / 5,625 = 30.9% (2023); 1,963 / 5,550 = 35.4% (2022); 1,950 / 5,568 = 35.0% (2021); Q2 2026 636 / 1,775 = 35.8%. Unallocated research 14,987 / 58,142 = 25.8%; Animal Health research 448 / 6,354 = 7.1%. Animal Health segment profit 2,131 / 45,754 = 4.7% of Pharmaceutical. Gardasil: international 2,592 / 6,158 - 1 = -57.9%; US 2,641 / 2,083 - 1 = 26.8%; share 5,233 / 65,011 = 8.0%; share of sales 2021 5,673 / 48,704 = 11.6%, 2022 6,897 / 59,283 = 11.6%, 2023 8,886 / 60,115 = 14.8%, 2024 8,583 / 64,168 = 13.4%; Q2 2026 1,169 x 4 = 4,676. Vaccines H1 2026 2,314 + 2,361 = 4,675; H1 2025 2,607 + 2,370 = 4,977; 4,675 / 4,977 - 1 = -6.1%. Childhood vaccines growth 2,368 / 2,241 - 1 = 5.7%; 2,485 / 2,368 - 1 = 4.9%; 2,451 / 2,485 - 1 = -1.4%. Pneumococcal: Pneumovax 166 / 893 - 1 = -81%; 825 + 759 + 166 = 1,750; 1,750 / 893 = 2.0; (825 + 759) / 166 = 9.5; Capvaxive + Vaxneuvance 759 + 825 = 1,584; 1,584 / 6,494 = 24.4% of Prevnar. Animal Health: livestock 3,896 / 6,354 = 61.3%; livestock growth 3,300 / 3,295 - 1 = 0.2%, 3,337 / 3,300 - 1 = 1.1%, 3,462 / 3,337 - 1 = 3.7%, 3,896 / 3,462 - 1 = 12.5%; companion 2,458 / 2,415 - 1 = 1.8%, 2,458 / 2,273 - 1 = 8.1%; companion excluding Bravecto 2,458 - 1,100 = 1,358; rest of Animal Health 6,354 - 1,100 = 5,254; Bravecto 359 / 335 - 1 = 7%. Segment 6,354 / 5,877 - 1 = 8.1%; 5,625 / 5,568 - 1 = 1.0%; Q2 2026 1,775 / 1,646 - 1 = 7.8%; compound (6,354 / 5,568)^(1/4) - 1 = 3.4% a year; share 6,354 / 65,011 = 9.8%; 6,354 / 31,681 = 0.20 of Keytruda; 6,354 / 9,467 = 67% of Zoetis; Zoetis 9,467 / 9,256 - 1 = 2.3%. Competitors: Keytruda 31,641 / Opdivo 10,049 = 3.1. Geography: US 36,510 / 65,011 = 56.2%; China 1,939 / 6,802 - 1 = -71%; China share 4,378 / 48,704 = 9.0% (2021), 6,802 / 60,115 = 11.3% (2023), 5,494 / 64,168 = 8.6% (2024), 1,939 / 65,011 = 3.0% (2025); other regions 65,011 - 36,510 - 14,580 - 2,711 - 1,939 = 9,271. Wholesaler receivables 22% + 21% + 13% = 56% (2025); 21 + 21 + 13 = 55 (2024); 21 + 20 + 14 = 55 (2023). Januvia and Janumet: 3,324 + 1,964 = 5,288 (2021); 2,189 + 1,177 = 3,366 (2023); 1,334 + 935 = 2,269 (2024); 1,604 + 940 = 2,544 (2025). Newer products Q2 2026: 588 + 271 + 204 + 184 = 1,247; 1,247 / 8,366 = 14.9%. Bridion 1,841 / 4 = 460 a quarter. Other pharmaceutical Q2 2026 14,760 - 8,366 - 1,169 = 5,225; Q2 2025 14,050 - 7,956 - 1,126 = 4,968; 5,225 / 4,968 - 1 = 5.2%; 2025 share 21,228 / 65,011 = 32.7%. Research: 30,531 / 60,115 = 50.8% of sales (2023). Charges 2026 9.0 + 5.7 = 14.7 bn; per share 3.62 + 2.31 = 5.93. Ohtuvayre 204 x 4 = 816; 12,100 / 816 = 14.8. Tax guidance midpoints (23.5 + 24.5) / 2 = 24.0; (35.0 + 36.0) / 2 = 35.5. Balance sheet: net debt end-2025 2,589 + 46,750 - 14,565 = 34,774; end-2024 2,649 + 34,462 - 13,242 - 447 = 23,422; end-2023 1,372 + 33,683 - 6,841 - 252 = 27,962; 30 June 2026 2,825 + 51,081 - 6,849 - 292 = 46,765, cash and short-term investments 6,849 + 292 = 7,141; net debt to equity 34,774 / 52,606 = 0.66; 46,765 / 41,933 = 1.1. Net income 2023-2025 365 + 17,117 + 18,254 = 35,736. Valuation: year-end 2025 market value 261.26 bn / net income 18.254 bn = 14.3; free cash flow 2025 16,472 - 4,112 = 12,360; 12,360 / 365,090 = 3.4%. Trailing twelve months to June 2026: sales 65,011 - 31,335 + 32,893 = 66,569; net income 18,254 - 9,506 - 5,575 = 3,173. EPS guidance midpoints (5.00 + 5.15) / 2 = 5.075; (5.04 + 5.16) / 2 = 5.10; (2.66 + 2.76) / 2 = 2.71. Protection from 2026: 2043 - 2026 = 17 years; 2028 - 2026 = 2 years. Year-end P/E = market value / net income: 147.55 / 4.442 = 33.2 (2015); 162.31 / 3.920 = 41.4 (2016); 153.30 / 2.394 = 64.0 (2017); 198.69 / 6.220 = 31.9 (2018); 231.56 / 9.843 = 23.5 (2019); 206.96 / 7.067 = 29.3 (2020); 193.59 / 13.049 = 14.8 (2021); 281.30 / 14.519 = 19.4 (2022); 276.26 / 0.365 = 757 (2023); 251.65 / 17.117 = 14.7 (2024); 261.26 / 18.254 = 14.3 (2025); 365.09 / 3.173 = 115.1 (TTM). Return on average equity 2025: 18,254 / ((52,606 + 46,313) / 2) = 18,254 / 49,460 = 36.9%. Gross profit 2025 65,011 - 16,382 = 48,629; 48,629 / 65,011 = 74.8%; royalty 792 / 16,382 = 4.8% of cost of sales. Keytruda increase 2021-2025 31,681 - 17,186 = 14,495; sales increase 65,011 - 48,704 = 16,307. US sales 36,510 / 28,480 - 1 = 28%. Pharmaceutical margin 2021 30,977 / 42,754 = 72.5%. Livestock less companion 3,295 - 2,273 = 1,022 (2021); 3,896 - 2,458 = 1,438 (2025). Prevnar 6,494 / Vaxneuvance 825 = 7.9. Animal Health 2025 6,354 against Keytruda franchise Q2 2026 8,366 - product and segment totals, growth and royalties. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Merck's Forms 10-K and 10-Q, results releases, the Bristol Myers Squibb, Pfizer and Zoetis 10-Ks and market data; operands shown in the source line.
  4. ReportedThen Merck paid $1,303 million in cash for Elanco's aqua business in 2024, and sales grew to $6,354 million in 2025.
    Merck & Co. Form 10-K for fiscal 2025 - Animal Health segment: sales by line, Bravecto, segment profit and costs. — FY2025 · publ. 24 February 2026 · source ↗
  5. ReportedThen Merck paid $1,303 million in cash for Elanco's aqua business in 2024, and sales grew to $6,354 million in 2025.
    Merck & Co. Form 10-K for fiscal 2025 - Animal Health segment: sales by line, Bravecto, segment profit and costs. — FY2025 · publ. 24 February 2026 · source ↗
  6. ReportedTARGAN, a poultry biodevice company, was acquired in 2026.
    Merck second-quarter 2026 results release, Form 8-K exhibit 99.1 - vaccine and Animal Health sales. — Q2 2026 · publ. 4 August 2026 · source ↗
  7. Moat Explorer calcThe livestock line, where the aqua business sits, rose about 12.5% in 2025 while companion animals grew about 1.8%.
    Moat Explorer calculation from Merck's reported sales, segment and financial statement figures ($ millions unless stated). Lines 2025: Keytruda 31,641 + Keytruda Qlex 40 = 31,681; other pharmaceutical 58,142 - 31,681 - 5,233 = 21,228; Animal Health 6,354; other revenue 515; total 31,681 + 5,233 + 21,228 + 6,354 + 515 = 65,011. 2024: 29,482; 57,400 - 29,482 - 8,583 = 19,335. 2023: 53,583 - 25,011 - 8,886 = 19,686. 2022: 52,005 - 20,937 - 6,897 = 24,171. 2021: 42,754 - 17,186 - 5,673 = 19,895. Everything else 2025: 65,011 - 31,681 = 33,330. Keytruda share of sales: 11,084 / 39,121 = 28.3% (2019, continuing basis); 17,186 / 48,704 = 35.3% (2021); 25,011 / 60,115 = 41.6% (2023); 31,681 / 65,011 = 48.7% (2025); Q2 2026 8,366 / 16,607 = 50.4%. Keytruda and Gardasil Q2 2026 (8,366 + 1,169) / 16,607 = 9,535 / 16,607 = 57.4%. Qlex 463 / 8,366 = 5.5%. Keytruda growth: 31,641 / 29,482 - 1 = 7.3% (2025); 29,482 / 25,011 - 1 = 17.9% (2024); 31,641 / 17,186 = 1.84, compound (1.84)^(1/4) - 1 = 16.5% a year; 31,641 / 11,084 = 2.85 (2019-2025). US share of Keytruda 18,829 / 31,641 = 59.5%. International Keytruda 12,812 / 11,610 - 1 = 10.4%; US Keytruda 18,829 / 17,872 - 1 = 5.4%. US Keytruda share of total sales 18,829 / 65,011 = 29.0%. Royalty: 2.5% x 31,681 = 792; 6.5% x 31,681 = 2,059. Gardasil US royalty 7% x 2,641 = 185. Winrevair royalty 22% x 1,443 = 317; 22% x 419 = 92; Winrevair Q2 2026 588 x 4 = 2,352, 22% x 2,352 = 517. Segment margins: Pharmaceutical 45,754 / 58,142 = 78.7% (2025); Q2 2026 11,612 / 14,760 = 78.7% (recast basis). Animal Health 2,131 / 6,354 = 33.5% (2025); 1,938 / 5,877 = 33.0% (2024); 1,737 / 5,625 = 30.9% (2023); 1,963 / 5,550 = 35.4% (2022); 1,950 / 5,568 = 35.0% (2021); Q2 2026 636 / 1,775 = 35.8%. Unallocated research 14,987 / 58,142 = 25.8%; Animal Health research 448 / 6,354 = 7.1%. Animal Health segment profit 2,131 / 45,754 = 4.7% of Pharmaceutical. Gardasil: international 2,592 / 6,158 - 1 = -57.9%; US 2,641 / 2,083 - 1 = 26.8%; share 5,233 / 65,011 = 8.0%; share of sales 2021 5,673 / 48,704 = 11.6%, 2022 6,897 / 59,283 = 11.6%, 2023 8,886 / 60,115 = 14.8%, 2024 8,583 / 64,168 = 13.4%; Q2 2026 1,169 x 4 = 4,676. Vaccines H1 2026 2,314 + 2,361 = 4,675; H1 2025 2,607 + 2,370 = 4,977; 4,675 / 4,977 - 1 = -6.1%. Childhood vaccines growth 2,368 / 2,241 - 1 = 5.7%; 2,485 / 2,368 - 1 = 4.9%; 2,451 / 2,485 - 1 = -1.4%. Pneumococcal: Pneumovax 166 / 893 - 1 = -81%; 825 + 759 + 166 = 1,750; 1,750 / 893 = 2.0; (825 + 759) / 166 = 9.5; Capvaxive + Vaxneuvance 759 + 825 = 1,584; 1,584 / 6,494 = 24.4% of Prevnar. Animal Health: livestock 3,896 / 6,354 = 61.3%; livestock growth 3,300 / 3,295 - 1 = 0.2%, 3,337 / 3,300 - 1 = 1.1%, 3,462 / 3,337 - 1 = 3.7%, 3,896 / 3,462 - 1 = 12.5%; companion 2,458 / 2,415 - 1 = 1.8%, 2,458 / 2,273 - 1 = 8.1%; companion excluding Bravecto 2,458 - 1,100 = 1,358; rest of Animal Health 6,354 - 1,100 = 5,254; Bravecto 359 / 335 - 1 = 7%. Segment 6,354 / 5,877 - 1 = 8.1%; 5,625 / 5,568 - 1 = 1.0%; Q2 2026 1,775 / 1,646 - 1 = 7.8%; compound (6,354 / 5,568)^(1/4) - 1 = 3.4% a year; share 6,354 / 65,011 = 9.8%; 6,354 / 31,681 = 0.20 of Keytruda; 6,354 / 9,467 = 67% of Zoetis; Zoetis 9,467 / 9,256 - 1 = 2.3%. Competitors: Keytruda 31,641 / Opdivo 10,049 = 3.1. Geography: US 36,510 / 65,011 = 56.2%; China 1,939 / 6,802 - 1 = -71%; China share 4,378 / 48,704 = 9.0% (2021), 6,802 / 60,115 = 11.3% (2023), 5,494 / 64,168 = 8.6% (2024), 1,939 / 65,011 = 3.0% (2025); other regions 65,011 - 36,510 - 14,580 - 2,711 - 1,939 = 9,271. Wholesaler receivables 22% + 21% + 13% = 56% (2025); 21 + 21 + 13 = 55 (2024); 21 + 20 + 14 = 55 (2023). Januvia and Janumet: 3,324 + 1,964 = 5,288 (2021); 2,189 + 1,177 = 3,366 (2023); 1,334 + 935 = 2,269 (2024); 1,604 + 940 = 2,544 (2025). Newer products Q2 2026: 588 + 271 + 204 + 184 = 1,247; 1,247 / 8,366 = 14.9%. Bridion 1,841 / 4 = 460 a quarter. Other pharmaceutical Q2 2026 14,760 - 8,366 - 1,169 = 5,225; Q2 2025 14,050 - 7,956 - 1,126 = 4,968; 5,225 / 4,968 - 1 = 5.2%; 2025 share 21,228 / 65,011 = 32.7%. Research: 30,531 / 60,115 = 50.8% of sales (2023). Charges 2026 9.0 + 5.7 = 14.7 bn; per share 3.62 + 2.31 = 5.93. Ohtuvayre 204 x 4 = 816; 12,100 / 816 = 14.8. Tax guidance midpoints (23.5 + 24.5) / 2 = 24.0; (35.0 + 36.0) / 2 = 35.5. Balance sheet: net debt end-2025 2,589 + 46,750 - 14,565 = 34,774; end-2024 2,649 + 34,462 - 13,242 - 447 = 23,422; end-2023 1,372 + 33,683 - 6,841 - 252 = 27,962; 30 June 2026 2,825 + 51,081 - 6,849 - 292 = 46,765, cash and short-term investments 6,849 + 292 = 7,141; net debt to equity 34,774 / 52,606 = 0.66; 46,765 / 41,933 = 1.1. Net income 2023-2025 365 + 17,117 + 18,254 = 35,736. Valuation: year-end 2025 market value 261.26 bn / net income 18.254 bn = 14.3; free cash flow 2025 16,472 - 4,112 = 12,360; 12,360 / 365,090 = 3.4%. Trailing twelve months to June 2026: sales 65,011 - 31,335 + 32,893 = 66,569; net income 18,254 - 9,506 - 5,575 = 3,173. EPS guidance midpoints (5.00 + 5.15) / 2 = 5.075; (5.04 + 5.16) / 2 = 5.10; (2.66 + 2.76) / 2 = 2.71. Protection from 2026: 2043 - 2026 = 17 years; 2028 - 2026 = 2 years. Year-end P/E = market value / net income: 147.55 / 4.442 = 33.2 (2015); 162.31 / 3.920 = 41.4 (2016); 153.30 / 2.394 = 64.0 (2017); 198.69 / 6.220 = 31.9 (2018); 231.56 / 9.843 = 23.5 (2019); 206.96 / 7.067 = 29.3 (2020); 193.59 / 13.049 = 14.8 (2021); 281.30 / 14.519 = 19.4 (2022); 276.26 / 0.365 = 757 (2023); 251.65 / 17.117 = 14.7 (2024); 261.26 / 18.254 = 14.3 (2025); 365.09 / 3.173 = 115.1 (TTM). Return on average equity 2025: 18,254 / ((52,606 + 46,313) / 2) = 18,254 / 49,460 = 36.9%. Gross profit 2025 65,011 - 16,382 = 48,629; 48,629 / 65,011 = 74.8%; royalty 792 / 16,382 = 4.8% of cost of sales. Keytruda increase 2021-2025 31,681 - 17,186 = 14,495; sales increase 65,011 - 48,704 = 16,307. US sales 36,510 / 28,480 - 1 = 28%. Pharmaceutical margin 2021 30,977 / 42,754 = 72.5%. Livestock less companion 3,295 - 2,273 = 1,022 (2021); 3,896 - 2,458 = 1,438 (2025). Prevnar 6,494 / Vaxneuvance 825 = 7.9. Animal Health 2025 6,354 against Keytruda franchise Q2 2026 8,366 - growth rates and changes. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Merck's Forms 10-K and 10-Q, results releases, the Bristol Myers Squibb, Pfizer and Zoetis 10-Ks and market data; operands shown in the source line.
  8. ReportedIn 2024 Merck spent $1,303 million on the Elanco aqua business alongside $1,344 million on EyeBio and $746 million on Harpoon in its human business.
    Merck & Co. Form 10-K for fiscal 2025 - Animal Health segment: sales by line, Bravecto, segment profit and costs. — FY2025 · publ. 24 February 2026 · source ↗
Sources
Generated September 25, 2026