Vaccines: Plants a Rival Cannot RentNarrow moat

Merck & Co. (MRK) — moat facet

Merck's vaccine plants are hard to copy, but China's warehouse and America's schedule decide how many doses they sell.

Vaccines are the part of Merck's business most protected by manufacturing. A vaccine is a biological product made in facilities that take years to build and qualify, and Merck is the only American maker of the MMRV and varicella vaccines1. Its vaccine portfolio includes Gardasil, the pneumococcal vaccines, RotaTeq and the childhood measles and varicella line2.

Vaccine sales by quarter ($M)2,607Q1 20252,370Q2 20252,314Q1 20262,361Q2 2026Merck Q2 2026 results release, vaccine sales footnote
Flat to falling while the company grew.

In 2025 the portfolio told two stories. American Gardasil sales rose to $2,641 million3; the new adult pneumococcal vaccine Capvaxive reached $759 million4. But Gardasil as a whole fell 39% to $5,233 million5, because shipments to China stopped in February 20256.

The moat protected against copying and did not protect against demand. Merck's plants could make every dose China wanted; China stopped wanting them. The same is true in the United States, where a large part of childhood vaccine sales goes to the CDC's Vaccines for Children programme7 and the schedule is written in Washington.

The total shows it. Vaccine sales were $2,314 million in the first quarter of 2026 and $2,361 million in the second, against $2,607 million and $2,370 million a year earlier8, while the Pharmaceutical segment grew9.

The manufacturing base is overwhelmingly American and European. Merck's property, plant and equipment was $15,021 million in the United States and $8,856 million in Europe, the Middle East and Africa at the end of 202510. A vaccine made in those plants can be sold anywhere a regulator approves it; what it cannot do is make a government recommend it.

Vaccines give Merck a narrow, durable advantage that is currently shrinking. Quarterly vaccine sales are the figure to follow: a return to growth above the second-quarter 2025 level would say the portfolio has absorbed China and the schedule changes; continued declines would say policy, not manufacturing, now sets the size of this business.

Moat trajectory: Narrowing

Vaccine sales fell in H1 2026 against H1 2025; Gardasil down 39% in 2025.

The number that tests this moat
Reported
Total vaccine sales, latest quarter
$2,361M (Q2 2026), against $2,370M in Q2 2025

The whole vaccine portfolio; continued declines would say policy, not manufacturing, sets its size.

Source: Merck Q2 2026 results release ↗
Aspects of the moat
DIG DEEPER 01
Gardasil: $8.9 Billion to $5.2 Billion
Gardasil lost 39% of its sales in a year because one Chinese distributor stopped buying.
DIG DEEPER 02
The Only American Maker of Two Childhood Vaccines
Merck is the only American maker of the combined childhood MMRV vaccine and of Varivax, which makes Washington both its customer and its rulebook.
DIG DEEPER 03
Replacing Pneumovax With Capvaxive
Merck's pneumococcal sales doubled as Capvaxive and Vaxneuvance replaced Pneumovax, but in children the newer vaccine is already shrinking.
DIG DEEPER 04
The American Gardasil Market Held Up
American Gardasil sales grew for three straight years while China collapsed, and the real American risk is a single-dose schedule.
⚠ Threats to the moat
⚠ THREAT 01
Vaccine Policy Is Being Rewritten
The CDC changed three schedules affecting Merck's vaccines in six months, and the buyer of many of those doses is the same government.
⚠ THREAT 02
Vaccines Shrank in the First Half of 2026
Merck's vaccine sales fell about 6% in the first half of 2026 while its total sales grew 5%.
References
  1. ReportedA vaccine is a biological product made in facilities that take years to build and qualify, and Merck is the only American maker of the MMRV and varicella vaccines.
    Merck & Co. Form 10-K for fiscal 2025 - vaccines and China: Gardasil, the childhood and pneumococcal vaccines, and sales in China. — FY2025 · publ. 24 February 2026 · source ↗
  2. ReportedIts vaccine portfolio includes Gardasil, the pneumococcal vaccines, RotaTeq and the childhood measles and varicella line.
    Merck & Co. Form 10-K for fiscal 2025 - vaccines and China: Gardasil, the childhood and pneumococcal vaccines, and sales in China. — FY2025 · publ. 24 February 2026 · source ↗
  3. ReportedAmerican Gardasil sales rose to $2,641 million; the new adult pneumococcal vaccine Capvaxive reached $759 million.
    Merck & Co. Form 10-K for fiscal 2025 - vaccines and China: Gardasil, the childhood and pneumococcal vaccines, and sales in China. — FY2025 · publ. 24 February 2026 · source ↗
  4. ReportedAmerican Gardasil sales rose to $2,641 million; the new adult pneumococcal vaccine Capvaxive reached $759 million.
    Merck & Co. Form 10-K for fiscal 2025 - vaccines and China: Gardasil, the childhood and pneumococcal vaccines, and sales in China. — FY2025 · publ. 24 February 2026 · source ↗
  5. ReportedBut Gardasil as a whole fell 39% to $5,233 million, because shipments to China stopped in February 2025.
    Merck & Co. Form 10-K for fiscal 2025 - vaccines and China: Gardasil, the childhood and pneumococcal vaccines, and sales in China. — FY2025 · publ. 24 February 2026 · source ↗
  6. ReportedBut Gardasil as a whole fell 39% to $5,233 million, because shipments to China stopped in February 2025.
    Merck & Co. Form 10-K for fiscal 2025 - vaccines and China: Gardasil, the childhood and pneumococcal vaccines, and sales in China. — FY2025 · publ. 24 February 2026 · source ↗
  7. ReportedThe same is true in the United States, where a large part of childhood vaccine sales goes to the CDC's Vaccines for Children programme and the schedule is written in Washington.
    Merck & Co. Form 10-K for fiscal 2025 - Item 1A risk factors, patents and exclusivity, government pricing, vaccine policy and legal proceedings. — FY2025 · publ. 24 February 2026 · source ↗
  8. ReportedVaccine sales were $2,314 million in the first quarter of 2026 and $2,361 million in the second, against $2,607 million and $2,370 million a year earlier, while the Pharmaceutical segment grew.
    Merck second-quarter 2026 results release, Form 8-K exhibit 99.1 - vaccine and Animal Health sales. — Q2 2026 · publ. 4 August 2026 · source ↗
  9. ReportedVaccine sales were $2,314 million in the first quarter of 2026 and $2,361 million in the second, against $2,607 million and $2,370 million a year earlier, while the Pharmaceutical segment grew.
    Merck second-quarter 2026 results release, Form 8-K exhibit 99.1 - vaccine and Animal Health sales. — Q2 2026 · publ. 4 August 2026 · source ↗
  10. ReportedMerck's property, plant and equipment was $15,021 million in the United States and $8,856 million in Europe, the Middle East and Africa at the end of 2025.
    Merck & Co. Form 10-K for fiscal 2025 - Item 1 business: products, customers, segments and people. — FY2025 · publ. 24 February 2026 · source ↗
Sources
Generated September 25, 2026