Merck & Co. (NYSE:MRK), the pharmaceutical giant behind blockbuster drugs like Keytruda and Gardasil, is facing fresh scrutiny in Washington after a bipartisan group of lawmakers opened a national security inquiry into its clinical trial operations in China. Shares slipped 0.68% to 128.5 dollars on the news, a modest move for a stock that has spent much of the year climbing toward its 52 week high.
At a Glance
- Price: 128.5 USD, down 0.68% on the day
- 52 week range: 107.9 to 130.29 USD
- Market cap: 317.77 billion USD
- P/E ratio: 35.99, EPS derived from trailing earnings
- Dividend yield: 2.65%, RSI at 68.01
| Price | 128.5 USD |
|---|---|
| Day change | -0.88 (-0.68%) |
| 52-week range | 107.9 – 130.29 |
| Market cap | $317.77B |
| P/E ratio | 35.99 |
| EPS (ttm) | 3.57 |
| Dividend yield | 2.65% |
| RSI (14) | 68.01 |
| Volume | 11,837,218 |
Lawmakers Question Trial Practices in Xinjiang
Representative John Moolenaar of Michigan, who chairs the House Select Committee on the Chinese Communist Party, sent letters dated Monday to Merck chief executive Robert Davis and AbbVie chief executive Robert Michael. The letters, first reported by Reuters, ask both companies to detail their due diligence, data protection procedures and ethical standards at trial sites in China, with particular attention to Xinjiang and facilities tied to military hospitals. Lawmakers set a July 17 deadline for a response.
The inquiry points to Xinjiang as the center of what the letters describe as genocide against Uyghurs and other ethnic and religious minorities, and it cites documented failures by Chinese researchers to secure informed consent from trial participants. While the 2021 Uyghur Forced Labor Prevention Act does not directly cover clinical trials, the letters argue it sets an ethical benchmark that drugmakers should be following when they operate in the region.
Merck responded that patient safety and ethical integrity guide its clinical research program and that it adheres to global standards wherever it operates. AbbVie declined to comment. China's embassy in Washington pushed back sharply, saying there is nothing credible behind the committee's action and accusing U.S. lawmakers of politicizing trade and technology disputes.
China's Growing Share of Drug Trials
The letters frame this as part of a bigger shift in where new drugs get tested. China's share of global early stage drug development climbed from about 8% in 2015 to more than 32% by 2024, according to research cited in the lawmakers' letters, while the U.S. share fell from roughly 48% to 37% over the same stretch. Lawmakers attribute the shift to regulatory changes, government subsidies and what they call questionable ethical oversight that together make China a faster, cheaper place to run early human trials.
A December report from the National Security Commission on Emerging Biotechnology warned that China has built a vertically integrated biotech ecosystem capable of challenging U.S. dominance in the field. The letters to Merck and AbbVie stop short of alleging wrongdoing, stating plainly that there is no evidence either company broke the law, but they argue that running trials in China still carries ethical and security exposure worth examining.
What the Numbers Say
Merck trades at a P/E of 35.99, a valuation that reflects investor confidence in its drug pipeline even as the stock sits just below its 52 week high of 130.29. Shares have traveled a wide arc over the past year, bottoming near 107.9 before this recent run. An RSI of 68.01 puts the stock close to overbought territory, suggesting the rally has been strong enough that some cooling could be normal. The 2.65% dividend yield remains a draw for income focused shareholders, offering steady cash return alongside the stock's price appreciation.
The bull case rests on Merck's diversified drug portfolio and its ability to keep growing earnings despite patent cliffs looming over some older products. Bears point to regulatory risk, including this congressional inquiry, along with the elevated RSI reading and a P/E multiple that leaves little room for disappointment if trial revenue or drug approvals slow. Political scrutiny over China operations adds a layer of uncertainty that did not exist a year ago, even though no violation has been alleged.
Watching for the July Response
The July 17 deadline gives both companies a defined window to respond, and how they answer could shape whether this inquiry expands or fades. For now, Merck's business fundamentals remain intact, and the stock's reaction has been muted rather than dramatic. Investors will likely watch whether other lawmakers join the effort or whether additional drugmakers with China operations face similar letters in the coming weeks.