No matter how well the stock market is performing, investors can always find some companies that aren't keeping pace with broader equities. This year, pharmaceutical giant Merck (NYSE: MRK) is it: The drugmaker's shares are down by 2% in 2024 while the broader S&P 500 is up by 21%.

Even when we zoom out, Merck hasn't performed particularly well in recent years. The company has significantly trailed the S&P 500 over the past decade.

Does that mean investors should stay away from Merck? Maybe not. Let's look at how it might perform in the next half-decade.

The dreaded patent cliff

Merck's most important product is Keytruda, a cancer drug that has won approval to treat scores of indications. Keytruda has been the best-selling medicine in the world since last year, when it generated $25 billion in sales. Merck's total revenue for the year was $60.1 billion, so Keytruda accounted for about 41.5% of the company's top line.

What will Keytruda's trajectory look like through 2029? The medicine's sales should continue growing until 2028, when it will hit peak sales above $30 billion, according to some estimates. However, Merck will then lose patent exclusivity for its cash cow, so Keytruda's sales will drop off a cliff, likely dragging Merck's entire revenue along with it.

Thankfully, Merck has a plan. The company is developing a subcutaneous version of Keytruda, whose target population it thinks will be about 50% of Keytruda's 2028 total patient pool.

It remains to be seen how many of them would actually switch to the subcutaneous version, whose patent exclusivity would extend beyond 2028. But by the end of the decade, the company should be on its way to replacing Keytruda as its now sold with a new formulation of the medicine.

And Merck's business extends beyond this single product. The company recently earned approval for Winrevair, a therapy for pulmonary arterial hypertension with a new mechanism of action. According to some analysts, Winrevair could hit sales of $3.9 billion by 2029, so it should help Merck replace lost Keytruda sales. There are other products in the drugmaker's portfolio that should continue performing well at least through 2028, such as its pair of HPV vaccines, Gardasil and Gardasil 9.

Further, the company has a deep pipeline, with more than 80 programs in phase 2 studies and more than 30 in phase 3 trials. Not everything will make it to market, but I expect many brand-new approvals and label expansions through 2029.

Beware of the competition

There is one crucial headwind Merck could face in the coming years: Summit Therapeutics, a clinical-stage biotech, is developing a cancer medicine called ivonescimab. Summit licensed ivonescimab from the drug's original creator, China-based Akeso Biopharma.