Exhibit 99.1

 

		News Release
	FOR IMMEDIATE RELEASE

 

Media Contacts:	Jennifer Mauer	Investor Contacts:	Peter Dannenbaum
	(908) 740-1801		(908) 740-1037
	Pamela Eisele		Michael DeCarbo
	(267) 305-3558		(908) 740-1807

 

Merck Announces Third-Quarter 2019 Financial Results

 

·

Third-Quarter 2019 Worldwide Sales Were $12.4 Billion, an Increase of 15%; Sales Increased 16% Excluding Impact from Foreign Exchange; Growth Driven by Oncology and Human Health Vaccines

 

o

KEYTRUDA Sales Grew 62% to $3.1 Billion; Excluding the Impact of Foreign Exchange, Sales Grew 64%

 

o

Human Health Vaccines Sales Grew 17% to $2.5 Billion; Excluding the Impact of Foreign Exchange, Sales Grew 18%

 

·

Third-Quarter 2019 GAAP EPS was $0.74, an Increase of 1%; Third-Quarter Non-GAAP EPS was $1.51, an Increase of 27%

 

·

Company Narrows and Raises 2019 Full-Year Revenue Range to be Between $46.5 Billion and $47.0 Billion, Including a Negative Impact from Foreign Exchange of Approximately 2%

 

·

Company Narrows and Reduces 2019 Full-Year GAAP EPS Range to be Between $3.75 and $3.80; Narrows and Raises 2019 Full-Year Non-GAAP EPS Range to be Between $5.12 and $5.17, Including a Negative Impact from Foreign Exchange of Approximately 1%

 

KENILWORTH, N.J., Oct. 29, 2019 – Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the third quarter of 2019.

 

“We achieved another quarter of strong revenue and earnings growth as we continue to realize the benefits of our sustained investment in research and development and our focus on commercial execution,” said Kenneth C. Frazier, chairman and chief executive officer, Merck. “We are confident that the investments we are making now will allow us to convert cutting-edge science into medicines and vaccines of great benefit to patients and value to shareholders.”

 

 

Financial Summary

 

		Third Quarter
$ in millions, except EPS amounts		2019				2018				Change				Change Ex-Exchange
Sales		$	12,397			$	10,794				15	%			16	%
GAAP net income1			1,901				1,950				-3	%			-3	%
Non-GAAP net income that excludes certain items1,2*			3,873				3,178				22	%			22	%
GAAP EPS			0.74				0.73				1	%			1	%
Non-GAAP EPS that excludes certain items2*			1.51				1.19				27	%			27	%

 

*Refer to table on page 9

 

GAAP (generally accepted accounting principles) earnings per share assuming dilution (EPS) were $0.74 for the third quarter of 2019. Non-GAAP EPS of $1.51 for the third quarter of 2019 excludes a $982 million charge for the acquisition of Peloton Therapeutics, Inc. (Peloton), a $612 million pretax intangible asset impairment charge, other acquisition- and divestiture-related costs, restructuring costs and certain other items. Year-to-date results can be found in the attached tables.

 

Pipeline Highlights

 

Oncology

 

Merck continued to advance the development programs for KEYTRUDA (pembrolizumab), the company’s anti-PD-1 therapy; Lynparza (olaparib), a PARP inhibitor being co-developed and co-commercialized with AstraZeneca; and Lenvima (lenvatinib mesylate), an orally available tyrosine kinase inhibitor being co-developed and co-commercialized with Eisai Co., Ltd. (Eisai).

 

KEYTRUDA

 

·

Merck announced the following regulatory milestones for KEYTRUDA:

 

o

Approval in China as monotherapy for the first-line treatment of patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) whose tumors express PD-L1 based on overall survival results from the KEYNOTE-042 trial. KEYTRUDA is now the first anti-PD-1 therapy approved in China as both monotherapy and in combination with chemotherapy for the first-line treatment of NSCLC;

 

1

Net income attributable to Merck & Co., Inc.

2

Merck is providing certain 2019 and 2018 non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results and permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. Senior management’s annual compensation is derived in part using non-GAAP income and non-GAAP EPS. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP. For a description of the items, see Table 2a attached to this release.

 

 

o

Approval in Europe in combination with axitinib for the first-line treatment of advanced renal cell carcinoma (RCC) across all International Metastatic RCC Database Consortium (IMDC) risk groups based on overall survival results from the KEYNOTE-426 trial;

 

o

Approval in the United States by the Food and Drug Administration (FDA) as monotherapy for the treatment of patients with recurrent locally advanced or metastatic squamous cell carcinoma of the esophagus whose tumors express PD-L1 (Combined Positive Score [CPS] > 10) with disease progression after one or more prior lines of therapy based on the results from the KEYNOTE-181 and KEYNOTE-180 trials;

 

o

Adoption of a positive opinion by the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) for two regimens of KEYTRUDA, as monotherapy or in combination with platinum and 5-fluorouracil (5-FU) chemotherapy, for the first-line treatment of metastatic or unresectable recurrent head and neck squamous cell carcinoma (HNSCC) in adults whose tumors express PD-L1 with a CPS ≥1 based on data from the KEYNOTE-048 trial; and

 

o

Filing acceptance by the FDA for a supplemental Biologics License Application (sBLA) seeking use of KEYTRUDA for the treatment of patients with recurrent and/or metastatic cutaneous squamous cell carcinoma (cSCC) that is not curable by surgery or radiation. The FDA has set a PDUFA date of June 29, 2020.

 

·

Merck presented results from the pivotal neoadjuvant/adjuvant Phase 3 KEYNOTE-522 trial in patients with early-stage triple-negative breast cancer (TNBC), the first randomized trial of an anti-PD-1 therapy in this setting, at the 2019 European Society for Medical Oncology (ESMO) Congress. Interim results from the neoadjuvant phase showed the combination of KEYTRUDA plus chemotherapy resulted in a statistically significant increase in pathological complete response versus chemotherapy in patients with early-stage TNBC.

 

·

Merck presented first-time results of a pooled analysis of three randomized KEYNOTE studies (KEYNOTE-189, KEYNOTE-407 and KEYNOTE-021 [Cohort G]) evaluating KEYTRUDA in combination with chemotherapy in advanced NSCLC in which the combination regimen demonstrated an improvement in overall survival among newly diagnosed patients whose tumors do not express PD-L1. The data were presented at the IASLC 2019 World Conference on Lung Cancer.

 

 

Lynparza

 

·

Merck and AstraZeneca presented results from the Phase 3 PROfound trial in patients with metastatic castration-resistant prostate cancer (mCRPC) who have a mutation in their homologous recombination repair (HRR) genes and whose disease has progressed on prior treatment with new hormonal agent treatments at the 2019 ESMO Congress. In this study, Lynparza improved radiographic progression-free survival versus standard of care in BRCA1/2 or ATM-mutated tumors as well as reduced the risk of disease progression or death in tumors with mutations in other genes associated with HRR.

 

·

Merck and AstraZeneca also presented results from the Phase 3 PAOLA-1 trial at the 2019 ESMO Congress, in which Lynparza added to bevacizumab reduced the risk of disease progression or death (41%) in the first-line maintenance setting for patients with advanced ovarian cancer who had a complete or partial response to platinum-based chemotherapy and bevacizumab.

 

·

Merck and AstraZeneca received filing submission acceptances from the FDA and EMA for the use of Lynparza in BRCAm pancreatic cancer based on results from the Phase 3 POLO trial. A decision by the FDA is expected in the fourth quarter of 2019 and from the EMA in the second half of 2020.

 

Lenvima

 

·

Merck and Eisai announced accelerated FDA approval of the combination of KEYTRUDA and Lenvima for patients with certain types of endometrial carcinoma based on data from the KEYNOTE-146/Study 111, marking the first approval of the combination and the first time an anti-PD-1 therapy is approved in combination with a kinase inhibitor for advanced endometrial carcinoma in the United States. Approval was granted under the FDA’s Real-Time Oncology Review pilot program as well as under a new FDA-initiated program in which the FDA partnered with the Australian and Canadian regulatory bodies to review the application, allowing for simultaneous decisions in all three countries.

 

Other Pipeline Highlights

 

·

Merck announced FDA approval expanding the use of both PIFELTRO (doravirine), in combination with other antiretroviral agents, and DELSTRIGO (doravirine/lamivudine/tenofovir disoproxil fumarate) for the treatment of adult patients with HIV-1 infection who are virologically suppressed (HIV-1 RNA less than 50 copies per mL) on a stable antiretroviral regimen with no history of treatment failure.

 

·

Merck announced FDA acceptance of a New Drug Application (NDA) for DIFICID (fidaxomicin) for oral suspension and a supplemental NDA (sNDA) for use of DIFICID tablets and oral suspension for the treatment of Clostridium difficile infections in children aged six months or older. The FDA has set a PDUFA date of Jan. 24, 2020 for both applications.

 

 

·

Merck announced the pivotal Phase 3 RESTORE-IMI 2 trial evaluating RECARBRIO (imipenem, cilastatin and relebactam) for use in adults with hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP) met its primary endpoint.

 

·

Merck announced that the EMA’s CHMP adopted a positive opinion recommending a conditional marketing authorization for the company’s investigational V920 vaccine, brand name ERVEBO (rVSVΔG-ZEBOV-GP, live), for protection against Ebola Virus Disease caused by Zaire Ebola virus, as well as FDA acceptance and priority review for its Biologics License Application (BLA) for V920. The FDA has set a PDUFA date of March 14, 2020.

 

Third-Quarter Revenue Performance

 

The following table reflects sales of the company’s top pharmaceutical products, as well as sales of animal health products.

 

		Third Quarter
$ in millions		2019				2018				Change				Change Ex-Exchange
Total Sales		$	12,397			$	10,794				15	%			16	%
Pharmaceutical			11,095				9,658				15	%			16	%
KEYTRUDA			3,070				1,889				62	%			64	%
GARDASIL / GARDASIL 9			1,320				1,048				26	%			27	%
JANUVIA / JANUMET			1,311				1,490				-12	%			-11	%
PROQUAD, M-M-R II and VARIVAX			623				525				19	%			19	%
BRIDION			284				217				31	%			32	%
ISENTRESS / ISENTRESS HD			250				275				-9	%			-6	%
NUVARING			241				234				3	%			4	%
PNEUMOVAX 23			237				214				11	%			11	%
SIMPONI			203				210				-3	%			1	%
IMPLANON / NEXPLANON			199				186				7	%			8	%
Animal Health			1,122				1,021				10	%			12	%
Livestock			726				660				10	%			12	%
Companion Animals			396				361				10	%			12	%
Other Revenues			180				115				59	%			-18	%

 

Pharmaceutical Revenue

 

Third-quarter pharmaceutical sales were $11.1 billion, an increase of 15% compared with the third quarter of 2018; excluding the unfavorable effect of foreign exchange, sales grew 16% in the third quarter. The increase was driven primarily by growth in oncology and vaccines, partially offset by the ongoing impacts of the loss of market exclusivity for several products as well as lower sales of JANUVIA (sitagliptin) and JANUMET (sitagliptin and metformin HCI). International pharmaceutical sales represented 54% of total sales in the quarter. Performance in international markets was led by China, which had pharmaceutical sales of $898 million representing growth of 84% compared with the third quarter of 2018, driven by vaccines, primarily GARDASIL [Human Papillomavirus Quadrivalent (Types 6, 11, 16 and 18) Vaccine, Recombinant] and GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant), and oncology. Excluding the unfavorable effect of foreign exchange, pharmaceutical sales in China grew by 90%.

 

 

Growth in oncology was largely driven by a $1.2 billion increase in sales for KEYTRUDA to $3.1 billion, reflecting strong momentum from the NSCLC indications as well as continued uptake in other indications, including the recently launched RCC and adjuvant melanoma indications, along with growth from Lynparza and Lenvima.

 

Growth in vaccines reflects higher sales of GARDASIL and GARDASIL 9, vaccines to prevent certain cancers and other diseases caused by HPV, primarily due to higher demand in Asia Pacific, particularly in China. Also contributing to sales growth was higher demand in Europe, driven primarily by increased vaccination rates for both boys and girls, as well as higher pricing and demand in the United States, partially offset by public sector buying patterns.

 

In October 2019, the company borrowed doses of GARDASIL 9 from the U.S. Centers for Disease and Control and Prevention’s (CDC) Pediatric Vaccine Stockpile, which will reduce GARDASIL 9 sales in the fourth quarter of 2019 by approximately $120 million. These doses will be allocated to support routine vaccination in the United States and will allow the company to manufacture doses for other parts of the world, including regions where some of the most vulnerable populations live.

 

Growth in pediatric vaccines was driven by VARIVAX (Varicella Virus Vaccine Live), a vaccine to help prevent chickenpox, and PROQUAD (Measles, Mumps, Rubella and Varicella Virus Vaccine Live), a combination vaccine to help protect against measles, mumps, rubella and varicella, reflecting higher demand and pricing in the United States and higher demand in Europe and Latin America.

 

Performance in hospital acute care reflects higher demand globally, particularly in the United States, for BRIDION (sugammadex) Injection 100 mg/mL, a medicine for the reversal of neuromuscular blockade induced by rocuronium bromide or vecuronium bromide in adults undergoing surgery; and the ongoing launch of PREVYMIS (letermovir), a medicine for prophylaxis (prevention) of cytomegalovirus (CMV) infection and disease in adult CMV-seropositive recipients of an allogeneic hematopoietic stem cell transplant.

 

Pharmaceutical sales growth for the quarter was partially offset by the ongoing impacts from the loss of market exclusivity for INVANZ (ertapenem sodium), ZETIA (ezetimibe) and VYTORIN (ezetimibe/simvastatin), CUBICIN (daptomycin) and REMICADE (infliximab). In addition, the decline in sales of JANUVIA and JANUMET reflects continued pricing pressure in the United States, which more than offset higher demand globally.

 

 

Animal Health Revenue

 

Animal Health sales totaled $1.1 billion for the third quarter of 2019, an increase of 10% compared with the third quarter of 2018. Excluding the unfavorable effect from foreign exchange, Animal Health sales grew 12%. Growth in the third quarter was primarily driven by livestock, due to products acquired in the Antelliq acquisition, along with growth from companion animal products, driven largely by higher sales of the BRAVECTO (fluralaner) line of products for parasitic control.

 

Animal Health segment profits were $423 million in the third quarter of 2019, an increase of 4% compared with $409 million in the third quarter of 2018.³

 

Third-Quarter Expense, EPS and Related Information

 

The tables below present selected expense information.

 

$ in millions		GAAP				Acquisition- and Divestiture- Related Costs4				Restructuring Costs				Certain Other Items				Non-GAAP2
Third-Quarter 2019
Cost of sales		$	3,990			$	941			$	62			$	-			$	2,987
Selling, general and administrative			2,589				22				1				-				2,566
Research and development			3,204				6				1				982				2,215
Restructuring costs			232				-				232				-				-
Other (income) expense, net			35				6				-				-				29
Third-Quarter 2018
Cost of sales		$	3,619			$	680			$	2			$	420			$	2,517
Selling, general and administrative			2,443				2				-				-				2,441
Research and development			2,068				5				(4	)			-				2,067
Restructuring costs			171				–				171				-				-
Other (income) expense, net			(172	)			(10	)			-				-				(162	)

 

GAAP Expense, EPS and Related Information

 

Gross margin was 67.8% for the third quarter of 2019 compared to 66.5% for the third quarter of 2018. The increase in gross margin for the third quarter of 2019 reflects the favorable impacts of a charge in 2018 related to the termination of a collaboration agreement with Samsung Bioepis Co., Ltd. and product mix, partially offset by higher acquisition- and divestiture-related costs, including the impact of a 2019 intangible asset impairment charge, higher amortization of unfavorable manufacturing variances, higher amortization of intangible assets related to collaborations, higher restructuring costs, as well as manufacturing facilities startup costs.

 

³ Animal Health segment profits are comprised of segment sales, less all cost of sales, as well as selling, general and administrative expenses and research and development costs directly incurred by the segment. For internal management reporting, Merck does not allocate general and administrative expenses not directly incurred by the segment, nor the cost of financing these activities. Separate divisions maintain responsibility for monitoring and managing these costs, including depreciation related to fixed assets utilized by these divisions and, therefore, they are not included in segment profits.

⁴ Includes expenses for the amortization of intangible assets and purchase accounting adjustments to inventories recognized as a result of acquisitions, intangible asset impairment charges, and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration. Also includes integration, transaction and certain other costs related to business acquisitions and divestitures.

 

 

Selling, general and administrative expenses were $2.6 billion in the third quarter of 2019, a 6% increase compared to the third quarter of 2018. The increase primarily reflects higher promotion and administrative costs primarily in support of strategic brands, and higher acquisition- and divestiture-related costs, partially offset by the favorable effects of foreign exchange.

 

Research and development (R&D) expenses were $3.2 billion in the third quarter of 2019, an increase of 55% compared with the third quarter of 2018. The increase was driven primarily by a $982 million charge recorded in the third quarter of 2019 for the acquisition of Peloton coupled with higher expenses related to clinical development and increased investment in discovery research and early drug development.

 

Other (income) expense, net, was $35 million of expense in the third quarter of 2019 compared to $172 million of income in the third quarter of 2018 primarily reflecting lower income from investments in equity securities and higher net interest expense.

 

The effective income tax rate of 18.7% for the third quarter of 2019 includes the unfavorable impact of the charge for the acquisition of Peloton for which no tax benefit was recognized and the favorable impact of product mix.

 

GAAP EPS was $0.74 for the third quarter of 2019 compared with $0.73 for the third quarter of 2018.

 

Non-GAAP Expense, EPS and Related Information

 

The non-GAAP gross margin was 75.9% for the third quarter of 2019 compared to 76.7% for the third quarter of 2018. The decrease in non-GAAP gross margin primarily reflects higher amortization of unfavorable manufacturing variances, higher amortization of intangible assets related to collaborations, as well as manufacturing facilities startup costs.

 

Non-GAAP selling, general and administrative expenses were $2.6 billion in the third quarter of 2019, a 5% increase compared to the third quarter of 2018. The increase reflects higher promotion and administrative costs primarily in support of strategic brands, partially offset by the favorable effects of foreign exchange.

 

Non-GAAP R&D expenses were $2.2 billion in the third quarter of 2019, a 7% increase compared to the third quarter of 2018. The increase primarily reflects higher expenses related to clinical development and increased investment in discovery research and early drug development.

 

 

Non-GAAP other (income) expense, net, was $29 million of expense in the third quarter of 2019 compared to $162 million of income in the third quarter of 2018 primarily reflecting lower income from investments in equity securities and higher net interest expense.

 

The non-GAAP effective income tax rate of 15.7% for the third quarter of 2019 reflects the favorable impact of product mix.

 

Non-GAAP EPS was $1.51 for the third quarter of 2019 compared with $1.19 for the third quarter of 2018.

 

A reconciliation of GAAP to non-GAAP net income and EPS is provided in the table that follows.

 

		Third Quarter
$ in millions, except EPS amounts		2019				2018
EPS
GAAP EPS		$	0.74			$	0.73
Difference5			0.77				0.46
Non-GAAP EPS that excludes items listed below2		$	1.51			$	1.19
Net Income
GAAP net income1		$	1,901			$	1,950
Difference			1,972				1,228
Non-GAAP net income that excludes items listed below1,2		$	3,873			$	3,178
Decrease (Increase) in Net Income Due to Excluded Items:
Acquisition- and divestiture-related costs4		$	975			$	677
Restructuring costs			296				169
Charge for the acquisition of Peloton			982				-
Charge related to the termination of a collaboration agreement with Samsung			-				420
Net decrease (increase) in income before taxes			2,253				1,266
Estimated income tax (benefit) expense			(281	)			(38	)
Decrease (increase) in net income		$	1,972			$	1,228

 

Financial Outlook

 

Merck narrowed and raised its full-year 2019 revenue range to be between $46.5 billion and $47.0 billion, including both the impact of the GARDASIL 9 stockpile borrowing noted above and a negative impact from foreign exchange of approximately 2% at mid-October exchange rates.

 

Merck reduced its expected full-year GAAP effective tax rate to approximately 16.5% and its expected full-year non-GAAP effective tax rate to approximately 17.5%. These reductions are primarily attributable to favorable product mix.

 

⁵ Represents the difference between calculated GAAP EPS and calculated non-GAAP EPS, which may be different than the amount calculated by dividing the impact of the excluded items by the weighted-average shares for the period.

 

 

Merck narrowed and reduced its full-year 2019 GAAP EPS range to be between $3.75 and $3.80. The change in the GAAP EPS range primarily reflects the impact of the intangible asset impairment charge noted above. Merck narrowed and raised its full-year 2019 non-GAAP EPS range to be between $5.12 and $5.17, including a negative impact from foreign exchange of approximately 1% at mid-October exchange rates. The non-GAAP range excludes acquisition- and divestiture-related costs, costs related to restructuring programs, a net benefit from the settlement of certain federal income tax matters, the charge for the acquisition of Peloton and certain other items.

 

The following table summarizes the company’s full-year 2019 financial guidance.

 

		GAAP		Non-GAAP2
Revenue		$46.5 to $47.0 billion		$46.5 to $47.0 billion*
Operating expenses		Higher than 2018 by a low-single digit rate		Higher than 2018 by a mid-single digit rate
Effective tax rate		Approximately 16.5%		Approximately 17.5%
EPS**		$3.75 to $3.80		$5.12 to $5.17

 

*The company does not have any non-GAAP adjustments to revenue.

**EPS guidance for 2019 assumes a share count (assuming dilution) of approximately 2.6 billion shares.

.

A reconciliation of anticipated 2019 GAAP EPS to non-GAAP EPS and the items excluded from non-GAAP EPS are provided in the table below.

 

$ in millions, except EPS amounts		Full-Year 2019
GAAP EPS			$3.75 to $3.80
Difference5			1.37
Non-GAAP EPS that excludes items listed below2			$5.12 to $5.17
Acquisition- and divestiture-related costs4		$	2,700
Restructuring costs Charge for the acquisition of Peloton			750 982
Net decrease (increase) in income before taxes			4,432
Income tax (benefit) expense6			(900	)
Decrease (increase) in net income		$	3,532

 

The expected full-year GAAP effective tax rate of 16.5% reflects a net favorable impact of approximately one percentage point from the above items.

 

Earnings Conference Call

 

Investors, journalists and the general public may access a live audio webcast of the call today at 8:00 a.m. EDT on Merck’s website at http://investors.merck.com/events-and-presentations/default.aspx. Institutional investors and analysts can participate in the call by dialing (706) 758-9927 or (877) 381-5782 and using ID code number 5635157. Members of the media are invited to monitor the call by dialing (706) 758-9928 or (800) 399-7917 and using ID code number 5635157. Journalists who wish to ask questions are requested to contact a member of Merck’s Media Relations team at the conclusion of the call.

 

⁶ Includes the estimated tax impact on the reconciling items. In addition, includes a $360 million net tax benefit related to the settlement of certain federal income tax matters and a $67 million tax charge related to the finalization of treasury regulations for the Tax Cuts and Jobs Act of 2017.

 

 

About Merck

 

For more than a century, Merck, a leading global biopharmaceutical company known as MSD outside of the United States and Canada, has been inventing for life, bringing forward medicines and vaccines for many of the world’s most challenging diseases. Through our prescription medicines, vaccines, biologic therapies and animal health products, we work with customers and operate in more than 140 countries to deliver innovative health solutions. We also demonstrate our commitment to increasing access to health care through far-reaching policies, programs and partnerships. Today, Merck continues to be at the forefront of research to advance the prevention and treatment of diseases that threaten people and communities around the world - including cancer, cardio-metabolic diseases, emerging animal diseases, Alzheimer’s disease and infectious diseases including HIV and Ebola. For more information,

visit www.merck.com and connect with us on Twitter, Facebook, Instagram, YouTube and LinkedIn.

 

Forward-Looking Statement of Merck & Co., Inc., Kenilworth, N.J., USA

 

This news release of Merck & Co., Inc., Kenilworth, N.J., USA (the “company”) includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline products that the products will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.

 

Risks and uncertainties include but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.

 

The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s 2018 Annual Report on Form 10-K and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (www.sec.gov).

# # #

 

 

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1

 

		GAAP								% Change				GAAP								% Change
		3Q19				3Q18								Sep YTD 2019				Sep YTD 2018
Sales		$	12,397			$	10,794				15	%		$	34,972			$	31,296				12	%
Costs, Expenses and Other
Cost of sales (1)			3,990				3,619				10	%			10,443				10,220				2	%
Selling, general and administrative (1)			2,589				2,443				6	%			7,726				7,459				4	%
Research and development (1)(2)			3,204				2,068				55	%			7,324				7,538				-3	%
Restructuring costs (3)			232				171				36	%			444				494				-10	%
Other (income) expense, net (1)			35				(172	)			*				362				(512	)			*
Income Before Taxes			2,347				2,665				-12	%			8,673				6,097				42	%
Taxes on Income (1)			440				707								1,259				1,682
Net Income			1,907				1,958				-3	%			7,414				4,415				68	%
Less: Net Income (Loss) Attributable to Noncontrolling Interests (1)			6				8								(73	)			22
Net Income Attributable to Merck & Co., Inc.		$	1,901			$	1,950				-3	%		$	7,487			$	4,393				70	%
Earnings per Common Share Assuming Dilution		$	0.74			$	0.73				1	%		$	2.89			$	1.63				77	%
Average Shares Outstanding Assuming Dilution			2,572				2,678								2,587				2,694
Tax Rate (4)			18.7	%			26.5	%							14.5	%			27.6	%

 

* 100% or greater

 

⁽¹⁾ Amounts include the impact of acquisition and divestiture-related costs, restructuring costs and certain other items. See accompanying tables for details. 

 

⁽²⁾ Research and development expenses for the third quarter and first nine months of 2019 include a $982 million charge for the acquisition of Peloton Therapeutics (Peloton).  Research and development expenses in the first nine months of 2018 include a $344 million charge for the acquisition of Viralytics Limited. Research and development expenses in the first nine months of 2018 also include a $1.4 billion charge related to the formation of a collaboration with Eisai Co., Ltd. (Eisai).

 

⁽³⁾ Represents separation and other related costs associated with restructuring activities under the company's formal restructuring programs. 

 

⁽⁴⁾ The effective income tax rates for the third quarter and the first nine months of 2019 include the unfavorable impact of a charge for the acquisition of Peloton for which no tax benefit was recognized and the favorable impact of product mix.  The effective income tax rate for the first nine months of 2019 reflects a net tax benefit of $360 million related to the settlement of certain federal income tax matters.  The effective income tax rates for the third quarter and first nine months of 2018 include the unfavorable impact of a charge related to the termination of a collaboration agreement with Samsung for which no tax benefit was recognized.  The effective income tax rate for the first nine months of 2018 reflects the unfavorable impact of a charge related to the formation of a collaboration with Eisai for which no tax benefit was recognized. 

 

 

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

THIRD QUARTER 2019

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2a

 

		GAAP				Acquisition and Divestiture-Related Costs (1)				Restructuring Costs (2)				Certain Other Items (4)				Adjustment Subtotal				Non-GAAP
Cost of sales		$	3,990				941				62								1,003			$	2,987
Selling, general and administrative			2,589				22				1								23				2,566
Research and development			3,204				6				1				982				989				2,215
Restructuring costs			232								232								232				-
Other (income) expense, net			35				6												6				29
Income Before Taxes			2,347				(975	)			(296	)			(982	)			(2,253	)			4,600
Income Tax Provision (Benefit)			440				(231	)(3)			(50	)(3)			-				(281	)			721
Net Income			1,907				(744	)			(246	)			(982	)			(1,972	)			3,879
Net Income Attributable to Merck & Co., Inc.			1,901				(744	)			(246	)			(982	)			(1,972	)			3,873
Earnings per Common Share Assuming Dilution		$	0.74				(0.29	)			(0.10	)			(0.38	)			(0.77	)		$	1.51
Tax Rate			18.7	%																			15.7	%

 

Only the line items that are affected by non-GAAP adjustments are shown.

 

Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results as it permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. Senior management’s annual compensation is derived in part using non-GAAP income and non-GAAP EPS. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

 

⁽¹⁾ Amount included in cost of sales primarily reflects $320 million of expenses for the amortization of intangible assets recognized as a result of business acquisitions, as well as $612 million of intangible asset impairment charges related to SIVEXTRO.  Amount included in selling, general and administrative expenses primarily reflects integration, transaction and certain other costs related to business acquisitions and divestitures.

 

⁽²⁾ Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities under the company's formal restructuring programs.

 

⁽³⁾ Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.

 

⁽⁴⁾ Amount included in research and development represents the charge related to the acquisition of Peloton Therapeutics.

 

 

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

NINE MONTHS ENDED SEPTEMBER 30, 2019

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2b

 

		GAAP				Acquisition and Divestiture-Related Costs (1)				Restructuring Costs (2)				Certain Other Items (4)				Adjustment Subtotal				Non-GAAP
Cost of sales		$	10,443				1,801				161								1,962			$	8,481
Selling, general and administrative			7,726				82				33								115				7,611
Research and development			7,324				(21	)			4				982				965				6,359
Restructuring costs			444								444								444				-
Other (income) expense, net			362				321								48				369				(7	)
Income Before Taxes			8,673				(2,183	)			(642	)			(1,030	)			(3,855	)			12,528
Income Tax Provision (Benefit)			1,259				(438	)(3)			(106	)(3)			(304	)(5)			(848	)			2,107
Net Income			7,414				(1,745	)			(536	)			(726	)			(3,007	)			10,421
Less: Net (Loss) Income Attributable to Noncontrolling Interests			(73	)			(89	)											(89	)			16
Net Income Attributable to Merck & Co., Inc.			7,487				(1,656	)			(536	)			(726	)			(2,918	)			10,405
Earnings per Common Share Assuming Dilution		$	2.89				(0.64	)			(0.21	)			(0.28	)			(1.13	)		$	4.02
Tax Rate			14.5	%																			16.8	%

 

Only the line items that are affected by non-GAAP adjustments are shown.

 

Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results as it permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. Senior management’s annual compensation is derived in part using non-GAAP income and non-GAAP EPS. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

 

⁽¹⁾ Amount included in cost of sales primarily reflects $1.1 billion of expenses for the amortization of intangible assets recognized as a result of business acquisitions, as well as $693 million of intangible asset impairment charges, including $612 million related to SIVEXTRO.  Amount included in selling, general and administrative expenses primarily reflects integration, transaction and certain other costs related to business acquisitions and divestitures, including costs related to the acquisition of Antelliq Corporation.  Amount included in research and development expenses primarily reflects a reduction in expenses related to a decrease in the estimated fair value measurement of liabilities for contingent consideration.  Amount included in other (income) expense, net primarily reflects goodwill and intangible asset impairment charges related to certain businesses in the Healthcare Services segment and expenses related to an increase in the estimated fair value measurement of liabilities for contingent consideration, partially offset by royalty income related to the termination of the Sanofi-Pasteur MSD joint venture.

 

⁽²⁾ Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities under the company's formal restructuring programs.

 

⁽³⁾ Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.

 

⁽⁴⁾ Amount included in research and development represents the charge related to the acquisition of Peloton Therapeutics.

 

⁽⁵⁾ Primarily reflects a $360 million net tax benefit related to the settlement of certain federal income tax matters and a $67 million tax charge related to the finalization of treasury regulations associated with the 2017 enactment of U.S. tax legislation.

 

 

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3

 

			2019																2018																								3 Q							Sep YTD
			1Q				2Q				3Q				Sep YTD				1Q				2Q				3Q				Sep  YTD				4Q				Full Year				Nom %				Ex-Exch %				Nom %				Ex-Exch %
TOTAL SALES (1)		$	10,816			$	11,760			$	12,397			$	34,972			$	10,037			$	10,465			$	10,794			$	31,296			$	10,998			$	42,294				15				16				12				14
PHARMACEUTICAL			9,663				10,460				11,095				31,218				8,919				9,282				9,658				27,859				9,830				37,689				15				16				12				15
Oncology
Keytruda			2,269				2,634				3,070				7,973				1,464				1,667				1,889				5,020				2,151				7,171				62				64				59				63
Emend			117				121				98				336				125				148				123				396				126				522				-20				-19				-15				-13
Alliance Revenue – Lynparza (2)			79				111				123				313				33				44				49				125				62				187				154				157				151				156
Alliance Revenue – Lenvima (2)			74				97				109				280								35				43				78				71				149				154				156				*				*
Vaccines (3)
Gardasil / Gardasil 9			838				886				1,320				3,044				660				608				1,048				2,317				835				3,151				26				27				31				34
ProQuad / M-M-R II / Varivax			496				675				623				1,794				392				426				525				1,343				455				1,798				19				19				34				36
Pneumovax 23			185				170				237				592				179				193				214				586				322				907				11				11				1				2
RotaTeq			211				172				180				564				193				156				191				540				188				728				-5				-5				4				6
Vaqta			47				58				62				167				37				65				66				167				72				239				-6				-3				0				3
Hospital Acute Care
Bridion			255				278				284				817				204				240				217				661				256				917				31				32				24				27
Noxafil			190				193				177				560				176				188				188				551				191				742				-6				-4				1				5
Cubicin			88				67				52				207				98				94				95				287				80				367				-45				-44				-28				-25
Primaxin			59				71				77				207				72				68				72				212				53				265				7				10				-2				2
Invanz			72				78				57				206				151				149				137				437				59				496				-58				-57				-53				-50
Cancidas			61				67				62				191				91				87				79				257				69				326				-21				-19				-26				-22
Immunology
Simponi			208				214				203				625				231				233				210				673				220				893				-3				1				-7				-1
Remicade			123				98				101				322				167				157				135				459				123				582				-25				-23				-30				-25
Neuroscience
Belsomra			67				76				80				223				54				71				66				191				69				260				22				19				17				17
Virology
Isentress / Isentress HD			255				247				250				752				281				305				275				860				280				1,140				-9				-6				-13				-7
Zepatier			114				108				83				304				131				113				104				347				108				455				-20				-18				-12				-9
Cardiovascular
Zetia			140				156				147				443				305				226				165				696				162				857				-11				-12				-36				-35
Vytorin			97				76				57				231				167				155				92				414				83				497				-38				-36				-44				-41
Atozet			94				92				97				283				73				101				84				258				89				347				15				19				9				16
Adempas			90				104				107				302				68				75				94				238				91				329				14				15				27				30
Diabetes (4)
Januvia			824				908				807				2,539				880				949				927				2,756				930				3,686				-13				-12				-8				-6
Janumet			530				533				503				1,567				544				585				563				1,693				535				2,228				-11				-9				-7				-4
Women's Health
NuvaRing			219				240				241				700				216				236				234				686				216				902				3				4				2				3
Implanon / Nexplanon			199				183				199				581				174				174				186				535				169				703				7				8				9				10
Diversified Brands
Singulair			191				160				152				503				175				185				161				521				187				708				-6				-5				-3				0
Cozaar / Hyzaar			103				109				116				329				120				125				103				348				105				453				13				16				-6				-1
Nasonex			96				72				58				226				122				81				71				274				102				376				-17				-17				-17				-14
Arcoxia			75				75				72				221				83				84				83				249				86				335				-13				-11				-11				-6
Follistim AQ			57				63				62				182				67				70				60				198				70				268				2				4				-8				-5
Other Pharmaceutical (5)			1,140				1,268				1,229				3,634				1,186				1,189				1,109				3,486				1,215				4,705				11				12				4				8
ANIMAL HEALTH			1,025				1,124				1,122				3,271				1,065				1,090				1,021				3,176				1,036				4,212				10				12				3				8
Livestock			611				671				726				2,007				652				633				660				1,946				684				2,630				10				12				3				9
Companion Animals			414				453				396				1,264				413				457				361				1,230				352				1,582				10				12				3				7
Other Revenues (6)			128				176				180				483				53				93				115				261				132				393				59				-18				86				-54

 

* 200% or greater

 

Sum of quarterly amounts may not equal year-to-date amounts due to rounding.

 

⁽¹⁾ Only select products are shown.

 

⁽²⁾ Alliance Revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

 

⁽³⁾ Total Vaccines sales were $1,887 million, $2,037 million and $2,517 million in the first, second and third quarters of 2019, respectively, and $1,561 million, $1,533 million, $2,159 million and $2,008 million for the first, second, third and fourth quarters of 2018, respectively.

 

⁽⁴⁾ Total Diabetes sales were $1,402 million, $1,480 million and $1,360 million in the first, second and third quarters of 2019, respectively, and $1,433 million, $1,571 million, $1,506 million and $1,485 million for the first, second, third and fourth quarters of 2018, respectively.

 

⁽⁵⁾ Includes Pharmaceutical products not individually shown above.

 

⁽⁶⁾ Other Revenues are comprised primarily of Healthcare Services segment revenues, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities.

 

 

 

Exhibit 99.2

 

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1a

 

		2019																2018																								% Change
		1Q				2Q				3Q				Sep YTD				1Q				2Q				3Q				Sep YTD				4Q				Full Year				3Q				Sep YTD
Sales		$	10,816			$	11,760			$	12,397			$	34,972			$	10,037			$	10,465			$	10,794			$	31,296			$	10,998			$	42,294				15	%			12	%
Costs, Expenses and Other
Cost of sales			3,052				3,401				3,990				10,443				3,184				3,417				3,619				10,220				3,289				13,509				10	%			2	%
Selling, general and administrative			2,425				2,712				2,589				7,726				2,508				2,508				2,443				7,459				2,643				10,102				6	%			4	%
Research and development			1,931				2,189				3,204				7,324				3,196				2,274				2,068				7,538				2,214				9,752				55	%			-3	%
Restructuring costs			153				59				232				444				95				228				171				494				138				632				36	%			-10	%
Other (income) expense, net			188				140				35				362				(291	)			(48	)			(172	)			(512	)			110				(402	)			*				*
Income Before Taxes			3,067				3,259				2,347				8,673				1,345				2,086				2,665				6,097				2,604				8,701				-12	%			42	%
Taxes on Income			205				615				440				1,259				604				370				707				1,682				826				2,508
Net Income			2,862				2,644				1,907				7,414				741				1,716				1,958				4,415				1,778				6,193				-3	%			68	%
Less: Net (Loss) Income Attributable to Noncontrolling Interests			(53	)			(26	)			6				(73	)			5				9				8				22				(49	)			(27	)
Net Income Attributable to Merck & Co., Inc.		$	2,915			$	2,670			$	1,901			$	7,487			$	736			$	1,707			$	1,950			$	4,393			$	1,827			$	6,220				-3	%			70	%
Earnings per Common Share Assuming Dilution		$	1.12			$	1.03			$	0.74			$	2.89			$	0.27			$	0.63			$	0.73			$	1.63			$	0.69			$	2.32				1	%			77	%
Average Shares Outstanding Assuming Dilution			2,603				2,588				2,572				2,587				2,710				2,696				2,678				2,694				2,634				2,679
Tax Rate			6.7	%			18.9	%			18.7	%			14.5	%			44.9	%			17.8	%			26.5	%			27.6	%			31.7	%			28.8	%

 

* 100% or greater

 

Sum of quarterly amounts may not equal year-to-date amounts due to rounding.

 

 

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

THIRD QUARTER 2018

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2c

 

		GAAP				Acquisition and Divestiture- Related Costs (1)				Restructuring Costs (2)				Certain Other Items (3)				Adjustment Subtotal				Non-GAAP
Cost of sales		$	3,619				680				2				420				1,102			$	2,517
Selling, general and administrative			2,443				2												2				2,441
Research and development			2,068				5				(4	)							1				2,067
Restructuring costs			171								171								171				-
Other (income) expense, net			(172	)			(10	)											(10	)			(162	)
Income Before Taxes			2,665				(677	)			(169	)			(420	)			(1,266	)			3,931
Income Tax Provision (Benefit)			707				(26	)(4)			(20	)(4)			8				(38	)			745
Net Income			1,958				(651	)			(149	)			(428	)			(1,228	)			3,186
Net Income Attributable to Merck & Co., Inc.			1,950				(651	)			(149	)			(428	)			(1,228	)			3,178
Earnings per Common Share Assuming Dilution		$	0.73				(0.24	)			(0.06	)			(0.16	)			(0.46	)		$	1.19
Tax Rate			26.5	%																			18.9	%

 

Only the line items that are affected by non-GAAP adjustments are shown.

 

Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results as it permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. Senior management’s annual compensation is derived in part using non-GAAP income and non-GAAP EPS. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

 

⁽¹⁾ Amounts included in cost of sales reflect expenses for the amortization of intangible assets recognized as a result of business acquisitions.  Amounts included in selling, general and administrative expenses reflect integration, transaction and certain other costs related to business acquisitions and divestitures.  Amounts included in research and development expenses primarily reflect an increase in the estimated fair value measurement of liabilities for contingent consideration.  Amounts included in other (income) expense, net primarily reflect royalty income, partially offset by an increase in the estimated fair value measurement of liabilities for contingent consideration related to the termination of the Sanofi-Pasteur MSD joint venture.

 

⁽²⁾ Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities under the company's formal restructuring programs.

 

⁽³⁾ Amount included in cost of sales represents a charge related to the termination of a collaboration agreement with Samsung Bioepis Co., Ltd. for insulin glargine.

 

⁽⁴⁾ Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.

 

 

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

NINE MONTHS ENDED SEPTEMBER 30, 2018

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2d

 

		GAAP				Acquisition and Divestiture- Related Costs (1)				Restructuring Costs (2)				Certain Other Items (3)				Adjustment Subtotal				Non-GAAP
Cost of sales		$	10,220				2,147				11				420				2,578			$	7,642
Selling, general and administrative			7,459				26				2								28				7,431
Research and development			7,538				7				1				1,744				1,752				5,786
Restructuring costs			494								494								494				-
Other (income) expense, net			(512	)			85								(54	)			31				(543	)
Income Before Taxes			6,097				(2,265	)			(508	)			(2,110	)			(4,883	)			10,980
Income Tax Provision (Benefit)			1,682				(230	)(4)			(69	)(4)			(101	)(4)			(400	)			2,082
Net Income			4,415				(2,035	)			(439	)			(2,009	)			(4,483	)			8,898
Net Income Attributable to Merck & Co., Inc.			4,393				(2,035	)			(439	)			(2,009	)			(4,483	)			8,876
Earnings per Common Share Assuming Dilution		$	1.63				(0.75	)			(0.16	)			(0.75	)			(1.66	)		$	3.29
Tax Rate			27.6	%																			19.0	%

 

Only the line items that are affected by non-GAAP adjustments are shown.

 

Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results as it permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. Senior management’s annual compensation is derived in part using non-GAAP income and non-GAAP EPS. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

 

⁽¹⁾ Amounts included in cost of sales reflect expenses for the amortization of intangible assets recognized as a result of business acquisitions.  Amounts included in selling, general and administrative expenses reflect integration, transaction and certain other costs related to business acquisitions and divestitures.  Amounts included in research and development expenses primarily reflect an increase in the estimated fair value measurement of liabilities for contingent consideration.  Amounts included in other (income) expense, net primarily reflect an increase in the estimated fair value measurement of liabilities for contingent consideration, partially offset by royalty income related to the termination of the Sanofi-Pasteur MSD joint venture.

 

⁽²⁾ Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities under the company's formal restructuring programs.

 

⁽³⁾ Amount included in cost of sales represents a charge related to the termination of a collaboration agreement with Samsung Bioepis Co., Ltd. for insulin glargine.  Amounts included in research and development expenses represent a $1.4 billion charge related to the formation of a collaboration with Eisai Co., Ltd., as well as a $344 million charge for the acquisition of Viralytics Limited.

 

⁽⁴⁾ Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.

 

 

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

THIRD QUARTER 2019

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3a

 

		Global												U.S.												International
		3Q 2019				3Q 2018				% Change				3Q 2019				3Q 2018				% Change				3Q 2019				3Q 2018				% Change
TOTAL SALES (1)		$	12,397			$	10,794				15			$	5,525			$	5,030				10			$	6,872			$	5,764				19
PHARMACEUTICAL			11,095				9,658				15				5,132				4,649				10				5,962				5,010				19
Oncology
Keytruda			3,070				1,889				62				1,743				1,109				57				1,327				780				70
Alliance Revenue - Lynparza (2)			123				49				154				71				33				112				53				15				*
Alliance Revenue - Lenvima (2)			109				43				154				65				30				117				44				13				*
Emend			98				123				-20				42				71				-40				56				52				7
Vaccines (3)
Gardasil / Gardasil 9			1,320				1,048				26				761				740				3				558				308				81
ProQuad / M-M-R II / Varivax			623				525				19				482				429				12				141				96				48
Pneumovax 23			237				214				11				179				160				12				58				54				6
RotaTeq			180				191				-5				102				134				-24				78				57				37
Vaqta			62				66				-6				36				36				1				26				30				-14
Hospital Acute Care
Bridion			284				217				31				133				96				38				151				120				25
Noxafil			177				188				-6				77				89				-13				100				99
Primaxin			77				72				7				2				1				138				75				71				6
Cancidas			62				79				-21								2				-79				62				77				-19
Invanz			57				137				-58				(1	)			74				-101				58				62				-7
Cubicin			52				95				-45				14				55				-74				38				40				-5
Immunology
Simponi			203				210				-3																203				210				-3
Remicade			101				135				-25																101				135				-25
Neuroscience
Belsomra			80				66				22				23				23				-1				57				43				34
Virology
Isentress / Isentress HD			250				275				-9				102				123				-18				149				151				-2
Zepatier			83				104				-20				24				18				30				59				86				-31
Cardiovascular
Zetia			147				165				-11				5				9				-44				142				157				-9
Vytorin			57				92				-38				5								*				52				92				-43
Atozet			97				84				15																97				84				15
Adempas			107				94				14																107				94				14
Diabetes (4)
Januvia			807				927				-13				367				498				-26				440				429				3
Janumet			503				563				-11				129				225				-43				375				339				11
Women's Health
NuvaRing			241				234				3				202				193				5				39				41				-5
Implanon / Nexplanon			199				186				7				136				133				2				62				53				17
Diversified Brands
Singulair			152				161				-6				11				5				116				140				156				-10
Cozaar / Hyzaar			116				103				13				6				4				34				110				99				12
Arcoxia			72				83				-13																72				83				-13
Follistim AQ			62				60				2				27				26				3				35				34				2
Nasonex			58				71				-17				4				7				-40				55				64				-15
Other Pharmaceutical (5)			1,229				1,109				11				385				326				18				842				786				7
ANIMAL HEALTH			1,122				1,021				10				337				306				10				785				715				10
Livestock			726				660				10				144				153				-6				582				508				15
Companion Animals			396				361				10				193				153				25				203				207				-2
Other Revenues (6)			180				115				59				56				75				-25				125				39				*

 

* 200% or greater

 

⁽¹⁾ Only select products are shown. 

 

⁽²⁾ Alliance Revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

 

⁽³⁾ Total Vaccines sales were $2,517 million and $2,159 million on a global basis for third quarter 2019 and 2018, respectively.

 

⁽⁴⁾ Total Diabetes sales were $1,360 million and $1,506 million on a global basis for third quarter 2019 and 2018, respectively.

 

⁽⁵⁾ Includes Pharmaceutical products not individually shown above.

 

⁽⁶⁾ Other Revenues are comprised primarily of Healthcare Services segment revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities. 

 

 

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

SEPTEMBER YEAR-TO-DATE 2019

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3b

 

		Global												U.S.												International
		Sep YTD 2019				Sep YTD 2018				% Change				Sep YTD 2019				Sep YTD 2018				% Change				Sep YTD 2019				Sep YTD 2018				% Change
TOTAL SALES (1)		$	34,972			$	31,296				12			$	15,183			$	13,425				13			$	19,789			$	17,871				11
PHARMACEUTICAL			31,218				27,859				12				14,065				12,206				15				17,153				15,653				10
Oncology
Keytruda			7,973				5,020				59				4,525				2,906				56				3,448				2,114				63
Emend			336				396				-15				173				239				-28				163				157				4
Alliance Revenue - Lynparza (2)			313				125				151				186				88				112				126				37				*
Alliance Revenue - Lenvima (2)			280				78				*				169				49				*				112				29				*
Vaccines (3)
Gardasil / Gardasil 9			3,044				2,317				31				1,579				1,422				11				1,464				894				64
ProQuad / M-M-R II / Varivax			1,794				1,343				34				1,325				1,097				21				469				246				91
Pneumovax 23			592				586				1				428				394				8				164				192				-14
RotaTeq			564				540				4				360				384				-6				203				156				30
Vaqta			167				167								103				95				8				65				72				-10
Hospital Acute Care
Bridion			817				661				24				381				272				40				437				389				12
Noxafil			560				551				1				268				257				4				291				294				-1
Cubicin			207				287				-28				78				150				-48				129				137				-6
Primaxin			207				212				-2				2				6				-61				204				206				-1
Invanz			206				437				-53				30				252				-88				176				185				-5
Cancidas			191				257				-26				5				10				-52				187				247				-25
Immunology
Simponi			625				673				-7																625				673				-7
Remicade			322				459				-30																322				459				-30
Neuroscience
Belsomra			223				191				17				68				76				-10				155				115				35
Virology
Isentress / Isentress HD			752				860				-13				304				383				-21				449				477				-6
Zepatier			304				347				-12				96				8				*				208				339				-39
Cardiovascular
Zetia			443				696				-36				11				34				-67				432				662				-35
Vytorin			231				414				-44				11				11				-2				219				402				-45
Atozet			283				258				9																283				258				9
Adempas			302				238				27																302				238				27
Diabetes (4)
Januvia			2,539				2,756				-8				1,223				1,466				-17				1,317				1,291				2
Janumet			1,567				1,693				-7				462				625				-26				1,105				1,067				3
Women's Health
NuvaRing			700				686				2				593				550				8				107				135				-21
Implanon / Nexplanon			581				535				9				421				375				12				160				160
Diversified Brands
Singulair			503				521				-3				24				16				54				479				505				-5
Cozaar / Hyzaar			329				348				-6				16				18				-13				313				330				-5
Nasonex			226				274				-17				2				8				-74				224				266				-16
Arcoxia			221				249				-11																221				249				-11
Follistim AQ			182				198				-8				80				83				-3				102				115				-12
Other Pharmaceutical (5)			3,634				3,486				4				1,142				932				23				2,492				2,557				-3
ANIMAL HEALTH			3,271				3,176				3				966				924				4				2,305				2,252				2
Livestock			2,007				1,946				3				406				383				6				1,601				1,563				2
Companion Animals			1,264				1,230				3				560				541				4				704				689				2
Other Revenues (6)			483				261				86				152				295				-48				331				(34	)			*

 

* 200% or greater

 

⁽¹⁾ Only select products are shown. 

 

⁽²⁾ Alliance Revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

 

⁽³⁾ Total Vaccines sales were $6,441 million and $5,254 million on a global basis for third quarter 2019 and 2018, respectively.

 

⁽⁴⁾ Total Diabetes sales were $4,242 million and $4,510 million on a global basis for third quarter 2019 and 2018, respectively.

 

⁽⁵⁾ Includes Pharmaceutical products not individually shown above.

 

⁽⁶⁾ Other Revenues are comprised primarily of Healthcare Services segment revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities. 

 

 

MERCK & CO., INC.

PHARMACEUTICAL GEOGRAPHIC SALES

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3c

 

		2019																2018
		1Q				2Q				3Q				Sep YTD				1Q				2Q				3Q				Sep YTD				4Q				Full Year				% Change 3Q
TOTAL PHARMACEUTICAL		$	9,663			$	10,460			$	11,095			$	31,218			$	8,919			$	9,282			$	9,658			$	27,859			$	9,830			$	37,689			15
United States			4,175				4,758				5,132				14,065				3,716				3,841				4,649				12,206				4,402				16,608				10
% Pharmaceutical Sales			43.2	%			45.5	%			46.3	%			45.1	%			41.7	%			41.4	%			48.1	%			43.8	%			44.8	%			44.1	%
Europe (1)			2,335				2,301				2,304				6,941				2,402				2,322				2,114				6,839				2,237				9,076				9
% Pharmaceutical Sales			24.2	%			22.0	%			20.8	%			22.2	%			26.9	%			25.0	%			21.9	%			24.5	%			22.8	%			24.1	%
Japan			779				900				894				2,573				718				834				740				2,292				835				3,127				21
% Pharmaceutical Sales			8.1	%			8.6	%			8.1	%			8.2	%			8.1	%			9.0	%			7.7	%			8.2	%			8.5	%			8.3	%
Asia Pacific			1,367				1,351				1,536				4,254				1,112				1,224				1,054				3,390				1,199				4,589				46
% Pharmaceutical Sales			14.1	%			12.9	%			13.8	%			13.6	%			12.5	%			13.2	%			10.9	%			12.2	%			12.2	%			12.2	%
China			725				745				898				2,368				459				530				488				1,476				601				2,077				84
% Pharmaceutical Sales			7.5	%			7.1	%			8.1	%			7.6	%			5.1	%			5.7	%			5.1	%			12.2	%			6.1	%			5.5	%
Latin America			427				523				534				1,484				398				459				493				1,350				530				1,880				8
% Pharmaceutical Sales			4.4	%			5.0	%			4.8	%			4.8	%			4.5	%			4.9	%			5.1	%			4.8	%			5.4	%			5.0	%
Eastern Europe/Middle East Africa			343				388				423				1,154				335				356				347				1,038				349				1,388				22
% Pharmaceutical Sales			3.6	%			3.7	%			3.8	%			3.7	%			3.8	%			3.8	%			3.6	%			3.7	%			3.6	%			3.7	%
Canada			177				179				211				568				196				192				177				565				211				776				19
% Pharmaceutical Sales			1.8	%			1.7	%			1.9	%			1.8	%			2.2	%			2.1	%			1.8	%			2.0	%			2.1	%			2.1	%
Other			60				60				61				179				42				54				84				179				67				245				-27
% Pharmaceutical Sales			0.6	%			0.6	%			0.5	%			0.6	%			0.5	%			0.6	%			0.9	%			0.6	%			0.7	%			0.7	%

 

⁽¹⁾ Europe primarily represents all European Union countries and the European Union accession markets.

 

 

MERCK & CO., INC.

OTHER (INCOME) EXPENSE, NET - GAAP

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 4

 

OTHER (INCOME) EXPENSE, NET

 

	3Q19				3Q18				Sep YTD 2019				Sep YTD 2018
Interest income		$	(61	)		$	(92	)		$	(225	)		$	(257	)
Interest expense			231				190				674				569
Exchange losses			38				42				166				119
Income from investments in equity securities, net (1)			(16	)			(198	)			(50	)			(376	)
Net periodic defined benefit plan (credit) cost other than service cost			(128	)			(119	)			(409	)			(384	)
Other, net			(29	)			5				206				(183	)
Total		$	35			$	(172	)		$	362			$	(512	)

 

⁽¹⁾ Includes net realized and unrealized gains and losses from investments in equity securities either owned directly or through ownership interests in investment funds.