Oct 27, 2015 - regulatory approval of bezlotoxumab in the United States, EU and ..... Income Before Taxes. 1,381. 807. 2
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) October 27, 2015
Merck & Co., Inc. (Exact Name of Registrant as Specified in Its Charter) New Jersey (State or Other Jurisdiction of Incorporation) 1-6571 (Commission File Number)
22-1918501 (I.R.S. Employer Identification No.)
2000 Galloping Hill Road, Kenilworth, NJ (Address of Principal Executive Offices)
07033 (Zip Code)
Registrant’s Telephone Number, Including Area Code (908) 740-4000 Not Applicable (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition. The following information, including the exhibits hereto, is being furnished pursuant to this Item 2.02. Incorporated by reference is a press release issued by the Registrant on October 27, 2015, regarding earnings for the third quarter of 2015, attached as Exhibit 99.1. Also incorporated by reference is certain supplemental information not included in the press release, attached as Exhibit 99.2. This information shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and is not incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing. Item 9.01. Financial Statements and Exhibits. (d) Exhibits Exhibit 99.1
Press release issued October 27, 2015, regarding earnings for the third quarter 2015
Exhibit 99.2
Certain supplemental information not included in the press release 2
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Merck & Co., Inc. Date: October 27, 2015
By:
3
/s/ Katie E. Fedosz KATIE E. FEDOSZ Senior Assistant Secretary
EXHIBIT INDEX Exhibit Number
Description
99.1
Press release issued October 27, 2015, regarding earnings for the third quarter 2015
99.2
Certain supplemental information not included in the press release 4
Exhibit 99.1
News Release
FOR IMMEDIATE RELEASE Media Contacts:
Lainie Keller (908) 236-5036
Investor Contacts:
Steven Cragle (908) 740-1801
Teri Loxam (908) 740-1986 Justin Holko (908) 740-1789
Merck Announces Third-Quarter 2015 Financial Results ·
Increased Non-GAAP EPS by 7 Percent to $0.96; GAAP EPS of $0.64
·
Raised 2015 Full-Year Non-GAAP EPS Target to a Range of $3.55 — $3.60 and GAAP EPS Target to a Range of $1.64 — $1.74
·
Worldwide Sales Were $10.1 Billion, a Decrease of 5 Percent; Excluding the Impact of Foreign Exchange, Acquisitions and Divestitures, Worldwide Sales Grew 4 Percent
·
Advanced KEYTRUDA Program ·
FDA Approved sBLA for the Treatment of Previously Treated Patients with Metastatic Non-Small Cell Lung Cancer (NSCLC) Whose Tumors Express PD-L1
·
In KEYNOTE-010 Study KEYTRUDA Showed Superior Overall Survival Compared to Chemotherapy in Patients with Previously Treated Advanced NSCLC Whose Tumors Express PD-L1
·
Third-Quarter Sales Were Approximately $160 million
KENILWORTH, N.J., Oct. 27, 2015 — Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the third quarter of 2015. “Our solid results this quarter demonstrate that our focused strategy, which aims to drive future growth, as well as value for patients, society and shareholders, is working. The evolving market, economic and political dynamics of global health care increasingly underscore that the ability to provide high-value innovation is what will distinguish successful companies going forward,” said Kenneth C. Frazier, chairman and chief executive officer, Merck. Financial Summary Third Quarter $ in millions, except EPS amounts
Sales GAAP EPS Non-GAAP EPS that excludes items listed below1 GAAP Net Income2 Non-GAAP Net Income that excludes items listed below1,2 1
2015
$10,073 0.64 0.96 1,826 2,720
2014
$10,557 0.31 0.90 895 2,617
Merck is providing certain 2015 and 2014 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 performance. This information should be considered in addition to, but not in lieu of, information prepared in accordance with GAAP. For a description of the items, see Table 2a, including the related footnotes, attached to this release. 2 Net income attributable to Merck & Co., Inc.
Non-GAAP (generally accepted accounting principles) earnings per share (EPS) of $0.96 for the third quarter exclude acquisition- and divestiturerelated costs, restructuring costs and certain other items. A reconciliation of GAAP to non-GAAP net income and EPS is provided in the tables that follow. Year-to-date results can be found in the attached tables. Third Quarter $ in millions, except EPS amounts
2015
EPS GAAP EPS Difference3 Non-GAAP EPS that excludes items listed below1
2014
$0.64 0.32 $0.96
$0.31 0.59 $0.90
Net Income GAAP net income2 Difference Non-GAAP net income that excludes items listed below1,2
$1,826 894 $2,720
$895 1,722 $2,617
Decrease (Increase) in Net Income Due to Excluded Items: Acquisition- and divestiture-related costs4 Restructuring costs Gain on divestiture of certain migraine clinical development programs Additional year of health care reform fee Gain on divestiture of certain ophthalmic products Other Net decrease (increase) in income before taxes Income tax (benefit) expense5 Acquisition- and divestiture-related costs attributable to non-controlling interests Decrease (increase) in net income
$1,146 217 (250) — — (33) 1,080 (186) — $894
$1,659 612 — 193 (396) 5 2,073 (295) (56) $1,722
Additional Executive Commentary “Our late-stage pipeline and ongoing launches create both near- and longer-term opportunities to generate value through innovation aimed at addressing some of the world’s biggest medical needs — cancer, antibiotic resistance, cardiometabolic disease, hepatitis C and Alzheimer’s disease,” said Frazier. “Our broad, global and balanced portfolio of medicines and vaccines allows us to weather periodic volatility within a particular therapeutic area or region while consistently focusing on the best scientific and medical opportunities,” continued Frazier. 3
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. 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 fair value measurement of contingent consideration. Also includes integration, transaction and certain other costs related to business acquisitions and divestitures. 5 Includes the estimated tax impact on the reconciling items. Page 2
“The Global Human Health business performed well in the third quarter with continued growth in our diabetes, hospital acute care and oncology franchises. We continue to be pleased with the progress of KEYTRUDA, which is a priority launch for the company,” said Adam Schechter, president, Global Human Health, Merck. “In the third quarter, Merck Research Laboratories achieved multiple milestones in our oncology and infectious disease clinical development programs, priority areas where we believe we can have the most beneficial impact on the lives of patients around the world,” said Dr. Roger M. Perlmutter, president, Merck Research Laboratories. “In particular, the results from KEYNOTE-010, which we announced yesterday, provide unambiguous evidence of the favorable impact that our R&D efforts can have in the treatment of grievous illnesses.” “The third quarter was another demonstration of our strong execution. We remain committed to delivering a leveraged P&L. We have met and will exceed our annual target of $2.5 billion in net savings versus 2012 by the end of this year,” said Robert Davis, chief financial officer, Merck. Select Business Highlights Worldwide sales were $10.1 billion for the third quarter of 2015, a decrease of 5 percent compared with the third quarter of 2014, including a 7 percent negative impact from foreign exchange and a 2 percent net unfavorable impact resulting from the divestiture of the Consumer Care business and select products, partially offset by the acquisition of Cubist Pharmaceuticals, Inc. (Cubist). The following table reflects sales of the company’s top pharmaceutical products, as well as total sales of Animal Health and Consumer Care products. Third Quarter $ in millions
Total Sales Pharmaceutical JANUVIA / JANUMET ZETIA / VYTORIN GARDASIL / GARDASIL 9 REMICADE PROQUAD, M-M-R II and VARIVAX ISENTRESS CUBICIN Animal Health Consumer Care*** Other Revenues
2015
2014
$10,073 8,925 1,576 936 625 442 390 377 325 825 — 323
$10,557 9,134 1,439 1,028 590 604 421 412 7* 885 401 137
Change Ex-Exchange
Change
-5% -2% 10% -9% 6% -27% -7% -9% ** -7% ** **
2% 6% 17% -2% 7% -13% -5% -1% ** 7% ** 39%
*Reflects licensing agreement with Cubist in Japan prior to acquisition by Merck on Jan. 21, 2015 **>100% ***divested on Oct. 1, 2014 Page 3
Commercial and Pipeline Highlights During the third quarter of 2015, the company continued to focus on advancing its pipeline and key therapeutic areas of diabetes, hospital acute care, oncology and vaccines and executing on key launches, including KEYTRUDA (pembrolizumab), an anti-PD-1 therapy, for the treatment of advanced melanoma and metastatic NSCLC in patients whose disease has progressed after other therapies, and BELSOMRA (suvorexant) for the treatment of insomnia. ·
Merck significantly advanced the clinical development program for KEYTRUDA. ·
The U.S. Food and Drug Administration (FDA) approved KEYTRUDA for the treatment of patients with metastatic NSCLC whose tumors express PD-L1 as determined by an FDA-approved test and who have disease progression on or after platinum-containing chemotherapy across both squamous and non-squamous metastatic NSCLC.
·
The National Institute for Health and Care Excellence (NICE) of the U.K. issued a draft recommendation for KEYTRUDA as a first-line treatment option for adults with advanced melanoma. Additionally, NICE issued its final guidance recommending KEYTRUDA for the treatment of advanced melanoma in patients whose disease has progressed after treatment with ipilimumab.
·
The FDA accepted for review a supplemental Biologics License Application (sBLA) for KEYTRUDA for the first-line treatment of unresectable or metastatic melanoma. The FDA granted Priority Review with a PDUFA action date of Dec. 19, 2015.
·
Additionally, the FDA extended the PDUFA action date for a separate sBLA for KEYTRUDA for the treatment of patients with ipilimumabrefractory advanced melanoma to Dec. 24, 2015. The company submitted additional data that constitutes a major amendment, which will require additional time for review.
·
Topline results from KEYNOTE-010 indicated the pivotal study met its primary objective. KEYTRUDA showed superior overall survival compared to chemotherapy in patients with previously treated advanced NSCLC whose tumors express PD-L1. The company plans regulatory submissions based on these data to the FDA by the end of 2015 and the European Medicines Agency (EMA) in early 2016.
·
Data were presented at the European Cancer Congress from the KEYNOTE-028 study, which included first-time presentations of findings investigating the use of KEYTRUDA in multiple tumor types.
·
More than 25 registration studies for KEYTRUDA have been announced or initiated in more than 10 tumor types. In total, the KEYTRUDA clinical development program encompasses more than 30 tumor types in more than 160 clinical trials, including more than 80 combinations of KEYTRUDA with other cancer treatments. Page 4
·
·
The company advanced its clinical development program for the treatment of diabetes. ·
The Japanese Pharmaceuticals and Medical Devices Agency approved omarigliptin, which will be known as MARIZEV in Japan, a once-weekly medicine that helps lower blood sugar levels in adults with type 2 diabetes. Japan is the first country where omarigliptin has been approved; the company plans to submit omarigliptin for regulatory approval in the United States by the end of 2015, and other worldwide regulatory submissions will follow.
·
At the 51 st European Association for the Study of Diabetes Annual Meeting, pivotal Phase 3 data were presented demonstrating omarigliptin achieved its primary efficacy endpoint.
The company highlighted its commitment to addressing infectious diseases with 40 presentations of data at the joint meeting of the Interscience Conference of Antimicrobial Agents and Chemotherapy, and International Congress of Chemotherapy and Infection. · ·
·
Data were presented from the two pivotal Phase 3 clinical studies for bezlotoxumab, an investigational antitoxin for prevention of Clostridium difficile (C. difficile) infection recurrence, which met their primary efficacy endpoints. The company plans to submit new drug applications for regulatory approval of bezlotoxumab in the United States, EU and Canada by the end of 2015. Data were presented from a Phase 2 study of relebactam, an investigational beta-lactamase inhibitor with Qualified Infectious Disease Product and Fast Track designations from the FDA for use in combination therapy, which met its primary efficacy endpoint in patients with complicated intra-abdominal infections. The company has initiated pivotal Phase 3 studies in serious bacterial infections.
The company’s clinical development program for elbasvir/grazoprevir, an investigational once-daily, single tablet combination therapy for the treatment of adult patients with chronic hepatitis C virus (HCV) infection, advanced in the third quarter of 2015. · ·
The FDA accepted the company’s New Drug Application for Priority Review with a PDUFA action date of Jan. 28, 2016. The EMA accepted the company’s Marketing Authorization Application for review, which it will initiate under accelerated assessment timelines.
Pharmaceutical Revenue Performance Third-quarter pharmaceutical sales declined 2 percent to $8.9 billion, including an 8 percent negative impact from foreign exchange. Excluding the impact of exchange, growth was driven by sales in the core therapeutic areas of hospital acute care, diabetes and oncology. Growth in hospital acute care was driven by the addition of the Cubist portfolio and sales growth of certain inline brands. The increase in diabetes reflects the timing of customer purchases in Page 5
the United States and global demand growth. Growth in oncology reflects higher sales of KEYTRUDA, which were approximately $160 million for the quarter. Third-quarter pharmaceutical sales reflect lower sales of REMICADE (infliximab), a treatment for inflammatory diseases, due to loss of exclusivity in the company’s marketing territories in Europe, and NASONEX (mometasone furoate monohydrate), an inhaled nasal corticosteroid for the treatment of nasal allergy symptoms, due to supply constraints in the United States, as well as declines in the HCV portfolio of VICTRELIS (boceprevir) and PEGINTRON (peginterferon alfa-2b). In addition, pharmaceutical sales reflect declines in vaccines, primarily PNEUMOVAX 23 (pneumococcal vaccine polyvalent) driven by lower sales in the United States and PROQUAD (Measles, Mumps, Rubella and Varicella Vaccine Live) driven by the timing of sales activity related to the Pediatric Vaccine Stockpile of the U.S. Centers for Disease Control and Prevention. These declines were partially offset by higher U.S. sales in the franchise of GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant) and GARDASIL [Human Papillomavirus Quadrivalent (Types 6, 11, 16, and 18) Vaccine, Recombinant], vaccines to prevent cancers and other diseases caused by HPV. Animal Health Revenue Performance Animal Health sales totaled $825 million for the third quarter of 2015, a decrease of 7 percent compared with the third quarter of 2014, including a 14 percent negative impact from foreign exchange. Excluding the impact of exchange, growth was driven by an increase in sales of companion animal products, primarily BRAVECTO (fluralaner), a chewable tablet that kills fleas and ticks in dogs for up to 12 weeks, and new aqua and swine products, including PORCILIS PCV M Hyo, a new swine vaccine. Other Revenue Performance Other revenues – primarily comprising alliance revenue, miscellaneous corporate revenues and third-party manufacturing sales – increased to $323 million in the third quarter of 2015. Third-Quarter 2015 Expense and Other Information The costs detailed below totaled $7.8 billion on a GAAP basis during the third quarter of 2015 and include $1.4 billion of acquisition- and divestiture-related costs and restructuring costs. Page 6
Included in expenses for the period
$ in millions
Third Quarter 2015 Materials and production Marketing and administrative Research and development Restructuring costs Third Quarter 2014 Materials and production Marketing and administrative Research and development Restructuring costs
Acquisitionand DivestitureRelated Costs4
GAAP
Restructuring Costs
Certain Other Items
Non-GAAP 1
$
3,761 2,472 1,500 113
$
1,184 26 (71) —
$
70 17 17 113
$
— — — —
$
2,507 2,429 1,554 —
$
4,223 2,975 1,659 376
$
1,420 110 36 —
$
87 68 81 376
$
— 193 — —
$
2,716 2,604 1,542 —
The gross margin was 62.7 percent for the third quarter of 2015 compared to 60.0 percent for the third quarter of 2014, reflecting 12.4 and 14.3 unfavorable percentage point impacts, respectively, from the acquisition- and divestiture-related costs and restructuring costs noted above. The increase in non-GAAP gross margin was driven by lower inventory write-offs and foreign exchange. Marketing and administrative expenses, on a non-GAAP basis, were $2.4 billion in the third quarter of 2015, a decrease from $2.6 billion in the same period of 2014, which was primarily driven by the favorable impact of foreign exchange and the sale of the Consumer Care business. Research and development (R&D) expenses, on a non-GAAP basis, were $1.6 billion in the third quarter of 2015, a 1 percent increase compared to the third quarter of 2014. Other (income) expense, net, was $170 million of income in the third quarter of 2015 compared to $166 million of income in the third quarter of 2014. The third quarter of 2015 includes a gain of $250 million on the divestiture of certain migraine clinical development programs. In the third quarter of 2014, the company recorded a gain of $396 million on the divestiture of certain ophthalmic products in several international markets that was partially offset by a $93 million goodwill impairment charge related to the company’s joint venture with Supera Farma Laboratorios S.A. in Brazil. Page 7
Financial Guidance Merck has raised its full-year 2015 non-GAAP EPS range to be between $3.55 and $3.60, including a negative impact from foreign exchange. The range excludes acquisition- and divestiture-related costs, costs related to restructuring programs and certain other items. The company also has raised its fullyear 2015 GAAP EPS range to be between $1.64 and $1.74. At current exchange rates, the company now anticipates full-year 2015 revenues to be between $39.2 billion and $39.8 billion, including a negative impact from foreign exchange and approximately $1 billion of net lost sales from acquisitions and divestitures. In addition, the company continues to expect full-year 2015 non-GAAP marketing and administrative expenses to be below 2014 levels and R&D expenses to be modestly above 2014 levels. The company continues to anticipate its full-year 2015 non-GAAP tax rate will be in the range of 23 to 24 percent, not including a 2015 R&D tax credit. A reconciliation of anticipated 2015 EPS, as reported in accordance with GAAP to non-GAAP EPS that excludes certain items, is provided in the table below. Full Year 2015
$ in millions, except EPS amounts
GAAP EPS Difference3 Non-GAAP EPS that excludes items listed below1
$1.64 to $1.74 1.91 to 1.86 $3.55 to $3.60
Acquisition- and divestiture-related costs Restructuring costs Foreign currency devaluation related to Venezuela Gain on sale of certain migraine clinical development programs Net decrease (increase) in income before taxes Estimated income tax (benefit) expense Decrease (increase) in net income
$5,450 to $5,350 1,000 to 900 715 (250) 6,915 to 6,715 (1,475) to (1,435) $5,440 to $5,280
Total Employees As of Sept. 30, 2015, Merck had approximately 68,000 employees worldwide. 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://www.merck.com/investors/events-and-presentations/home.html. Institutional investors and analysts can participate in the call by dialing (706) 7589927 or (877) 381-5782 and using ID code number 42222255. Members of the media are invited to monitor the call by dialing (706) 758-9928 or (800) 3997917 and using ID code number 42222255. Journalists who wish to ask questions are requested to contact a member of Merck’s Media Relations team at the conclusion of the call. Page 8
About Merck Today’s Merck is a global health care leader working to help the world be well. Merck is known as MSD outside the United States and Canada. 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. For more information, visit www.merck.com and connect with us on Twitter, Facebook and YouTube. You can also follow our Twitter conversation at $MRK. 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 2014 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). ### Page 9
MERCK & CO., INC. CONSOLIDATED STATEMENT OF INCOME - GAAP (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 1 GAAP 3Q15
Sales Costs, Expenses and Other Materials and production (1) Marketing and administrative (1) Research and development (1) Restructuring costs (2) Other (income) expense, net (1) (3) Income Before Taxes Income Tax Provision Net Income Less: Net Income (Loss) Attributable to Noncontrolling Interests Net Income Attributable to Merck & Co., Inc. Earnings per Common Share Assuming Dilution Average Shares Outstanding Assuming Dilution Tax Rate (4)
$
GAAP 3Q14
10,073
$
3,761 2,472 1,500 113 (170) 2,397 566 1,831
% Change
10,557 4,223 2,975 1,659 376 (166) 1,490 648 842
5
Sep YTD 2015
-5% $ -11% -17% -10% -70% 2% 61%
Sep YTD 2014
29,283
$
11,084 7,698 4,906 386 624 4,585 1,108 3,477
*
(53)
12
% Change
31,755
-8%
13,019 8,681 4,897 664 (978) 5,472 865 4,607
-15% -11% — -42% * -16% -25%
3
$
1,826
$
895
*
$
3,465
$
4,604
-25%
$
0.64
$
0.31
*
$
1.22
$
1.57
-22%
2,836 23.6%
2,911 43.5%
2,850 24.2%
2,942 15.8%
* 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) Represents separation and other related costs associated with restructuring activities under the company’s formal restructuring programs. (3) Other (income) expense, net in the third quarter and first nine months of 2015 includes a $250 million gain on the sale of certain migraine clinical development programs. Other (income) expense, net for the first nine months of 2015 includes foreign exchange losses of $715 million recorded in the second quarter to revalue the company’s net monetary assets in Venezuela. Other (income) expense, net in the third quarter and first nine months of 2014 includes a $396 million gain on the divestiture of certain ophthalmic products in several international markets, as well as a $93 million goodwill impairment charge related to the company’s joint venture with Supera Farma Laboratorios S.A. Other (income) expense, net for the first nine months of 2014 also includes a gain of $741 million related to AstraZeneca’s option exercise and a gain of $204 million related to the divestiture of the company’s Sirna Therapeutics, Inc. subsidiary. Other (income) expense, net includes equity income from affiliates. Prior period amounts have been reclassified to conform to the current presentation. (4) The effective income tax rate for the first nine months of 2015 reflects a net benefit of $370 million related to the settlement of certain federal income tax issues, partially offset by the unfavorable impact of foreign exchange losses recorded in connection with the revaluation of the company’s net monetary assets in Venezuela for which no tax benefit was recorded. The effective income tax rate for the first nine months of 2014 reflects a net benefit of $517 million recorded in connection with AstraZeneca’s option exercise, as well as a benefit of approximately $300 million associated with a capital loss generated in the first quarter of 2014.
MERCK & CO., INC. CONSOLIDATED STATEMENT OF INCOME GAAP TO NON-GAAP RECONCILIATION THIRD QUARTER 2015 (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 2a Acquisition and DivestitureRelated Costs (1)
GAAP
Sales Costs, Expenses and Other Materials and production Marketing and administrative Research and development Restructuring costs Other (income) expense, net (4) Income Before Taxes Taxes on Income Net Income Less: Net Income Attributable to Noncontrolling Interests Net Income Attributable to Merck & Co., Inc. Earnings per Common Share Assuming Dilution Average Shares Outstanding Assuming Dilution Tax Rate
$
Restructuring Costs (2)
Certain Other Items (3)
Adjustment Subtotal
10,073 3,761 2,472 1,500 113 (170) 2,397 566 1,831
Non-GAAP
$ 1,184 26 (71) 7 (1,146)
70 17 17 113 (217)
(283) 283
1,254 43 (54) 113 (276) (1,080) (186)(5) (894)
10,073 2,507 2,429 1,554 — 106 3,477 752 2,725
5
5
$
1,826
(894) $
2,720
$
0.64
$
0.96
2,836 23.6%
2,836 21.6%
Merck is providing 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 performance. This information should be considered in addition to, but not in lieu of, information prepared in accordance with GAAP. (1) Amounts included in materials and production costs reflect $1.2 billion of expenses for the amortization of intangible assets recognized as a result of acquisitions, as well as $11 million of amortization of purchase accounting adjustments to inventories as a result of the Cubist acquisition. Amounts included in marketing and administrative expenses reflect integration, transaction and certain other costs related to business acquisitions, including severance costs which are not part of the company’s formal restructuring programs, as well as transaction and certain other costs related to divestitures. Amount included in research and development expenses represents income of $71 million resulting from a reduction in the fair value of liabilities for contingent consideration. (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) Primarily reflects a $250 million gain on the divestiture of certain migraine clinical development programs. (4) Other (income) expense, net includes equity income from affiliates. (5) Represents the estimated tax impact on the reconciling items.
MERCK & CO., INC. CONSOLIDATED STATEMENT OF INCOME GAAP TO NON-GAAP RECONCILIATION NINE MONTHS ENDED SEPTEMBER 30, 2015 (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 2b Acquisition and DivestitureRelated Costs (1)
GAAP
Sales Costs, Expenses and Other Materials and production Marketing and administrative Research and development Restructuring costs Other (income) expense, net (4) Income Before Taxes Taxes on Income Net Income Less: Net Income Attributable to Noncontrolling Interests Net Income Attributable to Merck & Co., Inc. Earnings per Common Share Assuming Dilution Average Shares Outstanding Assuming Dilution Tax Rate
$
Restructuring Costs (2)
Certain Other Items (3)
Adjustment Subtotal
29,283 11,084 7,698 4,906 386 624 4,585 1,108 3,477
Non-GAAP
$ 3,675 389 63 7 (4,134)
280 70 34 386 (770)
418 (418)
3,955 459 97 386 425 (5,322) (1,201)(5) (4,121)
29,283 7,129 7,239 4,809 — 199 9,907 2,309 7,598
12
12
$
3,465
(4,121) $
7,586
$
1.22
$
2.66
2,850 24.2%
2,850 23.3%
Merck is providing 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 performance. This information should be considered in addition to, but not in lieu of, information prepared in accordance with GAAP. (1) Amounts included in materials and production costs reflect $3.6 billion of expenses for the amortization of intangible assets recognized as a result of acquisitions, as well as $76 million of amortization of purchase accounting adjustments to inventories as a result of the Cubist acquisition. Amounts included in marketing and administrative expenses reflect integration, transaction and certain other costs related to business acquisitions, including severance costs which are not part of the company’s formal restructuring programs, as well as transaction and certain other costs related to divestitures. Amounts included in research and development expenses primarily reflect $62 million of in-process research and development (“IPR&D”) impairment charges. (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) Primarily reflects foreign exchange losses of $715 million to revalue the company’s net monetary assets in Venezuela and a $250 million gain on the divestiture of certain migraine clinical development programs. (4) Other (income) expense, net includes equity income from affiliates. (5) Represents the estimated tax impact on the reconciling items, as well as a net benefit of $370 million on the settlement of certain federal income tax issues.
MERCK & CO., INC. FRANCHISE / KEY PRODUCT SALES (AMOUNTS IN MILLIONS) Table 3 2015
TOTAL SALES (1) PHARMACEUTICAL Primary Care and Women’s Health Cardiovascular Zetia Vytorin
$
1Q 9,425 8,266
$
2Q 9,785 8,564
$
2014 3Q 10,073 8,925
Sep YTD $ 29,283 25,755
$
1Q 10,264 8,451
$
2Q 10,934 9,087
$
3Q 10,557 9,134
Sep YTD $ 31,755 $ 26,672
Full 4Q Year 10,482 $ 42,237 9,370 36,042
% Change Sep YTD -5 -8 -2 -3
3Q
568 320
635 320
633 302
1,836 942
611 361
717 417
660 369
1,988 1,146
662 370
2,650 1,516
-4 -18
-8 -18
Diabetes Januvia Janumet
884 509
1,044 554
1,014 562
2,942 1,625
858 476
1,058 519
933 505
2,849 1,500
1,082 570
3,931 2,071
9 11
3 8
General Medicine & Women’s Health NuvaRing Implanon / Nexplanon Dulera Follistim AQ
166 137 130 82
182 124 120 111
190 176 133 95
538 437 383 288
168 102 102 110
178 119 103 102
186 158 124 97
531 379 328 309
191 123 132 102
723 502 460 412
2 11 7 -2
1 15 17 -7
56
52
40
148
112
103
84
300
81
381
-52
-51
HIV Isentress
385
375
377
1,137
390
453
412
1,255
418
1,673
-9
-9
Hospital Acute Care Cubicin (2) Cancidas Invanz Noxafil Bridion Primaxin
187 163 132 111 85 65
293 134 139 117 87 88
325 139 153 132 89 75
805 436 424 360 262 228
5 166 114 74 73 71
6 156 134 98 82 81
7 183 141 107 90 91
18 505 390 280 245 243
7 175 139 122 95 86
25 681 529 402 340 329
* -24 8 23 -1 -18
* -14 9 29 7 -6
Immunology Remicade Simponi
501 158
455 169
442 178
1,398 505
604 157
607 174
604 170
1,815 500
557 188
2,372 689
-27 5
-23 1
Oncology Emend Keytruda Temodar
122 83 74
134 110 80
141 159 83
396 352 238
122 0 83
144 0 93
136 4 88
402 4 264
151 50 86
553 55 350
4 * -5
-1 * -10
Diversified Brands Respiratory Singulair Nasonex Clarinex
245 289 51
212 215 55
201 121 39
658 625 145
271 312 62
284 258 69
218 261 49
773 830 180
319 268 52
1,092 1,099 232
-8 -54 -21
-15 -25 -20
185 123 94 49 53
189 115 96 63 39
150 123 86 56 41
524 361 277 168 133
205 128 123 64 74
214 141 121 69 58
195 132 114 61 66
614 400 358 194 197
192 118 112 64 67
806 519 470 258 264
-23 -7 -24 -9 -38
-15 -10 -23 -14 -32
359 348 175 192 110
427 358 149 89 106
625 390 179 160 138
1,410 1,096 503 441 354
383 280 142 169 101
409 326 156 147 102
590 421 181 174 197
1,382 1,027 479 490 400
356 366 285 169 346
1,738 1,394 765 659 746
6 -7 -1 -8 -30
2 7 5 -10 -12
1,075
1,128
1,178
3,380
1,378
1,389
1,326
4,097
1,269
5,356
-11
-18
829
840
825
2,494
813
872
885
2,569
885
3,454
-7
-3
2
0
0
3
546
583
401
1,531
16
1,547
*
*
328
381
323
1,031
454
392
137
983
211
1,194
*
5
Hospital and Specialty Hepatitis PegIntron
Other Cozaar / Hyzaar Arcoxia Fosamax Zocor Propecia Vaccines Gardasil / Gardasil 9 ProQuad, M-M-R II and Varivax Zostavax RotaTeq Pneumovax 23 Other Pharmaceutical (3) ANIMAL HEALTH CONSUMER CARE (4) Other Revenues
(5)
* 100% or greater Sum of quarterly amounts may not equal year-to-date amounts due to rounding. (1)
Only select products are shown.
(2)
Cubicin results for the first quarter 2015 represent sales for the two months following Merck’s acquisition of Cubist. Cubicin sales for 2014 represent the previous licensing agreement in Japan prior to the acquisition.
(3)
Includes Pharmaceutical products not individually shown above. Other Vaccines sales included in Other Pharmaceutical were $78 million, $76 million, and $99 million for the first, second, and third quarters of 2015, respectively. Other Vaccines sales included in Other Pharmaceutical were $98 million, $76 million, $116 million and $88 million for the first, second, third and fourth quarters of 2014, respectively. (4) (5)
On October 1, 2014, the company divested the Consumer Care business.
Other revenues are comprised primarily of alliance revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities. On June 30, 2014, AstraZeneca exercised its option to buy Merck’s interest in a subsidiary and through it, Merck’s interest in Nexium and Prilosec. As a result, the company no longer records supply sales for these products. Other revenues in the first quarter 2014 include $232 million of revenue recognized in connection with the sale of U.S. Saphris rights.
Exhibit 99.2 MERCK & CO., INC. CONSOLIDATED STATEMENT OF INCOME - GAAP (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 1a 2015 1Q Sales Costs, Expenses and Other Materials and production Marketing and administrative Research and development Restructuring costs Other (income) expense, net (1) Income Before Taxes Income Tax Provision (Benefit) Net Income Less: Net Income (Loss) Attributable to Noncontrolling Interests Net Income Attributable to Merck & Co., Inc. Earnings per Common Share Assuming Dilution Average Shares Outstanding Assuming Dilution Tax Rate
$
2Q
9,425
$
3,569 2,601 1,737 82 55 1,381 423 958
3Q
9,785
$
3,754 2,624 1,670 191 739 807 119 688
5
Sep YTD
10,073
$
3,761 2,472 1,500 113 (170) 2,397 566 1,831
1
1Q
29,283
$
11,084 7,698 4,906 386 624 4,585 1,108 3,477
5
10,264
$
3,903 2,734 1,574 125 (163) 2,091 360 1,731
12
2Q
3Q
2014 Sep YTD
10,934 $
10,557
$
4,893 2,973 1,664 163 (650) 1,891 (142) 2,033
26
29
4,223 2,975 1,659 376 (166) 1,490 648 842
31,755
$
13,019 8,681 4,897 664 (978) 5,472 865 4,607
(53)
Dec YTD
10,482 $ 3,749 2,924 2,283 349 (10,634) 11,811 4,484 7,327
3
11
3Q
% Change Sep YTD
42,237
-5%
-8%
16,768 11,606 7,180 1,013 (11,613) 17,283 5,349 11,934
-11% -17% -10% -70% 2% 61%
-15% -11% — -42% * -16%
*
-25%
14
$
953
$
687
$
1,826
$
3,465
$
1,705
$
2,004 $
895
$
4,604
$
7,316 $
11,920
*
-25%
$
0.33
$
0.24
$
0.64
$
1.22
$
0.57
$
0.68 $
0.31
$
1.57
$
2.54 $
4.07
*
-22%
2,865 30.6%
2,850 14.7%
2,836 23.6%
2,850 24.2%
2,971 17.2%
2,949 -7.5%
2,911 43.5%
* 100% or greater Sum of quarterly amounts may not equal year-to-date amounts due to rounding. (1)
4Q
Other (income) expense, net includes equity income from affiliates. Prior periods have been reclassified to conform to the current presentation.
2,942 15.8%
2,880 38.0%
2,928 30.9%
MERCK & CO., INC. CONSOLIDATED STATEMENT OF INCOME GAAP TO NON-GAAP RECONCILIATION THIRD QUARTER 2014 (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 2c Acquisition and DivestitureRelated Costs (1)
GAAP
Sales Costs, Expenses and Other Materials and production Marketing and administrative Research and development Restructuring costs Other (income) expense, net Income Before Taxes Taxes on Income Net Income Less: Net (Loss) Income Attributable to Noncontrolling Interests Net Income Attributable to Merck & Co., Inc. Earnings per Common Share Assuming Dilution Average Shares Outstanding Assuming Dilution Tax Rate
$
Restructuring Costs (2)
Certain Other Items (3)
Adjustment Subtotal
10,557 4,223 2,975 1,659 376 (166) 1,490 648 842 (53)
$
895
$
0.31 2,911 43.5%
Non-GAAP
$ 1,420 110 36 93 (1,659)
(56)
87 68 81 376 (612)
193 (391) 198
1,507 371 117 376 (298) (2,073) (295)(4) (1,778)
10,557 2,716 2,604 1,542 — 132 3,563 943 2,620
(56) (1,722)
3 $
2,617
$
0.90 2,911 26.5%
Merck is providing 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 performance. This information should be considered in addition to, but not in lieu of, information prepared in accordance with GAAP. (1) Amounts included in materials and production costs reflect expenses of $1.0 billion for the amortization of intangible assets recognized as a result of mergers and acquisitions, as well as $412 million of impairment charges on product intangibles. Amounts included in marketing and administrative expenses reflect merger integration costs, as well as transaction and certain other costs related to business acquisitions and divestitures. Amounts included in research and development expenses represent in-process research and development (“IPR&D”) impairment charges primarily related to the company’s joint venture with Supera Farma Laboratorios S.A. (“Supera”). Amount included in other (income) expense, net is a goodwill impairment charge related to the joint venture with Supera. Amount included in net (loss) income attributable to noncontrolling interests represents the portion of intangible asset and goodwill impairment charges related to the joint venture with Supera that are attributable to noncontrolling interests. (2) Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to actions under the company’s formal restructuring programs. (3) Amount included in marketing and administrative expenses represents an additional year of expense related to the healthcare reform fee in accordance with final regulations issued in the third quarter by the Internal Revenue Service. Included in other (income) expense, net is a $396 million gain on the divestiture of certain ophthalmic products in several international markets. (4) Represents the estimated tax impact on the reconciling items.
MERCK & CO., INC. CONSOLIDATED STATEMENT OF INCOME GAAP TO NON-GAAP RECONCILIATION NINE MONTHS ENDED SEPTEMBER 30, 2014 (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 2d Acquisition and DivestitureRelated Costs (1)
GAAP
Sales Costs, Expenses and Other Materials and production Marketing and administrative Research and development Restructuring costs Other (income) expense, net Income Before Taxes Taxes on Income Net Income Less: Net Income Attributable to Noncontrolling Interests Net Income Attributable to Merck & Co., Inc. Earnings per Common Share Assuming Dilution Average Shares Outstanding Assuming Dilution Tax Rate
$
Restructuring Costs (2)
Certain Other Items (3)
Adjustment Subtotal
31,755 13,019 8,681 4,897 664 (978) 5,472 865 4,607 3
$
4,604
$
1.57 2,942 15.8%
Non-GAAP
$ 4,270 153 36 93 (4,552)
(56)
377 143 175 664 (1,359)
193 (1,132) 939
4,647 489 211 664 (1,039) (4,972) (1,809)(4) (3,163)
31,755 8,372 8,192 4,686 — 61 10,444 2,674 7,770
(56) (3,107)
59 $
7,711
$
2.62 2,942 25.6%
Merck is providing 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 performance. This information should be considered in addition to, but not in lieu of, information prepared in accordance with GAAP. (1) Amounts included in materials and production costs reflect expenses of $3.2 billion for the amortization of intangible assets recognized as a result of mergers and acquisitions, as well as $1.1 billion of impairment charges on product intangibles. Amounts included in marketing and administrative expenses reflect merger integration costs, as well as transaction and certain other costs related to business acquisitions and divestitures. Amounts included in research and development expenses represent in-process research and development (“IPR&D”) impairment charges primarily related to the company’s joint venture with Supera Farma Laboratorios S.A. (“Supera”). Amount included in other (income) expense, net is a goodwill impairment charge related to the joint venture with Supera. Amount included in net income attributable to noncontrolling interests represents the portion of intangible asset and goodwill impairment charges related to the joint venture with Supera that are attributable to noncontrolling interests. (2) Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to actions under the company’s formal restructuring programs. (3) Amount included in marketing and administrative expenses represents an additional year of expense related to the healthcare reform fee in accordance with final regulations issued in the third quarter by the Internal Revenue Service. Included in other (income) expense, net is a $741 million gain related to AstraZeneca’s option exercise and a $396 million gain on the divestiture of certain ophthalmic products in several international markets. (4) Represents the estimated tax impact on the reconciling items, including a net benefit of $517 million recorded in connection with AstraZeneca’s option exercise, as well as a benefit of approximately $300 million associated with a capital loss generated in the first quarter.
MERCK & CO., INC. FRANCHISE / KEY PRODUCT SALES THIRD QUARTER 2015 (AMOUNTS IN MILLIONS) Table 3a 3Q 2015 $ 10,073 8,925
Global 3Q 2014 $ 10,557 9,134
% Change -5 -2
3Q 2015 $ 4,749 4,382
U.S. 3Q 2014 $ 4,409 3,837
% Change 8 14
3Q 2015 $ 5,324 4,543
633 302
660 369
-4 -18
406 122
361 133
12 -8
228 180
298 236
-24 -24
1,014 562
933 505
9 11
628 274
513 228
23 20
386 288
421 278
-8 4
190 176 133 95
186 158 124 97
2 11 7 -2
135 107 128 37
119 93 117 39
13 15 9 -5
56 69 5 57
67 65 6 58
-17 6 -25 -1
40
84
-52
4
*
40
81
-51
HIV Isentress
377
412
-9
204
207
-1
173
205
-16
Hospital Acute Care Cubicin (2) Cancidas Invanz Noxafil Bridion Primaxin
325 139 153 132 89 75
7 183 141 107 90 91
* -24 8 23 -1 -18
291 6 89 61
4 72 40
57 23 52
1
1
*
35 133 64 71 89 74
7 179 69 67 90 91
* -26 -8 6 -1 -19
Immunology Remicade Simponi
442 178
604 170
-27 5
442 178
604 170
-27 5
Oncology Emend Keytruda Temodar
141 159 83
136 4 88
4 * -5
88 109 6
80 4 1
10 * *
53 50 77
56 87
-5 * -11
Diversified Brands Respiratory Nasonex Singulair Clarinex
121 201 39
261 218 49
-54 -8 -21
41 10 5
154 5 7
-73 * -22
80 191 34
107 214 42
-25 -10 -21
150 123 86 56 41
195 132 114 61 66
-23 -7 -24 -9 -38
7
6
8
4 5 4
3 5 5
18 4 -15
143 123 83 51 37
188 132 111 56 61
-24 -7 -25 -10 -39
625
590
6
556
511
9
69
79
-12
390 179
421 181
-7 -1
327 145
377 149
-13 -3
64 34
44 32
45 5
160 138
174 197
-8 -30
115 103
126 150
-9 -31
45 35
48 48
-7 -26
1,178
1,326
-11
368
323
14
810
1,003
-19
825
885
-7
226
216
5
599
669
-10
0
401
*
0
262
*
0
139
*
323
137
*
141
94
50
182
43
*
TOTAL SALES (1) PHARMACEUTICAL Primary Care and Women’s Health Cardiovascular Zetia Vytorin Diabetes Januvia Janumet
General Medicine & Women’s Health NuvaRing Implanon / Nexplanon Dulera Follistim AQ Hospital and Specialty Hepatitis PegIntron
Other Cozaar / Hyzaar Arcoxia Fosamax Zocor Propecia Vaccines Gardasil / Gardasil 9 ProQuad, M-M-R II and Varivax Zostavax RotaTeq Pneumovax 23 Other Pharmaceutical (3) ANIMAL HEALTH CONSUMER CARE Other Revenues
(4)
(5)
* 100% or greater (1)
Only select products are shown.
International 3Q 2014 $ 6,148 5,297
% Change -13 -14
(2)
Cubicin sales for 2014 represent the previous licensing agreement in Japan prior to the acquisition.
(3)
Includes Pharmaceutical products not individually shown above. Other Vaccines sales included in Other Pharmaceutical were $99 million and $116 million on a global basis for third quarter 2015 and 2014, respectively. (4) (5)
On October 1, 2014, the company divested the Consumer Care business.
Other revenues are comprised primarily of alliance revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities. On June 30, 2014, AstraZeneca exercised its option to buy Merck’s interest in a subsidiary and through it, Merck’s interest in Nexium and Prilosec. As a result, the company no longer records supply sales for these products.
MERCK & CO., INC. FRANCHISE / KEY PRODUCT SALES SEPTEMBER YEAR-TO-DATE 2015 (AMOUNTS IN MILLIONS) Table 3b
TOTAL SALES (1) PHARMACEUTICAL Primary Care and Women’s Health Cardiovascular Zetia Vytorin
Global Sep YTD 15 Sep YTD 14 $ 29,283 $ 31,755 25,755 26,672
% Change -8 -3
U.S. Sep YTD 15 Sep YTD 14 $ 12,907 $ 12,983 11,953 10,429
% Change -1 15
International Sep YTD 15 Sep YTD 14 $ 16,376 $ 18,772 13,802 16,243
% Change -13 -15
1,836 942
1,988 1,146
-8 -18
1,160 356
1,093 410
6 -13
676 586
895 736
-24 -20
2,942 1,625
2,849 1,500
3 8
1,777 749
1,553 676
14 11
1,165 877
1,297 825
-10 6
538
531
1
373
334
12
165
198
-16
437 383 288
379 328 309
15 17 -7
265 369 123
220 312 103
21 18 19
172 15 164
159 16 206
8 -10 -20
148
300
-51
16
*
148
284
-48
1,137
1,255
-9
603
626
-4
534
629
-15
805 436 424 360 262 228
18 505 390 280 245 243
* -14 9 29 7 -6
722 19 235 156
15 195 95
26 20 65
5
4
44
83 417 189 204 262 222
18 491 195 185 245 239
* -15 -3 10 7 -7
1,398 505
1,815 500
-23 1
1,398 505
1,815 500
-23 1
Oncology Emend Keytruda Temodar
396 352 238
402 4 264
-1 * -10
245 261 6
228 4 5
7 * 23
151 90 232
174 259
-13 * -10
Diversified Brands Respiratory Singulair Nasonex Clarinex
658 625 145
773 830 180
-15 -25 -20
26 308 17
18 428 18
45 -28 -7
632 317 128
755 402 162
-16 -21 -21
524 361 277 168 133
614 400 358 194 197
-15 -10 -23 -14 -32
23
20
15
10 15 12
13 15 14
-23 1 -19
501 361 267 153 122
594 400 346 179 183
-16 -10 -23 -15 -33
1,410
1,382
2
1,159
1,075
8
252
307
-18
Zostavax RotaTeq Pneumovax 23
1,096 503 441 354
1,027 479 490 400
7 5 -10 -12
936 402 320 250
894 393 357 318
5 2 -10 -21
160 101 121 104
133 86 133 82
20 17 -9 26
Other Pharmaceutical (3)
3,380
4,097
-18
1,051
977
8
2,328
3,120
-25
2,494
2,569
-3
643
578
11
1,850
1,992
-7
3
1,531
*
0
1,058
*
3
473
*
1,031
983
5
311
919
-66
721
64
*
Diabetes Januvia Janumet General Medicine & Women’s Health NuvaRing Implanon / Nexplanon Dulera Follistim AQ Hospital and Specialty Hepatitis PegIntron HIV Isentress Hospital Acute Care Cubicin (2) Cancidas Invanz Noxafil Bridion Primaxin Immunology Remicade Simponi
Other Cozaar / Hyzaar Arcoxia Fosamax Zocor Propecia Vaccines Gardasil / Gardasil 9 ProQuad, M-M-R II and Varivax
ANIMAL HEALTH CONSUMER CARE Other Revenues
(5)
* 100% or greater
(4)
(1)
Only select products are shown.
(2)
Cubicin results for the September YTD 2015 period represent sales for the eight months following Merck’s acquisition of Cubist. Cubicin sales for 2014 represent the previous licensing agreement in Japan prior to the acquisition. (3)
Includes Pharmaceutical products not individually shown above. Other Vaccines sales included in Other Pharmaceutical were $253 million and $291 million on a global basis for September YTD 2015 and 2014, respectively. (4) (5)
On October 1, 2014, the company divested the Consumer Care business.
Other revenues are comprised primarily of alliance revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities. Other revenues in 2014 include $232 million of revenue recognized in connection with the sale of U.S. Saphris rights. On June 30, 2014, AstraZeneca exercised its option to buy Merck’s interest in a subsidiary and through it, Merck’s interest in Nexium and Prilosec. As a result, the company no longer records supply sales for these products.
MERCK & CO., INC. PHARMACEUTICAL GEOGRAPHIC SALES (AMOUNTS IN MILLIONS) (UNAUDITED) Table 3c 2015 TOTAL PHARMACEUTICAL
$
2Q 8,564
$
3Q 8,925
Sep YTD $ 25,755
$
1Q 8,451
$
3Q 9,134
2014 Sep YTD $ 26,672 $
4Q Full Year 9,370 $ 36,042
% Change 3Q
% Change Sep YTD -2
-3
3,637 44.0%
3,934 45.9%
4,382 49.1%
11,953 46.4%
3,130 37.0%
3,462 38.1%
3,837 42.0%
10,429 39.1%
3,786 40.4%
14,214 39.4%
14
15
Europe (1) % Pharmaceutical Sales
2,024 24.5%
1,896 22.1%
1,920 21.5%
5,841 22.7%
2,478 29.3%
2,537 27.9%
2,297 25.2%
7,312 27.4%
2,269 24.2%
9,581 26.6%
-16
-20
Japan % Pharmaceutical Sales
627 7.6%
629 7.3%
564 6.3%
1,820 7.1%
835 9.9%
859 9.5%
730 8.0%
2,423 9.1%
965 10.3%
3,389 9.4%
-23
-25
Asia Pacific % Pharmaceutical Sales
809 9.8%
822 9.6%
854 9.6%
2,485 9.6%
809 9.6%
840 9.2%
878 9.6%
2,528 9.5%
910 9.7%
3,438 9.5%
-3
-2
318
335
353
1,005
282
309
318
332
1,242
11
11
Latin America % Pharmaceutical Sales
630 7.6%
676 7.9%
585 6.5%
1,891 7.3%
538 6.4%
668 7.3%
673 7.4%
1,879 7.0%
678 7.2%
2,557 7.1%
-13
1
Eastern Europe/Middle East Africa % Pharmaceutical Sales
321 3.9%
372 4.3%
380 4.3%
1,074 4.2%
415 4.9%
459 5.1%
443 4.9%
1,317 4.9%
500 5.3%
1,817 5.0%
-14
-19
Canada % Pharmaceutical Sales
170 2.1%
167 2.0%
159 1.8%
496 1.9%
200 2.4%
218 2.4%
218 2.4%
636 2.4%
218 2.3%
854 2.4%
-27
-22
Other % Pharmaceutical Sales
48 0.6%
68 0.8%
81 0.9%
195 0.8%
46 0.5%
44 0.5%
58 0.6%
148 0.6%
44 0.5%
192 0.5%
40
32
(1) Europe primarily represents all European Union countries and the European Union accession markets.
$
2Q 9,087
United States % Pharmaceutical Sales
China
$
1Q 8,266
909
MERCK & CO., INC. THIRD QUARTER 2015 OTHER (INCOME) EXPENSE, NET - GAAP (AMOUNTS IN MILLIONS) (UNAUDITED) Table 4
OTHER (INCOME) EXPENSE, NET 3Q15
INTEREST INCOME INTEREST EXPENSE EXCHANGE LOSSES (1) EQUITY INCOME FROM AFFILIATES (2) Other, net (3) TOTAL
$
$
SEP YTD 2015
3Q14
(68) 165 228 (63) (432) (170 )
$
$
(69) 191 61 (24) (325) (166 )
$
$
(214) 503 1,038 (210) (493) 624
SEP YTD 2014
$
$
(190) 567 114 (241) (1,228) (978 )
(1)
Included in foreign exchange losses for the first nine months of 2015 is a $715 million charge recorded in the second quarter in connection with the revaluation of the company’s net monetary assets in Venezuela. (2)
Includes the performance of the company’s joint ventures and other equity method affiliates, including the Sanofi Pasteur MSD partnership, certain investment funds, as well as AstraZeneca LP until the termination of that relationship on June 30, 2014. Equity income from AstraZeneca LP was $192 million in the first nine months of 2014. (3)
Other, net in the third quarter and first nine months of 2015 includes a $250 million gain on the divestiture of certain migraine clinical development programs. Other, net in the third quarter and first nine months of 2014 includes a $396 million gain on the divestiture of certain ophthalmic products in several international markets. Other, net in the first nine months of 2014 also includes a $741 million gain on AstraZeneca’s option exercise.
