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Merck Announces Second-Quarter 2019 Financial Results

July 30, 2019 6:45 AM

KENILWORTH, N.J.--(BUSINESS WIRE)-- Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the second quarter of 2019.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190730005360/en/

“Our science-led strategy and execution across our key growth pillars have driven another quarter of accelerating revenue growth with strength across our global portfolio,” said Kenneth C. Frazier, chairman and chief executive officer, Merck. “We remain confident that our innovative products and significant pipeline opportunities will continue to deliver strong results and provide sustainable value to patients and shareholders.”

Financial Summary

$ in millions, except EPS amounts

Second Quarter

2019

2018

Change

Change
Ex-
Exchange

Sales

$11,760

$10,465

12%

15%

GAAP net income1

2,670

1,707

56%

61%

Non-GAAP net income that excludes certain items1,2*

3,356

2,854

18%

20%

GAAP EPS

1.03

0.63

63%

67%

Non-GAAP EPS that excludes certain items2

1.30

1.06

23%

25%

*Refer to table on page 10

Worldwide sales were $11.8 billion for the second quarter of 2019, an increase of 12% compared with the second quarter of 2018; excluding the negative impact from foreign exchange, worldwide sales grew 15%.

GAAP (generally accepted accounting principles) earnings per share assuming dilution (EPS) were $1.03 for the second quarter of 2019. Non-GAAP EPS of $1.30 for the second quarter of 2019 excludes 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

Lynparza

Lenvima

Vaccines

HIV and Hospital Acute Care

Business Development Highlights

Second-Quarter Revenue Performance

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

$ in millions

Second Quarter

2019

2018

Change

Change Ex-
Exchange

Total Sales

$11,760

$10,465

12%

15%

Pharmaceutical

10,460

9,282

13%

17%

KEYTRUDA

2,634

1,667

58%

63%

JANUVIA / JANUMET

1,441

1,535

-6%

-3%

GARDASIL / GARDASIL 9

886

608

46%

50%

PROQUAD, M-M-R II and

VARIVAX

675

426

58%

61%

BRIDION

278

240

16%

20%

ISENTRESS / ISENTRESS HD

247

305

-19%

-13%

NUVARING

240

236

2%

3%

ZETIA / VYTORIN

232

381

-39%

-36%

SIMPONI

214

233

-8%

-1%

ROTATEQ

172

156

10%

13%

Animal Health

1,124

1,090

3%

9%

Livestock

671

633

6%

13%

Companion Animals

453

457

-1%

4%

Other Revenues

176

93

88%

-62%

Pharmaceutical Revenue

Second-quarter pharmaceutical sales were $10.5 billion, an increase of 13% compared with the second quarter of 2018; excluding the unfavorable effect of foreign exchange, sales grew 17% in the second 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. International pharmaceutical sales represented 55% of total sales in the quarter. Performance in international markets was led by China, which had pharmaceutical sales of $745 million representing growth of 41% compared with the second quarter of 2018, driven by oncology and vaccines. Excluding the unfavorable effect of foreign exchange, pharmaceutical sales in China grew by 51%.

Growth in oncology was largely driven by a nearly $1 billion increase in sales for KEYTRUDA to $2.6 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 [Human Papillomavirus Quadrivalent (Types 6, 11, 16 and 18) Vaccine, Recombinant] and GARDASIL 9, vaccines to prevent certain cancers and other diseases caused by HPV, primarily due to public sector buying patterns, demand and pricing in the United States, and the ongoing commercial launch in China. Higher demand in Europe, driven primarily by increased vaccination rates for both boys and girls, also contributed to sales growth.

Growth in pediatric vaccines was driven by M-M-R II (Measles, Mumps and Rubella Virus Vaccine Live), a vaccine to help prevent measles, mumps and rubella; 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, including private-sector buy-in, and pricing in the United States; government tenders in Latin America and higher demand in Europe.

Performance in hospital acute care reflects strong demand 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 the 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 ZETIA (ezetimibe) and VYTORIN (ezetimibe/simvastatin), INVANZ (ertapenem sodium) and REMICADE (infliximab). In addition, the decline in sales of JANUVIA (sitagliptin) and JANUMET (sitagliptin and metformin HCI) 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 second quarter of 2019, an increase of 3% compared with the second quarter of 2018. Excluding the unfavorable effect from foreign exchange, Animal Health sales grew 9%. Growth in the second quarter was primarily driven by livestock, predominantly due to products acquired in the Antelliq acquisition. Companion animal sales performance reflects volume growth in vaccine and insulin products, partially offset by the timing of customer purchases in the prior year for the BRAVECTO (fluralaner) line of products for parasitic control.

Animal Health segment profits were $405 million in the second quarter of 2019, a decrease of 10% compared with $450 million in the second quarter of 2018, primarily reflecting the unfavorable impact of foreign exchange.3

Second-Quarter Expense, EPS and Related Information

The tables below present selected expense information.

$ in millions

Second-Quarter 2019

GAAP

Acquisition- and
Divestiture-
Related Costs4

Restructuring
Costs

Certain Other
Items

Non-GAAP2

Cost of sales

$3,401

$447

$65

$–

$2,889

Selling, general and administrative

2,712

61

32

–

2,619

Research and development

2,189

4

3

–

2,182

Restructuring costs

59

­­–

59

–

–

Other (income) expense, net

140

148

–

48

(56)

Second-Quarter 2018

Cost of sales

$3,417

$733

$3

$–

$2,681

Selling, general and administrative

2,508

16

1

–

2,491

Research and development

2,274

1

3

344

1,926

Restructuring costs

228

–

228

–

–

Other (income) expense, net

(48)

105

–

(32)

(121)

GAAP Expense, EPS and Related Information

Gross margin was 71.1% for the second quarter of 2019 compared to 67.3% for the second quarter of 2018. The increase in gross margin for the second quarter of 2019 was primarily driven by lower acquisition- and divestiture-related costs, favorable product mix and lower amortization of intangible assets related to collaborations, partially offset by higher restructuring costs.

Selling, general and administrative expenses were $2.7 billion in the second quarter of 2019, an 8% increase compared to the second quarter of 2018. The increase primarily reflects higher administrative, acquisition- and divestiture-related, restructuring and promotion costs, partially offset by the favorable effects of foreign exchange.

Research and development (R&D) expenses were $2.2 billion in the second quarter of 2019, a decline of 4% compared with the second quarter of 2018. The decline was driven primarily by lower expenses related to business development transactions, largely reflecting a $344 million charge recorded in the second quarter of 2018 related to the Viralytics Limited acquisition. The decline was partially offset by higher expenses related to clinical development and increased investment in discovery research and early drug development.

Other (income) expense, net, was $140 million of expense in the second quarter of 2019 compared to $48 million of income in the second quarter of 2018. Other (income) expense, net, in the second quarter of 2019 reflects impairment charges and lower income from investments in equity securities.

GAAP EPS was $1.03 for the second quarter of 2019 compared with $0.63 for the second quarter of 2018.

Non-GAAP Expense, EPS and Related Information

The non-GAAP gross margin was 75.4% for the second quarter of 2019, compared to 74.4% for the second quarter of 2018. The increase in non-GAAP gross margin reflects favorable product mix and lower amortization of intangible assets related to collaborations.

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

Non-GAAP R&D expenses were $2.2 billion in the second quarter of 2019, a 13% increase compared to the second quarter of 2018. The increase reflects higher expenses related to clinical development, investment in discovery research and early drug development, as well as business development transactions.

Non-GAAP other (income) expense, net, was $56 million of income in the second quarter of 2019 compared to $121 million of income in the second quarter of 2018, driven primarily by lower income from investments in equity securities.

Non-GAAP EPS was $1.30 for the second quarter of 2019 compared with $1.06 for the second quarter of 2018.

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

$ in millions, except EPS amounts

Second Quarter

2019

2018

EPS

GAAP EPS

$1.03

$0.63

Difference5

0.27

0.43

Non-GAAP EPS that excludes items listed below2

$1.30

$1.06

Net Income

GAAP net income1

$2,670

$1,707

Difference

686

1,147

Non-GAAP net income that excludes items listed below1,2

$3,356

$2,854

Decrease (Increase) in Net Income Due to Excluded Items:

Acquisition- and divestiture-related costs4

$660

$855

Restructuring costs

159

235

Charge for the acquisition of Viralytics

–

344

Other

48

(32)

Net decrease (increase) in income before taxes

867

1,402

Estimated income tax (benefit) expense

(145)

(255)

Acquisition- and divestiture-related costs attributable to noncontrolling interests

(36)

–

Decrease (increase) in net income

$686

$1,147

Financial Outlook

Merck narrowed and raised its full-year 2019 revenue range to be between $45.2 billion and $46.2 billion, including a negative impact from foreign exchange of slightly more than 1% at mid-July exchange rates.

Merck narrowed and reduced its full-year 2019 GAAP EPS range to be between $3.78 and $3.88. The reduction in the GAAP EPS range primarily reflects the inclusion of an approximately $1.1 billion charge related to the acquisition of Peloton. Merck narrowed and raised its full-year 2019 non-GAAP EPS range to be between $4.84 and $4.94, including a slightly negative impact from foreign exchange at mid-July 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

$45.2 to $46.2 billion

$45.2 to $46.2 billion*

Operating expenses

Higher than 2018 by a low-single digit rate

Higher than 2018 by a mid-single digit rate

Effective tax rate

16.0% to 17.0%

18.5% to 19.5%

EPS**

$3.78 to $3.88

$4.84 to $4.94

*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

$3.78 to $3.88

Difference5

1.06

Non-GAAP EPS that excludes items listed below2

$4.84 to $4.94

Acquisition- and divestiture-related costs4

$2,100

Restructuring costs

500

Charge for the acquisition of Peloton

1,100

Net decrease (increase) in income before taxes

3,700

Income tax (benefit) expense6

(950)

Decrease (increase) in net income

$2,750

The expected full-year GAAP effective tax rate of 16.0% to 17.0% reflects a net favorable impact of approximately 2.5 percentage points 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 4263838. Members of the media are invited to monitor the call by dialing (706) 758-9928 or (800) 399-7917 and using ID code number 4263838. Journalists who wish to ask questions are requested to contact a member of Merck’s Media Relations team at the conclusion of the call.

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).

_________________________

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.

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.

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.

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.

MERCK & CO., INC.
CONSOLIDATED STATEMENT OF INCOME - GAAP
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 1
GAAP % Change GAAP % Change
2Q19 2Q18 June YTD
2019		 June YTD
2018
Sales

$

11,760

$

10,465

12%

$

22,575

$

20,502

10%

Costs, Expenses and Other

Cost of sales (1)

3,401

3,417

--

6,453

6,601

-2%

Selling, general and administrative (1)

2,712

2,508

8%

5,138

5,016

2%

Research and development (1)(2)

2,189

2,274

-4%

4,119

5,470

-25%

Restructuring costs (3)

59

228

-74%

212

323

-34%

Other (income) expense, net (1)

140

(48

)

*

327

(340

)

*

Income Before Taxes

3,259

2,086

56%

6,326

3,432

84%

Taxes on Income (1)

615

370

820

975

Net Income

2,644

1,716

54%

5,506

2,457

*

Less: Net (Loss) Income Attributable to Noncontrolling Interests (1)

(26

)

9

(79

)

14

Net Income Attributable to Merck & Co., Inc.

$

2,670

$

1,707

56%

$

5,585

$

2,443

*

Earnings per Common Share Assuming Dilution

$

1.03

$

0.63

63%

$

2.15

$

0.90

*

Average Shares Outstanding Assuming Dilution

2,588

2,696

2,596

2,702

Tax Rate (4)

18.9

%

17.8

%

13.0

%

28.4

%

* 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 in the second quarter and first six months of 2018 include a $344 million charge for the acquisition of Viralytics Limited. Research and development expenses in the first six 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 rate for the first six 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 rate for the first six months of 2018 reflects the unfavorable impact of a $1.4 billion pretax 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
SECOND 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		 Adjustment
Subtotal		 Non-GAAP
Cost of sales

$

3,401

447

65

512

$

2,889

Selling, general and administrative

2,712

61

32

93

2,619

Research and development

2,189

4

3

7

2,182

Restructuring costs

59

59

59

-

Other (income) expense, net

140

148

48

196

(56

)

Income Before Taxes

3,259

(660

)

(159

)

(48

)

(867

)

4,126

Income Tax Provision (Benefit)

615

(109

)

(3)

(25

)

(3)

(11

)

(3)

(145

)

760

Net Income

2,644

(551

)

(134

)

(37

)

(722

)

3,366

Less: Net (Loss) Income Attributable to Noncontrolling Interests

(26

)

(36

)

(36

)

10

Net Income Attributable to Merck & Co., Inc.

2,670

(515

)

(134

)

(37

)

(686

)

3,356

Earnings per Common Share Assuming Dilution

$

1.03

(0.20

)

(0.05

)

(0.02

)

(0.27

)

$

1.30

Tax Rate

18.9

%

18.4

%

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 $373 million of expenses for the amortization of intangible assets recognized as a result of business acquisitions, as well as $69 million of intangible asset impairment charges. 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 other (income) expense, net primarily reflects goodwill impairment charges related to certain businesses in the Healthcare Services segment and expenses related to an increase in the estimated fair value 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) 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
SIX MONTHS ENDED JUNE 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		 Adjustment
Subtotal		 Non-GAAP
Cost of sales

$

6,453

860

99

959

$

5,494

Selling, general and administrative

5,138

60

32

92

5,046

Research and development

4,119

(27

)

3

(24

)

4,143

Restructuring costs

212

212

212

-

Other (income) expense, net

327

315

48

363

(36

)

Income Before Taxes

6,326

(1,208

)

(346

)

(48

)

(1,602

)

7,928

Income Tax Provision (Benefit)

820

(207

)

(3)

(56

)

(3)

(304

)

(4)

(567

)

1,387

Net Income

5,506

(1,001

)

(290

)

256

(1,035

)

6,541

Less: Net (Loss) Income Attributable to Noncontrolling Interests

(79

)

(89

)

(89

)

10

Net Income Attributable to Merck & Co., Inc.

5,585

(912

)

(290

)

256

(946

)

6,531

Earnings per Common Share Assuming Dilution

$

2.15

(0.36

)

(0.11

)

0.10

(0.37

)

$

2.52

Tax Rate

13.0

%

17.5

%

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 $771 million of expenses for the amortization of intangible assets recognized as a result of business acquisitions, as well as $81 million of intangible asset impairment charges. 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 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) Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments. Also 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 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

2Q

June YTD

1Q

2Q

June
YTD

1Q

2Q

June YTD

3Q

4Q

Full Year

Nom %

Ex-Exch %

Nom %

Ex-Exch %

TOTAL SALES (1)

$

10,816

$

11,760

$

22,575

$

10,037

$

10,465

$

20,502

$

10,794

$

10,998

$

42,294

12

15

10

13

PHARMACEUTICAL

9,663

10,460

20,123

8,919

9,282

18,201

9,658

9,830

37,689

13

17

11

15

Oncology
Keytruda

2,269

2,634

4,903

1,464

1,667

3,131

1,889

2,151

7,171

58

63

57

62

Emend

117

121

237

125

148

273

123

126

522

-18

-15

-13

-10

Alliance Revenue – Lynparza (2)

79

111

190

33

44

76

49

62

187

154

159

149

155

Alliance Revenue – Lenvima (2)

74

97

171

35

35

43

71

149

177

182

* *
Vaccines (3)
Gardasil / Gardasil 9

838

886

1,724

660

608

1,269

1,048

835

3,151

46

50

36

40

ProQuad / M-M-R II / Varivax

496

675

1,171

392

426

818

525

455

1,798

58

61

43

46

RotaTeq

211

172

383

193

156

349

191

188

728

10

13

10

12

Pneumovax 23

185

170

355

179

193

372

214

322

907

-12

-10

-4

-3

Vaqta

47

58

105

37

65

101

66

72

239

-10

-8

4

6

Hospital Acute Care
Bridion

255

278

533

204

240

444

217

256

917

16

20

20

25

Noxafil

190

193

383

176

188

363

188

191

742

3

7

5

10

Cubicin

88

67

155

98

94

192

95

80

367

-29

-25

-19

-16

Invanz

72

78

150

151

149

300

137

59

496

-48

-44

-50

-46

Primaxin

59

71

130

72

68

140

72

53

265

5

12

-7

-2

Cancidas

61

67

129

91

87

178

79

69

326

-22

-17

-28

-23

Immunology
Simponi

208

214

422

231

233

464

210

220

893

-8

-1

-9

-2

Remicade

123

98

221

167

157

324

135

123

582

-37

-32

-32

-26

Neuroscience
Belsomra

67

76

143

54

71

125

66

69

260

8

9

15

16

Virology
Isentress / Isentress HD

255

247

502

281

305

586

275

280

1,140

-19

-13

-14

-8

Zepatier

114

108

221

131

113

243

104

108

455

-5

0

-9

-5

Cardiovascular
Zetia

140

156

296

305

226

531

165

162

857

-31

-28

-44

-42

Vytorin

97

76

174

167

155

322

92

83

497

-51

-47

-46

-42

Atozet

94

92

186

73

101

174

84

89

347

-9

-3

7

14

Adempas

90

104

194

68

75

143

94

91

329

39

43

36

40

Diabetes (4)
Januvia

824

908

1,732

880

949

1,829

927

930

3,686

-4

-2

-5

-3

Janumet

530

533

1,063

544

585

1,129

563

535

2,228

-9

-5

-6

-1

Women's Health
NuvaRing

219

240

459

216

236

452

234

216

902

2

3

2

3

Implanon / Nexplanon

199

183

382

174

174

348

186

169

703

6

8

10

12

Diversified Brands
Singulair

191

160

352

175

185

360

161

187

708

-13

-8

-2

3

Cozaar / Hyzaar

103

109

213

120

125

245

103

105

453

-13

-7

-13

-8

Nasonex

96

72

168

122

81

203

71

102

376

-11

-6

-17

-13

Arcoxia

75

75

149

83

84

166

83

86

335

-11

-5

-10

-4

Follistim AQ

57

63

121

67

70

138

60

70

268

-10

-6

-12

-9

Other Pharmaceutical (5)

1,140

1,268

2,406

1,186

1,189

2,378

1,109

1,215

4,705

7

11

1

6

ANIMAL HEALTH

1,025

1,124

2,149

1,065

1,090

2,155

1,021

1,036

4,212

3

9

0

6

Livestock

611

671

1,282

652

633

1,286

660

684

2,630

6

13

0

7

Companion Animals

414

453

867

413

457

869

361

352

1,582

-1

4

0

5

Other Revenues (6)

128

176

303

53

93

146

115

132

393

88

-62

107

-82

* 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 and $2,037 million in the first and second 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 and $1,480 million in the first and second 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.

Media:

Jessica Fine

(908) 740-1707

Pamela Eisele

(267) 305-3558

Investors:

Teri Loxam

(908) 740-1986

Michael DeCarbo

(908) 740-1807

Source: Merck

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