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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 26, 2023

 

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.)

 

126 East Lincoln Avenue, Rahway, NJ

(Address of principal executive offices)

 

07065

(Zip Code)

 

(Registrant’s telephone number, including area code) (908) 740-4000

 

Not Applicable

(Former name, former address and former fiscal year, 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:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class  Trading Symbol(s)  Name of each exchange on which registered
       
Common Stock ($0.50 par value)  MRK  New York Stock Exchange
0.500% Notes due 2024  MRK 24  New York Stock Exchange
1.875% Notes due 2026  MRK/26  New York Stock Exchange
2.500% Notes due 2034  MRK/34  New York Stock Exchange
1.375% Notes due 2036  MRK 36A  New York Stock Exchange

 

 

 

 

 

 

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 Merck & Co., Inc. on October 26, 2023, regarding earnings for the third quarter of 2023, 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 26, 2023, regarding earnings for the third quarter of 2023
     
  Exhibit 99.2 Certain supplemental information not included in the press release
     
  Exhibit 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

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 26, 2023 By: /s/ Kelly E. W. Grez
    Kelly E. W. Grez
    Corporate Secretary

 

 

 

 

Exhibit 99.1

 

News Release
  

 

Merck Announces Third-Quarter 2023 Financial Results

 

-Sales Reflect Sustained Growth, Particularly in Oncology and Vaccines

-Total Worldwide Sales Were $16.0 Billion, an Increase of 7% From Third Quarter 2022;

Excluding LAGEVRIO, Growth Was 6%; Excluding LAGEVRIO and the Impact of Foreign Exchange, Growth Was 8%

oKEYTRUDA Sales Grew 17% to $6.3 Billion; Excluding the Impact of Foreign Exchange, Sales Also Grew 17%

oGARDASIL/GARDASIL 9 Sales Grew 13% to $2.6 Billion; Excluding the Impact of Foreign Exchange, Sales Grew 16%

oLAGEVRIO Sales Grew 47% to $640 Million; Excluding the Impact of Foreign Exchange, Sales Grew 51%

-GAAP EPS Was $1.86; Non-GAAP EPS Was $2.13

-Announced Collaboration Agreement With Daiichi Sankyo for Three Clinical-Stage ADC Candidates

-Received FDA Approval of KEYTRUDA for Perioperative Treatment of Certain Patients With NSCLC in Combination With Chemotherapy, Based on KEYNOTE-671 Trial

-Obtained FDA Priority Review of Biologics License Application for Sotatercept

-Presented Compelling Data at ESMO 2023 Congress, Including:

oPhase 3 KEYNOTE-671 Trial

oPhase 3 KEYNOTE-A39/EV-302 Trial Conducted in Collaboration With Seagen and Astellas

-Initiating Phase 3 Trials in 2023 Across Multiple Therapeutic Areas, Including Oncology, Cardiometabolic and Immunology

-Full-Year 2023 Financial Outlook:

oRaises and Narrows Expected Worldwide Sales Range To Be Between $59.7 Billion and $60.2 Billion, Including Negative Impact of Foreign Exchange of Approximately 2 Percentage Points; Outlook Includes Approximately $1.3 Billion of LAGEVRIO Sales

oNow Expects Non-GAAP EPS To Be Between $1.33 and $1.38, Including the Negative Impact of Foreign Exchange of Approximately 6 Percentage Points; Outlook Reflects Negative Impact From Upfront Charge of $5.5 Billion, or $1.70 per Share, Related to the Collaboration Agreement With Daiichi Sankyo

 

RAHWAY, N.J., Oct. 26, 2023 Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the third quarter of 2023.

 

“Our strong results this quarter reflect our talented team’s commitment to bringing forward important innovation and pursuing breakthroughs for all those who count on us,” said Robert M. Davis, chairman and chief executive officer, Merck. “We continue to push the boundaries of science, making disciplined investments to augment our diverse pipeline and applying our expertise to accelerate potentially transformative treatments to address patient needs – including through our recently announced collaboration with Daiichi Sankyo. I am proud of our progress as we continue to execute at the highest level and work to generate strong and sustainable value, today and well into the future.”

 

- 2 -

 

Financial Summary

 

   Third Quarter 
$ in millions, except EPS amounts  2023   2022   Change   Change Ex-
Exchange
 
Sales  $15,962   $14,959    7%   9%
GAAP net income1   4,745    3,248    46%   56%
Non-GAAP net income that excludes certain items1,2*    5,427    4,703    15%   22%
GAAP EPS   1.86    1.28    45%   55%
Non-GAAP EPS that excludes certain items2*   2.13    1.85    15%   22%

*Refer to table on page 6.

 

Generally Accepted Accounting Principles (GAAP) earnings per share (EPS) assuming dilution was $1.86 for the third quarter of 2023. Non-GAAP EPS was $2.13 for the third quarter of 2023. The increases in GAAP and non-GAAP EPS in the third quarter versus the prior year were primarily due to operational strength in the business, as well as $0.22 of charges recorded in 2022 related to collaboration and licensing agreements with Moderna, Inc. (Moderna), Orna Therapeutics (Orna) and Orion Corporation (Orion). The increase in GAAP EPS in the third quarter of 2023 was also driven by the impacts of intangible asset impairment charges recorded in 2022, compared with no such charges recorded in 2023, and lower losses from investments in equity securities in 2023. The increases in both GAAP and non-GAAP EPS in the third quarter were partially offset by the unfavorable impact of foreign exchange.

 

Non-GAAP EPS excludes acquisition- and divestiture-related costs, costs related to restructuring programs, as well as income and losses from investments in equity securities.

 

Year-to-date results can be found in the attached tables.

 

 

1 Net income attributable to Merck & Co., Inc.

2 Merck is providing certain 2023 and 2022 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 because management uses non-GAAP results to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management’s annual compensation is derived in part using a non-GAAP pretax income metric. 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 non-GAAP adjustments, see Table 2a attached to this release.

 

- 3 -

 

Third-Quarter Sales Performance

 

The following table reflects sales of the company’s top products and significant performance drivers.

 

   Third Quarter
$ in millions  2023   2022   Change   Change Ex-
Exchange
   Commentary
Total Sales  $15,962   $14,959    7%   9%   
Pharmaceutical   14,263    12,963    10%   11%  Increase driven by growth in oncology, vaccines, and virology due to sales of LAGEVRIO, partially offset by diabetes. Excluding LAGEVRIO, growth of 9%. Excluding LAGEVRIO and unfavorable impact of foreign exchange, growth of 10%.
KEYTRUDA   6,338    5,426    17%   17%  Growth driven by increased global uptake in earlier-stage indications, including triple-negative breast cancer (TNBC) and renal cell carcinoma (RCC), and continued strong global demand from metastatic indications.
GARDASIL / GARDASIL 9   2,585    2,294    13%   16%  Growth due to strong demand, particularly in China, and higher pricing in the U.S., partially offset by public-sector buying patterns in the U.S.
JANUVIA / JANUMET   835    1,133    -26%   -25%  Decline primarily due to generic competition in several international markets, particularly in Europe, and lower demand in the U.S.
PROQUAD, M-M-R II and VARIVAX   713    668    7%   6%  Growth largely due to higher pricing in the U.S.
LAGEVRIO   640    436    47%   51%  Growth largely attributable to higher demand in Japan, partially offset by lower demand in Australia and nonrecurrence of sales in the U.K.
BRIDION   424    423    0%   0%  Relatively flat compared with prior year due to higher demand in the U.S., offset by generic competition primarily in Europe.
Lynparza*   299    284    5%   6%  Growth driven primarily by higher pricing in the U.S. and increased demand in Latin America.
Lenvima*   260    202    29%   30%  Growth primarily due to higher demand in the U.S. and certain international markets, and timing of shipments in China.
VAXNEUVANCE   214    16    ***N/M    N/M   Growth driven largely by continued uptake in pediatric indication in the U.S. and launches in Europe.
Animal Health   1,400    1,371    2%   2%  Growth primarily driven by higher pricing in both Livestock and Companion Animal product portfolios.
Livestock   874    829    5%   7%  Growth primarily due to higher pricing across product portfolio, as well as higher demand for ruminant, poultry and swine products.
Companion Animal   526    542    -3%   -4%  Decline primarily due to lower vet visits in the U.S., partially offset by higher pricing. Sales of BRAVECTO were $235 million and $241 million in the current and prior-year quarters, respectively, which represented a decline of 3%.
Other Revenues**   299    625    -52%   -18%  Decline primarily due to impact of revenue hedging. Excluding unfavorable impact of foreign exchange, decline due to lower revenue from third-party manufacturing arrangements.

*Alliance revenue for this product represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

**Other revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities.

***Not meaningful

 

- 4 -

 

Third-Quarter Expense, EPS and Related Information

 

The table below presents selected expense information.

 

$ in millions  GAAP   Acquisition-
and
Divestiture-
Related
Costs3
   Restructuring
Costs
   (Income)
Loss From
Investments
in Equity
Securities
   Non-
GAAP2
 
Third Quarter 2023                         
Cost of sales  $4,264   $552   $33   $-   $3,679 
Selling, general and administrative   2,519    17    40    -    2,462 
Research and development   3,307    10    -    -    3,297 
Restructuring costs   126    -    126    -    - 
Other (income) expense, net   126    (24)   -    17    133 
                          
Third Quarter 2022                         
Cost of sales  $3,934   $446   $54   $-   $3,434 
Selling, general and administrative   2,520    22    26    -    2,472 
Research and development   4,399    902    1    -    3,496 
Restructuring costs   94    -    94    -    - 
Other (income) expense, net   429    (26)   -    350    105 

 

GAAP Expense, EPS and Related Information

 

Gross margin was 73.3% for the third quarter of 2023 compared with 73.7% for the third quarter of 2022. The decrease was primarily due to the unfavorable impact of foreign exchange, higher LAGEVRIO sales, which have a low gross margin, and higher acquisition- and divestiture-related costs. The gross margin decline was partially offset by lower revenue from third-party manufacturing arrangements, lower manufacturing-related costs and the favorable impact of product mix.

 

Selling, general and administrative (SG&A) expenses were $2.5 billion in both the third quarters of 2023 and 2022, primarily reflecting increased promotional spending, offset by lower administrative costs.

 

 

3 Includes expenses for the amortization of intangible assets and purchase accounting adjustments to inventories recognized as a result of acquisitions of businesses, intangible asset impairment charges and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration. R&D expenses in the third quarter of 2022 include intangible asset impairment charges of $887 million largely related to nemtabrutinib. Also includes integration, transaction and certain other costs associated with acquisitions and divestitures, as well as amortization of intangible assets related to collaborations and licensing arrangements.

 

- 5 -

 

Research and development (R&D) expenses were $3.3 billion in the third quarter of 2023 compared with $4.4 billion in the third quarter of 2022. The decrease was primarily due to charges recorded in 2022 of $887 million for intangible asset impairments, largely related to nemtabrutinib, and $690 million for collaboration and licensing agreements with Moderna, Orna and Orion. The decrease in R&D expenses was partially offset by higher compensation and benefit costs in 2023, reflecting in part increased headcount, higher investments in discovery research and early drug development and higher clinical development spending.

 

Other (income) expense, net, was $126 million of expense in the third quarter of 2023 compared with $429 million of expense in the third quarter of 2022, primarily due to lower net losses from investments in equity securities.

 

The effective tax rate was 15.5% for the third quarter of 2023 compared with 9.2% in the third quarter of 2022.

 

GAAP EPS was $1.86 for the third quarter of 2023 compared with $1.28 for the third quarter of 2022.

 

Non-GAAP Expense, EPS and Related Information

 

Non-GAAP gross margin was 77.0% for both the third quarters of 2023 and 2022, due to the unfavorable impact of foreign exchange, and higher LAGEVRIO sales, which have a low gross margin, offset by lower revenue from third-party manufacturing arrangements, lower manufacturing-related costs and the favorable impact of product mix.

 

Non-GAAP SG&A expenses were $2.5 billion in both the third quarters of 2023 and 2022, primarily reflecting increased promotional spending, offset by lower administrative costs.

 

Non-GAAP R&D expenses were $3.3 billion in the third quarter of 2023 compared with $3.5 billion in the third quarter of 2022. The decrease was primarily due to charges of $690 million in 2022 related to collaboration and licensing agreements with Moderna, Orna and Orion. The decrease in R&D expenses was partially offset by higher compensation and benefit costs in 2023, reflecting in part increased headcount, higher investments in discovery research and early drug development and higher clinical development spending.

 

Non-GAAP other (income) expense, net, was $133 million of expense in the third quarter of 2023 compared with $105 million of expense in the third quarter of 2022.

 

The non-GAAP effective tax rate was 15.0% for the third quarter of 2023 compared with 13.6% in the third quarter of 2022.

 

Non-GAAP EPS was $2.13 for the third quarter of 2023 compared with $1.85 for the third quarter of 2022.

 

- 6 -

 

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  2023   2022 
EPS          
GAAP EPS  $1.86   $1.28 
Difference   0.27    0.57 
Non-GAAP EPS that excludes items listed below2  $2.13   $1.85 
           
Net Income          
GAAP net income1  $4,745   $3,248 
Difference   682    1,455 
Non-GAAP net income that excludes items listed below1,2  $5,427   $4,703 
           
Excluded Items:          
Acquisition- and divestiture-related costs3  $555   $1,344 
Restructuring costs   199    175 
Loss from investments in equity securities   17    350 
Net decrease (increase) in income before taxes   771    1,869 
Estimated income tax (benefit) expense   (89)   (414)
Decrease (increase) in net income  $682   $1,455 

 

Pipeline and Portfolio Highlights

 

Merck continued to achieve regulatory and clinical milestones across its expansive pipeline and portfolio. The company is initiating Phase 3 trials in 2023 in multiple therapeutic areas, including oncology, cardiometabolic and immunology, and in new modalities. These include investigational individualized neoantigen therapy V940 in combination with KEYTRUDA, antibody-drug conjugate (ADC) MK-2870 and lysine-specific demethylase-1 inhibitor MK-3543 in oncology, oral PCSK9 inhibitor candidate MK-0616 in cardiovascular, and humanized monoclonal antibody MK-7240 in immunology.

 

In oncology, the company received U.S. Food and Drug Administration (FDA) approval of KEYTRUDA for the treatment of certain patients with resectable non-small cell lung cancer (NSCLC) as a neoadjuvant/adjuvant treatment, the company’s eighth approval of KEYTRUDA in earlier-stage cancer. The FDA also granted priority review to two supplemental New Drug Applications (sNDAs): for WELIREG in certain previously treated patients with advanced RCC, and for KEYTRUDA in cervical cancer. Notably, Merck presented compelling new data at the European Society for Medical Oncology (ESMO) Congress 2023 that showcased the company’s progress in earlier stages of cancers, its foundational position in metastatic disease and continued momentum in its diverse oncology pipeline.

 

In cardiovascular disease, Merck received priority review from the FDA for a new Biologics License Application (BLA) for sotatercept, the company’s novel investigational activin signaling inhibitor for the treatment of adults with pulmonary arterial hypertension (PAH) (World Health Organization Group 1), based on clinically meaningful results from the Phase 3 STELLAR trial. The FDA set a Prescription Drug User Fee Act (PDUFA), or target action, date of March 26, 2024. If approved, sotatercept would be the first in its class, bringing a novel approach to address a rare and progressive disease of the pulmonary arteries. Merck’s submission for sotatercept to the Committee for Medicinal Products for Human Use (CHMP) in the European Union (EU) has also been completed.

 

- 7 -

 

Additionally, Merck entered into a collaboration agreement with Daiichi Sankyo for three potentially first-in-class clinical-stage DXd ADCs for the treatment of multiple solid tumors, both as monotherapy and/or in combination with other treatments. This collaboration with Daiichi Sankyo will further augment and diversify Merck’s oncology pipeline.

 

Notable recent news releases on Merck’s pipeline and portfolio are provided in the table that follows.

 

Oncology FDA Approved KEYTRUDA for Treatment of Patients With Resectable (T≥4 cm or N+) NSCLC in Combination With Chemotherapy as Neoadjuvant Treatment, Then Continued as Single Agent as Adjuvant Treatment After Surgery, Based on Results From Phase 3 KEYNOTE-671 Trial (Read Announcement)
FDA Granted Priority Review to Merck’s Application for KEYTRUDA Plus Concurrent Chemoradiotherapy as Treatment for Patients With Newly Diagnosed High-Risk Locally Advanced Cervical Cancer, Based on Results From Phase 3 KEYNOTE-A18 Trial; FDA Set PDUFA Date of Jan. 20, 2024 (Read Announcement)
FDA Accepted for Priority Review Merck’s sNDA for WELIREG in Certain Previously Treated Patients With Advanced RCC, Based on Results From Phase 3 LITESPARK-005 Trial; FDA Set PDUFA Date of Jan. 17, 2024 (Read Announcement)
European Commission (EC) Approved KEYTRUDA as Adjuvant Treatment for Adults With NSCLC at High Risk of Recurrence Following Complete Resection and Platinum-Based Chemotherapy, Based on Results From Phase 3 KEYNOTE-091 Trial (Read Announcement)
EC Approved KEYTRUDA Plus Trastuzumab and Chemotherapy as First-Line Treatment for HER2-Positive Advanced Gastric or Gastroesophageal Junction (GEJ) Adenocarcinoma Expressing PD-L1 (CPS ≥1), Based on Results From Phase 3 KEYNOTE-811 Trial (Read Announcement)
EU Granted Positive CHMP Opinion for KEYTRUDA Plus Chemotherapy as First-Line Treatment for HER2-Negative Advanced Gastric or GEJ Adenocarcinoma Expressing PD-L1 (CPS ≥1), Based on Results From Phase 3 KEYNOTE-859 Trial (Read Announcement)
Japan Ministry of Health, Labor and Welfare Approved Lynparza Plus Abiraterone and Prednisolone for Treatment of BRCA-Mutated Metastatic Castration-Resistant Prostate Cancer, Based on Results From Phase 3 PROpel Trial (Read Announcement)
KEYTRUDA Plus Chemotherapy Before Surgery and Continued as Single Agent After Surgery Reduced Risk of Death by 28% Versus Pre-Operative Chemotherapy in Resectable Stage II, IIIA or IIIB NSCLC, Based on Results From Phase 3 KEYNOTE-671 Trial (Read Announcement)
KEYTRUDA Plus Padcev Reduced Risk of Death by More Than Half Versus Chemotherapy in Patients With Previously Untreated Locally Advanced or Metastatic Urothelial Cancer, Based on Results From Phase 3 KEYNOTE-A39/EV-302 Trial (Read Announcement)
KEYTRUDA Plus Concurrent Chemoradiotherapy Significantly Improved Progression-Free Survival (PFS) Versus Concurrent Chemoradiotherapy Alone in Newly Diagnosed, High-Risk Locally Advanced Cervical Cancer, Based on Results From Phase 3 KEYNOTE-A18 Trial (Read Announcement)
WELIREG Significantly Improved PFS and Objective Response Rates Versus Everolimus in Certain Previously Treated Patients With Advanced RCC, Based on Results From Phase 3 LITESPARK-005 Trial (Read Announcement)
KEYTRUDA Plus Chemotherapy Showed Statistically Significant Improvement in Pathological Complete Response Rate as Neoadjuvant Therapy Versus Chemotherapy in High-Risk, Early-Stage ER+/HER2- Breast Cancer, Based on Results From Phase 3 KEYNOTE-756 Trial (Read Announcement)
KEYTRUDA Plus Trastuzumab and Chemotherapy Significantly Improved PFS Versus Trastuzumab and Chemotherapy in First-Line HER2-Positive Advanced Gastric or GEJ Adenocarcinoma, Based on Results From Phase 3 KEYNOTE-811 Trial (Read Announcement)
KEYTRUDA Significantly Improved Disease-Free Survival in Certain Patients With Muscle-Invasive Urothelial Carcinoma After Surgery, Based on Results From Phase 3 KEYNOTE-123 Trial (Read Announcement)

 

- 8 -

 

Cardiovascular FDA Accepted for Priority Review a New BLA for Sotatercept, an Activin Signaling Inhibitor to Treat Adults With PAH, Based on Results From Phase 3 STELLAR Trial; FDA Set PDUFA Date of March 26, 2024 (Read Announcement)
Merck Presented New Analyses Supporting the Promising Potential of Sotatercept, Its Investigational Medicine for Adults With PAH, Based on Results From Phase 3 STELLAR and SOTERIA Trials (Read Announcement)
Merck Initiated Phase 3 Clinical Program for Oral PCSK9 Inhibitor Candidate MK-0616 (Read Announcement)
Vaccines Long-Term Follow-up Data on Sustained Immunogenicity and Safety for GARDASIL Published in Pediatrics (Read Announcement)
Hospital Acute Care Merck Received Positive EU CHMP Opinion for PREVYMIS for Prevention of CMV Disease in High-Risk Adult Kidney Transplant Recipients and Extended 200-Day Dosing in Adult Hematopoietic Stem Cell Transplant Recipients at Risk for Late CMV Infection and Disease, Based on Results From Phase 3 P002 and P040 Trials (Read Announcement)

 

Sustainability Highlights

 

Merck issued its 2022/2023 Impact Report highlighting the company’s performance across its sustainability efforts, reflecting strong progress toward its commitments to advance access to health and operate responsibly. The report noted how the company reached more than 500 million people around the world with its innovations in 2022 and expanded two of its 2025 Access to Health goals.

 

Full-Year 2023 Financial Outlook

 

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

 

   Full Year 2023
   Updated  Prior
Sales*  $59.7 to $60.2 billion  $58.6 to $59.6 billion
Non-GAAP Gross margin2  Approximately 77%  Approximately 77%
Non-GAAP Operating expenses2**  $39.8 to $40.4 billion  $34.0 to $34.6 billion
Non-GAAP Other (income) expense, net2  Approximately $200 million  Approximately $100 million
Non-GAAP Effective tax rate2***  39.0% to 40.0%  30.5% to 31.5%
Non-GAAP EPS2****  $1.33 to $1.38  $2.95 to $3.05
Share count (assuming dilution)  2.55 billion  2.55 billion

 

*Includes approximately $1.3 billion of LAGEVRIO sales. The company does not have any non-GAAP adjustments to sales.

**Includes an aggregate $17.1 billion of R&D expenses related to the Prometheus Biosciences, Inc. (Prometheus) and Imago BioSciences, Inc. (Imago) acquisitions, and upfront payments for the license and collaboration agreement with Kelun-Biotech (a holding subsidiary of Sichuan Kelun Pharmaceutical Co., Ltd) and collaboration agreement with Daiichi Sankyo. Outlook does not assume any additional significant potential business development transactions.

***Includes an approximate 24.5 percentage point negative impact related to business development (Imago, Prometheus and Daiichi Sankyo).

****Includes $6.22 of one-time charges related to the Prometheus and Imago acquisitions and upfront payments to Kelun-Biotech and Daiichi Sankyo.

 

Merck has not provided a reconciliation of forward-looking non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other (income) expense, net, non-GAAP effective tax rate and non-GAAP EPS to the most directly comparable GAAP measures, given it cannot predict with reasonable certainty the amounts necessary for such a reconciliation, including intangible asset impairment charges, legal settlements, and income and losses from investments in equity securities either owned directly or through ownership interests in investment funds, without unreasonable effort. These items are inherently difficult to forecast and could have a significant impact on the company’s future GAAP results.

 

- 9 -

 

Merck continues to experience strong sustained demand for key growth products, particularly in oncology and vaccines. As a result, Merck is raising and narrowing its full-year sales outlook. Merck now expects full-year sales to be between $59.7 billion and $60.2 billion, including a negative impact of foreign exchange of approximately 2 percentage points, at mid-October 2023 exchange rates. This full-year outlook includes approximately $1.3 billion of LAGEVRIO sales.

 

Merck’s full-year non-GAAP effective income tax rate is expected to be between 39.0% and 40.0%, which includes an approximate 24.5 percentage point negative impact related to business development activity.

 

Merck now expects its full-year non-GAAP EPS to be between $1.33 and $1.38, including a negative impact of foreign exchange of approximately 6 percentage points, at mid-October 2023 exchange rates. This revised non-GAAP EPS range reflects the following, which were not previously included in the outlook:

 

·Additional strength in the business of approximately $0.15 per share.

·A pretax charge of $5.5 billion, or $1.70 per share, for the collaboration agreement with Daiichi Sankyo.

·Estimated expense in the fourth quarter of 2023 of approximately $0.04 per share to advance the ADC assets and finance the transaction with Daiichi Sankyo.

·A 1%, or approximately $0.05 per share, incremental negative impact of foreign exchange.

 

The non-GAAP EPS range excludes acquisition- and divestiture-related costs, costs related to restructuring programs, income and losses from investments in equity securities, and a previously disclosed charge related to settlements with certain plaintiffs in the Zetia antitrust litigation.

 

Earnings Conference Call

 

Investors, journalists and the general public may access a live audio webcast of the earnings conference call on Thursday, Oct. 26, at 9 a.m. ET via this weblink. A replay of the webcast, along with the sales and earnings news release, supplemental financial disclosures, prepared remarks and slides highlighting the results, will be available at www.merck.com.

 

All participants may join the call by dialing (888) 769-8514 (U.S. and Canada Toll-Free) or (517) 308-9208 and using the access code 8206435.

 

- 10 -

 

About Merck

 

At Merck, known as MSD outside of the United States and Canada, we are unified around our purpose: We use the power of leading-edge science to save and improve lives around the world. For more than 130 years, we have brought hope to humanity through the development of important medicines and vaccines. We aspire to be the premier research-intensive biopharmaceutical company in the world – and today, we are at the forefront of research to deliver innovative health solutions that advance the prevention and treatment of diseases in people and animals. We foster a diverse and inclusive global workforce and operate responsibly every day to enable a safe, sustainable and healthy future for all people and communities. 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., Rahway, N.J., USA

 

This news release of Merck & Co., Inc., Rahway, 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 candidates that the candidates 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 the global outbreak of novel coronavirus disease (COVID-19); 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 Annual Report on Form 10-K for the year ended December 31, 2022, and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (www.sec.gov).

 

- 11 -

 

Appendix

 

Generic product names are provided below.

 

Pharmaceutical

BRIDION (sugammadex)

GARDASIL (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant)

GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant)

JANUMET (sitagliptin and metformin HCl)

JANUVIA (sitagliptin)

KEYTRUDA (pembrolizumab)

LAGEVRIO (molnupiravir)

Lenvima (lenvatinib)

Lynparza (olaparib)

M-M-R II (Measles, Mumps and Rubella Virus Vaccine Live)

PREVYMIS (letermovir)

PROQUAD (Measles, Mumps, Rubella and Varicella Virus Vaccine Live)

VARIVAX (Varicella Virus Vaccine Live)

VAXNEUVANCE (Pneumococcal 15-valent Conjugate Vaccine)

WELIREG (belzutifan)

 

Animal Health

BRAVECTO (fluralaner)

 

###

 

 

Media Contacts: Investor Contacts:

 

Robert Josephson

(203) 914-2372

robert.josephson@merck.com

 

Michael Levey

(215) 872-1462

michael.levey@merck.com

 

Peter Dannenbaum

(732) 594-1579

peter.dannenbaum@merck.com

 

Steven Graziano

(732) 594-1583

steven.graziano@merck.com

 

 

 

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1

 

   GAAP       GAAP     
   3Q23   3Q22   % Change   Sep YTD
2023
   Sep YTD
2022
   % Change 
Sales  $15,962   $14,959    7%  $45,485   $45,453     
                               
Costs, Expenses and Other                               
Cost of sales   4,264    3,934    8%   12,214    13,530    -10%
Selling, general and administrative   2,519    2,520        7,700    7,355    5%
Research and development   3,307    4,399    -25%   20,904    9,773    *  
Restructuring costs   126    94    34%   344    288    19%
Other (income) expense, net   126    429    -71%   388    1,576    -75%
Income Before Taxes   5,620    3,583    57%   3,935    12,931    -70%
Taxes on Income   870    330         2,332    1,423      
Net Income   4,750    3,253    46%   1,603    11,508    -86%
Less: Net Income Attributable to Noncontrolling Interests   5    5         12    6      
Net Income Attributable to Merck & Co., Inc.  $4,745   $3,248    46%  $1,591   $11,502    -86%
                               
Earnings per Common Share Assuming Dilution  $1.86   $1.28    45%  $0.62   $4.53    -86%
                               
Average Shares Outstanding Assuming Dilution   2,546    2,542         2,549    2,540      
Tax Rate   15.5%   9.2%        59.3%   11.0%     

 

* 100% or greater

 

 

 

 

MERCK & CO., INC.

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 GAAP TO NON-GAAP RECONCILIATION

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2a

 

   GAAP   Acquisition
and
Divestiture-Related
Costs
(1)
   Restructuring
Costs
(2)
   (Income)
Loss from
Investments
in Equity
Securities
   Certain
Other Items
   Adjustment
Subtotal
   Non-GAAP 
Third Quarter                                   
Cost of sales  $4,264    552    33              585   $3,679 
Selling, general and administrative   2,519    17    40              57    2,462 
Research and development   3,307    10                   10    3,297 
Restructuring costs   126         126              126     
Other (income) expense, net   126    (24)        17         (7)   133 
Income Before Taxes   5,620    (555)   (199)   (17)        (771)   6,391 
Income Tax Provision (Benefit)   870    (53)(4)    (32)(4)    (4)(4)         (89)   959 
Net Income   4,750    (502)   (167)   (13)        (682)   5,432 
Net Income Attributable to Merck & Co., Inc.   4,745    (502)   (167)   (13)        (682)   5,427 
Earnings per Common Share Assuming Dilution  $1.86    (0.20)   (0.07)            (0.27)  $2.13 
                                    
Tax Rate   15.5%                            15.0%
                                    
Sep YTD                                   
Cost of sales  $12,214    1,564    94              1,658   $10,556 
Selling, general and administrative   7,700    62    93              155    7,545 
Research and development   20,904    29    1              30    20,874 
Restructuring costs   344         344              344     
Other (income) expense, net   388    (12)        (218)   573(3)    343    45 
Income Before Taxes   3,935    (1,643)   (532)   218    (573)   (2,530)   6,465 
Income Tax Provision (Benefit)   2,332    (249)(4)    (88)(4)    47(4)    (60)(4)    (350)   2,682 
Net Income   1,603    (1,394)   (444)   171    (513)   (2,180)   3,783 
Net Income Attributable to Merck & Co., Inc.   1,591    (1,394)   (444)   171    (513)   (2,180)   3,771 
Earnings per Common Share Assuming Dilution  $0.62    (0.55)   (0.18)   0.07    (0.20)   (0.86)  $1.48 
                                    
Tax Rate   59.3%                            41.5%

 

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 non-GAAP information enhances investors’ understanding of the company’s results because management uses non-GAAP measures to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management’s annual compensation is derived in part using a non-GAAP pretax income metric. The non-GAAP information presented 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 primarily reflect expenses for the amortization of intangible assets.  Amounts included in selling, general and administrative expenses reflect integration, transaction and certain other costs related to acquisitions and divestitures.  Amounts included in research and development expenses primarily reflect expenses for the amortization of intangible assets.  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 prior termination of the Sanofi-Pasteur MSD joint venture.  Additionally, the nine-month period includes a $37 million loss on the sale of a business.

 

(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) Reflects a charge related to settlements with certain plaintiffs in the Zetia antitrust litigation.

 

(4) Represents the estimated tax impacts 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

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3

 

   2023   2022  3Q  Sep YTD 
   1Q 2Q 3Q Sep YTD  1Q 2Q 3Q Sep YTD  4Q Full Year  Nom %  Ex-Exch %   Nom %  Ex-Exch % 
TOTAL SALES (1)   $14,487  $15,035  $15,962  $45,485  $15,901  $14,593  $14,959  $45,453  $13,830  $59,283  7   9  -  3 
PHARMACEUTICAL   12,721   13,457   14,263   40,442   14,107   12,756   12,963   39,826   12,180   52,005  10   11  2  4 
Oncology                                                      
Keytruda   5,795   6,271   6,338   18,403   4,809   5,252   5,426   15,487   5,450   20,937  17   17  19  21 
Alliance Revenue – Lynparza (2)   275   310   299   884   266   275   284   825   292   1,116  5   6  7  10 
Alliance Revenue – Lenvima (2)   232   242   260   734   227   231   202   660   216   876  29   30  11  13 
Welireg   42   50   54   146   18   27   38   83   40   123  43   43  77  77 
Alliance Revenue – Reblozyl (3)   43   47   52   142   52   33   39   124   41   166  35   35  14  14 
Vaccines (4)                                                      
Gardasil / Gardasil 9   1,972   2,458   2,585   7,015   1,460   1,674   2,294   5,428   1,470   6,897  13   16  29  34 
ProQuad / M-M-R II / Varivax   528   582   713   1,823   470   578   668   1,716   526   2,241  7   6  6  6 
RotaTeq   297   131   156   584   216   173   256   644   139   783  -39   -39  -9  -8 
Vaxneuvance   106   168   214   488   5   12   16   32   138   170  *   *  *  * 
Pneumovax 23   96   92   140   327   173   153   131   457   145   602  6   4  -28  -27 
Vaqta   40   42   69   151   36   35   64   134   39   173  8   9  12  13 
Hospital Acute Care                                                      
Bridion   487   502   424   1,413   395   426   423   1,244   441   1,685  -   -  14  15 
Prevymis   129   143   157   430   94   103   114   310   118   428  38   38  39  41 
Dificid   65   76   74   215   52   66   77   196   67   263  -4   -4  10  10 
Primaxin   80   53   41   174   58   64   63   185   54   239  -35   -31  -6  - 
Noxafil   60   55   51   167   57   60   62   180   58   238  -18   -12  -7  -1 
Zerbaxa   50   54   53   157   30   46   43   120   49   169  23   22  31  33 
Cardiovascular                                                      
Alliance Revenue - Adempas/Verquvo (5)   99   68   92   259   72   98   88   258   82   341  5   5  -  - 
Adempas (6)   59   65   65   189   61   63   57   181   57   238  15   11  5  7 
Virology                                                      
Lagevrio   392   203   640   1,236   3,247   1,177   436   4,859   825   5,684  47   51  -75  -73 
Isentress / Isentress HD   123   136   119   377   158   147   161   466   167   633  -27   -27  -19  -17 
Neuroscience                                                      
Belsomra   56   63   58   176   69   69   62   199   59   258  -6   -4  -11  -6 
Immunology                                                      
Simponi   180   180   179   539   186   181   173   540   166   706  3   -2  -  - 
Remicade   51   48   45   144   61   53   49   163   44   207  -8   -10  -12  -10 
Diabetes (7)                                                      
Januvia   551   511   581   1,642   779   756   717   2,252   561   2,813  -19   -17  -27  -24 
Janumet   329   354   255   937   454   476   417   1,347   353   1,700  -39   -38  -30  -28 
Other Pharmaceutical (8)   584   553   549   1,690   602   528   603   1,736   583   2,319  -9   -7  -3  - 
ANIMAL HEALTH   1,491   1,456   1,400   4,347   1,482   1,467   1,371   4,320   1,230   5,550  2   2  1  3 
Livestock   849   807   874   2,530   832   826   829   2,486   814   3,300  5   7  2  6 
Companion Animal   642   649   526   1,817   650   641   542   1,834   416   2,250  -3   -4  -1  - 
Other Revenues (9)   275   122   299   696   312   370   625   1,307   420   1,728  -52   -18  -47  -19 

 

*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) Alliance Revenue represents royalties and a milestone payment of $20 million received in the first quarter of 2022.

 

(4) Total Vaccines sales were $3,133 million, $3,557 million and $4,002 million in the first, second and third quarter of 2023, respectively, and $2,481 million, $2,709 million and $3,552 million in the first, second and third quarter of 2022, respectively.

 

(5) Alliance Revenue represents Merck's share of profits from sales in Bayer's marketing territories, which are product sales net of cost of sales and commercialization costs.

 

(6) Net product sales in Merck's marketing territories.

 

(7) Total Diabetes sales were $950 million, $951 million and $924 million in the first, second and third quarter of 2023, respectively, and $1,305 million, $1,300 million and $1,231 million in the first, second and third quarter of 2022, respectively.

 

(8) Includes Pharmaceutical products not individually shown above.

 

(9) Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities.  Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $51 million, $3 million and $65 million in the first, second and third quarter of 2023, respectively, and $114 million, $32 million and $10 million in the first, second and third quarter of 2022, respectively.

 

 

 

Exhibit 99.2

 

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF OPERATIONS - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1a

 

   2023   2022   % Change 
   1Q   2Q   3Q   Sep YTD   1Q   2Q   3Q   Sep YTD   4Q   Full Year   3Q   Sep YTD 
Sales  $14,487   $15,035   $15,962   $45,485   $15,901   $14,593   $14,959   $45,453   $13,830   $59,283    7%    
                                                             
Costs, Expenses and Other                                                            
Cost of sales   3,926    4,024    4,264    12,214    5,380    4,216    3,934    13,530    3,881    17,411    8%   -10%
Selling, general and administrative   2,479    2,702    2,519    7,700    2,323    2,512    2,520    7,355    2,687    10,042        5%
Research and development   4,276    13,321    3,307    20,904    2,576    2,798    4,399    9,773    3,775    13,548    -25%   * 
Restructuring costs   67    151    126    344    53    142    94    288    49    337    34%   19%
Other (income) expense, net   89    172    126    388    708    438    429    1,576    (75)   1,501    -71%   -75%
Income (Loss) Before Taxes   3,650    (5,335)   5,620    3,935    4,861    4,487    3,583    12,931    3,513    16,444    57%   -70%
Income Tax Provision   825    637    870    2,332    554    538    330    1,423    495    1,918           
Net Income (Loss)   2,825    (5,972)   4,750    1,603    4,307    3,949    3,253    11,508    3,018    14,526    46%   -86%
Less: Net Income (Loss) Attributable to Noncontrolling Interests   4    3    5    12    (3)   5    5    6    1    7           
Net Income (Loss) Attributable to Merck & Co., Inc.  $2,821   $(5,975)  $4,745   $1,591   $4,310   $3,944   $3,248   $11,502   $3,017   $14,519    46%   -86%
                                                             
Earnings (Loss) per Common Share Assuming Dilution (1)  $1.11   $(2.35)  $1.86   $0.62   $1.70   $1.55   $1.28   $4.53   $1.18   $5.71    45%   -86%
                                                             
Average Shares Outstanding Assuming Dilution (1)   2,551    2,539    2,546    2,549    2,537    2,540    2,542    2,540    2,548    2,542           
Tax Rate   22.6%   -11.9%   15.5%   59.3%   11.4%   12.0%   9.2%   11.0%   14.1%   11.7%          

 

* 100% or greater

 

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

 

(1) Because the company recorded a net loss in the second quarter of 2023, no potential dilutive common shares were used in the computation of loss per common share assuming dilution as the effect would have been anti-dilutive. 

 

 

 

 

MERCK & CO., INC.

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 GAAP TO NON-GAAP RECONCILIATION

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2b

 

   GAAP  Acquisition and
Divestiture-Related
Costs (1)
  Restructuring Costs (2)  (Income) Loss from
Investments in Equity
Securities
  Adjustment Subtotal  Non-GAAP 
Third Quarter                   
Cost of sales  $3,934   446   54       500  $3,434 
Selling, general and administrative   2,520   22   26       48   2,472 
Research and development   4,399   902   1       903   3,496 
Restructuring costs   94       94       94    
Other (income) expense, net   429   (26)      350   324   105 
Income Before Taxes   3,583   (1,344)  (175)  (350)  (1,869)  5,452 
Income Tax Provision (Benefit)   330   (302)(3)  (35)(3)  (77)(3)  (414)  744 
Net Income   3,253   (1,042)  (140)  (273)  (1,455)  4,708 
Net Income Attributable to Merck & Co., Inc.   3,248   (1,042)  (140)  (273)  (1,455)  4,703 
Earnings per Common Share Assuming Dilution  $1.28   (0.40)  (0.06)  (0.11)  (0.57) $1.85 
                          
Tax Rate   9.2%                  13.6%
                          
Sep YTD                         
Cost of sales  $13,530   1,577   167       1,744  $11,786 
Selling, general and administrative   7,355   137   74       211   7,144 
Research and development   9,773   936   30       966   8,807 
Restructuring costs   288       288       288    
Other (income) expense, net   1,576   (138)      1,268   1,130   446 
Income Before Taxes   12,931   (2,512)  (559)  (1,268)  (4,339)  17,270 
Income Tax Provision (Benefit)   1,423   (587)(3)  (97)(3)  (281)(3)  (965)  2,388 
Net Income   11,508   (1,925)  (462)  (987)  (3,374)  14,882 
Net Income Attributable to Merck & Co., Inc.   11,502   (1,925)  (462)  (987)  (3,374)  14,876 
Earnings per Common Share Assuming Dilution  $4.53   (0.76)  (0.18)  (0.39)  (1.33) $5.86 
                          
Tax Rate   11.0%                  13.8%

 

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 non-GAAP information enhances investors’ understanding of the company’s results because management uses non-GAAP measures to assess performance.  Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics.  In addition, senior management’s annual compensation is derived in part using a non-GAAP pretax income metric.  The non-GAAP information presented 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 primarily reflect expenses for the amortization of intangible assets.  Amounts included in selling, general and administrative expenses reflect integration, transaction and certain other costs related to acquisitions and divestitures.  Amounts included in research and development expenses for the three and nine month periods primarily reflect $887 million of intangible asset impairment charges largely related to nemtabrutinib, which was obtained as part of the 2020 ArQule, Inc. acquisition, and expenses for the amortization of intangible assets.  Amounts included in other (income) expense, net, for the three and nine month periods primarily reflect royalty income and a decrease in the estimated fair value measurement of liabilities for contingent consideration related to the prior 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 impacts 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 2023

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3a

 

   Global  U.S.  International 
   3Q 2023  3Q 2022  % Change  3Q 2023  3Q 2022  % Change  3Q 2023  3Q 2022  % Change 
TOTAL SALES (1)   $15,962  $14,959  7  $7,715  $7,322   5  $8,247  $7,637   8 
PHARMACEUTICAL   14,263   12,963  10   7,153   6,620   8   7,110   6,343   12 
Oncology                                    
Keytruda   6,338   5,426  17   3,795   3,331   14   2,543   2,095   21 
Alliance Revenue – Lynparza (2)   299   284  5   153   144   7   146   140   4 
Alliance Revenue – Lenvima (2)   260   202  29   160   142   13   100   60   67 
Welireg   54   38  43   51   38   35   3       - 
Alliance Revenue – Reblozyl   52   39  35   43   32   34   10   7   42 
Vaccines (3)                                    
Gardasil / Gardasil 9   2,585   2,294  13   838   957   -12   1,746   1,337   31 
ProQuad / M-M-R II / Varivax   713   668  7   567   532   7   146   136   7 
Vaxneuvance   214   16  *   182   15   *   33   1   * 
RotaTeq   156   256  -39   108   154   -30   48   102   -53 
Pneumovax 23   140   131  6   42   68   -39   98   63   55 
Vaqta   69   64  8   32   27   18   37   36   1 
Hospital Acute Care                                    
Bridion   424   423  -   265   233   14   159   190   -17 
Prevymis   157   114  38   70   49   43   87   64   35 
Dificid   74   77  -4   69   72   -3   5   6   -20 
Zerbaxa   53   43  23   29   24   19   24   19   27 
Noxafil   51   62  -18   4   13   -71   47   49   -3 
Primaxin   41   63  -35           N/M   41   63   -35 
Cardiovascular                                    
Alliance Revenue - Adempas/Verquvo (4)   92   88  5   96   85   13   -4   3   * 
Adempas (5)   65   57  15               65   57   15 
Virology                                    
Lagevrio   640   436  47               640   436   47 
Isentress / Isentress HD   119   161  -27   58   68   -15   61   93   -35 
Neuroscience                                    
Belsomra   58   62  -6   23   20   12   35   42   -15 
Immunology                                    
Simponi   179   173  3               179   173   3 
Remicade   45   49  -8               45   49   -8 
Diabetes (6)                                    
Januvia   581   717  -19   328   332   -1   252   385   -34 
Janumet   255   417  -39   43   90   -52   211   327   -35 
Other Pharmaceutical (7)   549   603  -9   197   194   2   353   410   -14 
ANIMAL HEALTH   1,400   1,371  2   462   475   -3   938   896   5 
Livestock   874   829  5   205   186   10   669   643   4 
Companion Animal   526   542  -3   257   289   -11   269   253   6 
Other Revenues (8)   299   625  -52   100   227   -56   199   398   -50 

 

*200% or greater              

       

N/M - Not Meaningful  

                   

Sum of U.S. plus international may not equal global 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 $4,002 million in the third quarter of 2023 and $3,552 million in the third quarter of 2022.        

 

(4) Alliance Revenue represents Merck's share of profits from sales in Bayer's marketing territories, which are product sales net of cost of sales and commercialization costs.        

 

(5) Net product sales in Merck's marketing territories.         

 

(6) Total Diabetes sales were $924 million in the third quarter of 2023 and $1,231 million in the third quarter of 2022.        

 

(7) Includes Pharmaceutical products not individually shown above.        

 

(8) Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities.  Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $65 million in the third quarter of 2023 and $10 million in the third quarter of 2022.         

 

 

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

SEPTEMBER YEAR-TO-DATE 2023

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3b

 

   Global  U.S.  International 
   Sep YTD 2023  Sep YTD 2022  % Change  Sep YTD 2023  Sep YTD 2022  % Change  Sep YTD 2023  Sep YTD 2022  % Change 
TOTAL SALES (1)   $45,485  $45,453  -  $21,393  $20,927   2  $24,092  $24,526   -2 
PHARMACEUTICAL   40,442   39,826  2   19,840   19,119   4   20,602   20,707   -1 
Oncology                                    
Keytruda   18,403   15,487  19   11,142   9,307   20   7,261   6,180   17 
Alliance Revenue – Lynparza (2)   884   825  7   439   427   3   445   397   12 
Alliance Revenue – Lenvima (2)   734   660  11   476   426   12   258   235   10 
Welireg   146   83  77   141   83   70   6       - 
Alliance Revenue – Reblozyl (3)   142   124  14   108   87   24   33   37   -10 
Vaccines (4)                                    
Gardasil / Gardasil 9   7,015   5,428  29   1,718   1,803   -5   5,297   3,624   46 
ProQuad / M-M-R II / Varivax   1,823   1,716  6   1,435   1,337   7   388   379   2 
RotaTeq   584   644  -9   381   427   -11   203   218   -7 
Vaxneuvance   488   32  *   423   31   *   65   1   * 
Pneumovax 23   327   457  -28   105   280   -63   223   177   26 
Vaqta   151   134  12   91   72   25   60   62   -3 
Hospital Acute Care                                    
Bridion   1,413   1,244  14   841   665   27   572   579   -1 
Prevymis   430   310  39   186   136   37   244   174   40 
Dificid   215   196  10   199   184   8   16   12   33 
Primaxin   174   185  -6   2   1   69   173   185   -6 
Noxafil   167   180  -7   29   39   -26   138   141   -2 
Zerbaxa   157   120  31   86   64   33   71   55   29 
Cardiovascular                                    
Alliance Revenue - Adempas/Verquvo (5)   259   258  -   249   244   2   10   14   -28 
Adempas (6)   189   181  5               189   181   5 
Virology                                    
Lagevrio   1,236   4,859  -75       1,523   -100   1,236   3,336   -63 
Isentress / Isentress HD   377   466  -19   165   196   -16   212   270   -21 
Neuroscience                                    
Belsomra   176   199  -11   60   60   -   117   139   -16 
Immunology                                    
Simponi   539   540  -               539   540   - 
Remicade   144   163  -12               144   163   -12 
Diabetes (7)                                    
Januvia   1,642   2,252  -27   842   958   -12   800   1,294   -38 
Janumet   937   1,347  -30   182   258   -30   755   1,089   -31 
Other Pharmaceutical (8)   1,690   1,736  -3   540   511   6   1,147   1,225   -6 
ANIMAL HEALTH   4,347   4,320  1   1,418   1,425   -1   2,929   2,894   1 
Livestock   2,530   2,486  2   543   521   4   1,987   1,965   1 
Companion Animal   1,817   1,834  -1   875   904   -3   942   929   1 
Other Revenues (9)   696   1,307  -47   135   383   -65   561   925   -39 

 

*200% or greater    

                 

Sum of U.S. plus international may not equal global 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) Alliance Revenue represents royalties and a milestone payment of $20 million received in the first quarter of 2022.

       

(4) Total Vaccines sales were $10,692 million and $8,743 million on a global share basis for September YTD 2023 and 2022, respectively.  

     

(5) Alliance Revenue represents Merck's share of profits from sales in Bayer's marketing territories, which are product sales net of cost of sales and commercialization costs.        

 

(6) Net product sales in Merck's marketing territories.   

     

(7) Total Diabetes sales were $2,826 million and $3,836 million on a global share basis for September YTD 2023 and 2022, respectively.    

   

(8) Includes Pharmaceutical products not individually shown above.  

     

(9) Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities.  Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $118 million and $156 million on a global share basis for September YTD 2023 and 2022, respectively.        

 

 

 

MERCK & CO., INC.

PHARMACEUTICAL GEOGRAPHIC SALES

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3c

 

   2023  2022  % Change 
   1Q  2Q  3Q  Sep YTD  1Q  2Q  3Q  Sep YTD  4Q  Full Year  3Q  Sep YTD 
TOTAL PHARMACEUTICAL  $12,721  $13,457  $14,263  $40,442  $14,107  $12,756  $12,963  $39,826  $12,180  $52,005   10   2 
United States   6,117   6,570   7,153   19,840   6,773   5,726   6,620   19,119   5,871   24,989   8   4 
% Pharmaceutical Sales   48.1%  48.8%  50.1%  49.1%  48.0%  44.9%  51.1%  48.0%  48.2%  48.1%        
Europe (1)   2,326   2,401   2,497   7,224   3,309   2,677   2,427   8,412   2,494   10,906   3   -14 
% Pharmaceutical Sales   18.3%  17.8%  17.5%  17.9%  23.5%  21.0%  18.7%  21.1%  20.5%  21.0%        
China   1,694   1,887   1,674   5,255   1,113   1,355   1,419   3,887   1,216   5,102   18   35 
% Pharmaceutical Sales   13.3%  14.0%  11.7%  13.0%  7.9%  10.6%  10.9%  9.8%  10.0%  9.8%        
Japan   737   652   1,062   2,451   965   1,092   653   2,710   832   3,542   63   -10 
% Pharmaceutical Sales   5.8%  4.8%  7.4%  6.1%  6.8%  8.6%  5.0%  6.8%  6.8%  6.8%        
Asia Pacific (other than China and Japan)   703   705   636   2,045   786   854   702   2,342   691   3,034   -9   -13 
% Pharmaceutical Sales   5.5%  5.2%  4.5%  5.1%  5.6%  6.7%  5.4%  5.9%  5.7%  5.8%        
Latin America   470   566   696   1,731   435   453   511   1,399   472   1,871   36   24 
% Pharmaceutical Sales   3.7%  4.2%  4.9%  4.3%  3.1%  3.6%  3.9%  3.5%  3.9%  3.6%        
Eastern Europe/Middle East/Africa   381   370   301   1,052   450   339   360   1,149   320   1,469   -16   -8 
% Pharmaceutical Sales   3.0%  2.7%  2.1%  2.6%  3.2%  2.7%  2.8%  2.9%  2.6%  2.8%        
Canada   141   127   133   401   189   166   166   521   158   678   -20   -23 
% Pharmaceutical Sales   1.1%  0.9%  0.9%  1.0%  1.3%  1.3%  1.3%  1.3%  1.3%  1.3%        
Other   152   179   111   443   87   94   105   287   126   414   6   54 
% Pharmaceutical Sales   1.2%  1.6%  0.9%  0.9%  0.6%  0.6%  0.9%  0.7%  1.0%  0.8%        

 

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

 

(1) Europe represents all European Union countries, the European Union accession markets and the United Kingdom.        

 

 

 

 

MERCK & CO., INC.

OTHER (INCOME) EXPENSE, NET - GAAP

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 4

             

OTHER (INCOME) EXPENSE, NET

 

    3Q23   3Q22   Sep YTD
2023
    Sep YTD
2022
 
Interest income  $(73)  $(40)  $(295)  $(62)
Interest expense   317    244    836    727 
Exchange losses   85    96    208    220 
Loss (income) from investments in equity securities, net (1)   33    371    (240)   1,361 
Net periodic defined benefit plan (credit) cost other than service cost   (138)   (60)   (364)   (208)
Other, net   (98)   (182)   243    (462)
Total  $126   $429   $388   $1,576 

 

(1) Includes net realized and unrealized gains and losses from investments in equity securities either owned directly or through ownership interests in investment funds.  Unrealized gains and losses from investments that are directly owned are determined at the end of the reporting period, while gains and losses from ownership interests in investment funds are accounted for on a one quarter lag.

 

 

 

v3.23.3
Cover
Oct. 26, 2023
Document Information [Line Items]  
Document Type 8-K
Amendment Flag false
Document Period End Date Oct. 26, 2023
Entity File Number 1-6571
Entity Registrant Name Merck & Co., Inc.
Entity Central Index Key 0000310158
Entity Tax Identification Number 22-1918501
Entity Incorporation, State or Country Code NJ
Entity Address, Address Line One 126 East Lincoln Avenue
Entity Address, City or Town Rahway
Entity Address, State or Province NJ
Entity Address, Postal Zip Code 07065
City Area Code 908
Local Phone Number 740-4000
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Common Stock  
Document Information [Line Items]  
Title of 12(b) Security Common Stock ($0.50 par value)
Trading Symbol MRK
Security Exchange Name NYSE
0.500% Notes due 2024  
Document Information [Line Items]  
Title of 12(b) Security 0.500% Notes due 2024
Trading Symbol MRK 24
Security Exchange Name NYSE
1.875% Notes due 2026  
Document Information [Line Items]  
Title of 12(b) Security 1.875% Notes due 2026
Trading Symbol MRK/26
Security Exchange Name NYSE
2.500% Notes due 2034  
Document Information [Line Items]  
Title of 12(b) Security 2.500% Notes due 2034
Trading Symbol MRK/34
Security Exchange Name NYSE
1.375% Notes due 2036  
Document Information [Line Items]  
Title of 12(b) Security 1.375% Notes due 2036
Trading Symbol MRK 36A
Security Exchange Name NYSE

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