- Second-Quarter 2015 Non-GAAP EPS of
$0.86, Excluding Certain Items; GAAP EPS of $0.24
- Company Narrows and Raises 2015
Full-Year Non-GAAP EPS Target to $3.45 to $3.55, Excluding Certain
Items; Lowers 2015 Full-Year GAAP EPS Target to $1.52 to $1.71
- Second-Quarter 2015 Worldwide Sales
Were $9.8 Billion, a Decrease of 11 Percent, Including a 7 Percent
Net Unfavorable Impact from Acquisitions and Divestitures and a 7
Percent Negative Impact from Foreign Exchange
- Second-Quarter Results Reflect Sales
Growth in Hospital Acute Care, Oncology and Diabetes and Sales
Declines in Cardiovascular and Hepatitis C
- European Commission Approved KEYTRUDA
for the Treatment of Advanced Melanoma; FDA Accepted sBLA for
KEYTRUDA in Advanced Non-Small Cell Lung Cancer
- Grazoprevir/Elbasvir Chronic Hepatitis
C Combination Regimen Accepted for Regulatory Review in Both the
United States and European Union
Merck (NYSE:MRK), known as MSD outside the United States and
Canada, today announced financial results for the second quarter of
2015.
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Second Quarter $ in millions, except EPS
amounts
2015 2014 Sales $9,785
$10,934 GAAP EPS 0.24 0.68
Non-GAAP EPS that excludes items listed
below1
0.86 0.85
GAAP Net Income2
687 2,004
Non-GAAP Net Income that excludes items
listed below 1,2
2,441 2,493
Non-GAAP (generally accepted accounting principles) earnings per
share (EPS) of $0.86 for the second quarter exclude acquisition-
and divestiture-related costs, restructuring costs and certain
other items, including foreign exchange losses related to
Venezuela.
A reconciliation of GAAP to non-GAAP net income and EPS is
provided in the tables that follow. Year-to-date results can be
found in the attached tables.
$ in millions, except EPS amounts
Second
Quarter 2015 2014 EPS
GAAP EPS $0.24 $0.68
Difference3
0.62 0.17
Non-GAAP EPS that excludes items listed
below1
$0.86 $0.85
Net Income
GAAP net income2 $687 $2,004 Difference
1,754 489 Non-GAAP net income that excludes items
listed below1,2 $2,441 $2,493
Decrease
(Increase) in Net Income Due to Excluded Items:
Acquisition- and divestiture-related costs4
$1,448 $1,756 Restructuring costs 328 421
Foreign exchange losses related to Venezuela 715 –-
Gain on AstraZeneca option exercise –- (741) Net
decrease (increase) in income before taxes 2,491
1,436 Income tax (benefit) expense5 (737) (947)
Decrease (increase) in net income $1,754 $489
Commentary from Chairman and Chief Executive Officer Kenneth
C. Frazier
“We’re investing resources to grow our strongest brands and to
support the most promising assets in our pipeline, while at the
same time lowering our cost base and delivering operating
leverage.”
“We’ve made significant progress this quarter in two of our most
important assets, the KEYTRUDA and hepatitis C programs, and will
be fully prepared to take advantage of these potentially
breakthrough opportunities.”
“We’re witnessing the introduction of breakthrough therapies for
some of the most difficult-to-treat diseases. Merck’s late-stage
pipeline and ongoing launches reflect scientific and therapeutic
progress with the potential to provide significant value to
patients and society.”
Select Business Highlights
Worldwide sales were $9.8 billion for the second quarter of
2015, a decrease of 11 percent compared with the second quarter of
2014, including a 7 percent negative impact from foreign exchange
and a 7 percent net unfavorable impact resulting from the
divestiture of the Consumer Care business and select products,
partially offset by the acquisition of Cubist Pharmaceuticals, Inc.
(Cubist).
The following table reflects sales of the company’s top
pharmaceutical products, as well as total sales of Animal Health
and Consumer Care products.
$ in millions
Second Quarter Change
Change
Ex-Exchange
2015 2014 Total
Sales $9,785 $10,934 -11% -4%
Pharmaceutical 8,564 9,087 -6% 3%
JANUVIA / JANUMET 1,598 1,577 1% 9%
ZETIA / VYTORIN 955 1,134 -16% -8%
REMICADE 455 607 -25% -7% GARDASIL /
GARDASIL 9 427 409 4% 6% ISENTRESS
375 453 -17% -10% PROQUAD, M-M-R II and
VARIVAX 358 326 10% 12% CUBICIN
293 6* ** ** Animal Health 840
872 -4% 10% Consumer Care*** –- 583
** ** Other Revenues 381 392 -3%
-51% *Reflects licensing agreement with Cubist in Japan
prior to acquisition by Merck on Jan. 21, 2015 **≥100% ***divested
on Oct. 1, 2014
Commercial and Pipeline Highlights
During the second quarter of 2015, Merck continued to advance
its pipeline while also focusing on the ongoing launches of
KEYTRUDA (pembrolizumab), its anti-PD-1 therapy, for the treatment
of advanced melanoma in patients whose disease has progressed after
other therapies; BELSOMRA (suvorexant) for the treatment of
insomnia; and ZERBAXA (ceftolozane and tazobactam), a combination
product for the treatment of certain serious bacterial infections
in adults.
- The company accelerated its KEYTRUDA
clinical development program.
- The European Commission approved
KEYTRUDA last week at a dose of 2 mg/kg every three weeks for the
treatment of advanced (unresectable or metastatic) melanoma in
adults, allowing marketing of KEYTRUDA in all 28 European Union
member states.
- The U.S. Food and Drug Administration
(FDA) accepted for review the supplemental Biologics License
Application (sBLA) for KEYTRUDA for the treatment of patients with
advanced non-small cell lung cancer whose disease has progressed on
or after platinum-containing chemotherapy and an FDA-approved
therapy for EGFR or ALK genomic tumor aberrations, if present. The
FDA granted Priority Review with a PDUFA action date of Oct. 2,
2015; the sBLA will be reviewed under the FDA’s Accelerated
Approval program.
- At the 51st Annual Meeting of the
American Society of Clinical Oncology in June, data sets were
presented investigating the use of KEYTRUDA in advanced head and
neck cancer (KEYNOTE-012) and in
multiple difficult-to-treat cancers, including advanced small cell
lung cancer, esophageal cancer and ovarian cancer
(KEYNOTE-028). Additionally, data were
presented and simultaneously published in The New England Journal
of Medicine suggesting that the presence of DNA repair mutations in
colorectal cancer cells is associated with favorable responses to
KEYTRUDA.
- The clinical development program for
the treatment of chronic hepatitis C virus (HCV) infection made
substantial progress in the second quarter of 2015.
- As announced earlier today, the FDA has
accepted for review the New Drug Application (NDA) for
grazoprevir/elbasvir, an investigational once-daily, single tablet
combination therapy for the treatment of adult patients infected
with chronic HCV genotypes (GT) 1, 4 or 6. The FDA granted Priority
Review with a PDUFA action date of Jan. 28, 2016.
- Last week the European Medicines Agency
(EMA) accepted for review the company’s marketing authorization
application (MAA) for grazoprevir/elbasvir for the treatment of
adult patients infected with chronic HCV GT 1, 3, 4 or 6. The EMA
said it will initiate a review of the MAA under accelerated
assessment timelines.
- Results from the Trial Evaluating
Cardiovascular Outcomes with Sitagliptin (TECOS) of JANUVIA
(sitagliptin), a medicine that helps lower blood sugar levels in
adults with type 2 diabetes, were presented in June at the
75th Scientific Sessions of the American Diabetes Association
and simultaneously published online in The New England Journal of
Medicine. The study found that, added to usual care, treatment with
JANUVIA did not increase the risk of major adverse cardiovascular
events in the primary composite endpoint, or hospitalization for
heart failure, compared to placebo.
- The FDA has accepted the resubmission
of the NDA for sugammadex injection, an investigational medicine
for the reversal of neuromuscular blockade induced by rocuronium or
vecuronium, with a PDUFA action date of Dec. 19, 2015. Sugammadex
injection is marketed as BRIDION in more than 60 countries.
- The FDA has extended its planned review
timeline of the Biologics License Application for V419, the
investigational pediatric hexavalent combination vaccine,
DTaP5-IPV-Hib-HepB, which is being developed and, if approved, will
be commercialized through a partnership of Merck and Sanofi
Pasteur. The FDA has not requested additional clinical studies for
licensure.
Pharmaceutical Revenue Performance
Second-quarter pharmaceutical sales declined 6 percent to $8.6
billion, including a 9 percent negative impact from foreign
exchange. Excluding the impact of exchange, growth was driven by
sales in the core therapeutic areas of hospital acute care,
oncology and diabetes. The increase in hospital acute care was
driven by the addition of the Cubist portfolio and sales growth of
inline brands. Growth in oncology reflects sales of $110 million
for KEYTRUDA. Growth in diabetes primarily reflects higher sales in
the United States, Europe and emerging markets.
Second-quarter pharmaceutical sales reflect declines in the
cardiovascular portfolio of ZETIA (ezetimibe) and VYTORIN
(ezetimibe/simvastatin), medicines for lowering LDL cholesterol,
primarily due to loss of exclusivity of ZETIA in Canada (where it
is marketed as EZETROL) and volume declines of both products in the
United States, as well as lower sales of REMICADE (infliximab), a
treatment for inflammatory diseases, due to loss of exclusivity in
Europe. Pharmaceutical sales also reflect declines in the HCV
portfolio of VICTRELIS (boceprevir) and PEGINTRON (peginterferon
alfa-2b), as well as for ISENTRESS (raltegravir), an HIV integrase
inhibitor for use in combination with other antiretroviral agents
for the treatment of HIV-1 infection. The decline for ISENTRESS was
due to timing of tender purchases in the emerging markets and
volume declines in the United States.
Animal Health Revenue Performance
Animal Health sales totaled $840 million for the second quarter
of 2015, a decrease of 4 percent compared with the second quarter
of 2014, including a 14 percent negative impact from foreign
exchange. Excluding the impact of exchange, growth was primarily
driven by an increase in sales of companion animal and swine
products, including continued strong growth from BRAVECTO
(fluralaner), a chewable tablet that kills fleas and ticks in dogs
for up to 12 weeks.
Other Revenue Performance
Other revenues – primarily comprising alliance revenue,
miscellaneous corporate revenues and third-party manufacturing
sales – decreased 3 percent to $381 million compared to the second
quarter of 2014. The decrease was driven primarily by the loss of
revenue from AstraZeneca recorded by Merck, which was $316 million
in the second quarter of 2014, partially offset by higher
third-party manufacturing sales.
Second-Quarter 2015 Expense and Other Information
The costs detailed below totaled $8.2 billion on a GAAP basis
during the second quarter of 2015 and include $1.8 billion of
acquisition- and divestiture-related costs and restructuring
costs.
$ in millions
Included in expenses for the
period Acquisition- and
Second Quarter Divestiture- Restructuring
2015 GAAP
Related Costs4
Costs
Non-GAAP1
Materials and production $3,754 $1,241 $105
$2,408 Marketing and administrative 2,624 136
17 2,471 Research and development 1,670
71 15 1,584 Restructuring costs 191 –-
191 –-
Second Quarter 2014
Materials
and production $4,893 $1,724 $171
$2,998 Marketing and administrative 2,973 32
44 2,897 Research and development 1,664 –-
43 1,621 Restructuring costs 163 –-
163 –-
The gross margin was 61.6 percent for the second quarter of 2015
compared to 55.2 percent for the second quarter of 2014, reflecting
13.8 and 17.4 unfavorable percentage point impacts, respectively,
from the acquisition- and divestiture-related costs and
restructuring costs noted above. The increase in non-GAAP gross
margin was driven by lower inventory write-offs and foreign
exchange.
Marketing and administrative expenses, on a non-GAAP basis, were
$2.5 billion in the second quarter of 2015, a decrease from $2.9
billion in the same period of 2014, which was primarily driven by
the sale of the Consumer Care business, the favorable impact of
foreign exchange and declines in direct selling costs.
Research and development (R&D) expenses, on a non-GAAP
basis, were $1.6 billion in the second quarter of 2015, a 2 percent
decrease compared to the second quarter of 2014.
Other (income) expense, net, was $739 million of expense in the
second quarter of 2015 compared to $650 million of income in the
second quarter of 2014. The second quarter of 2015 includes foreign
exchange losses of $715 million related to the revaluation of the
company’s net monetary assets in Venezuela. The second quarter of
2014 includes a $741 million gain recorded in connection with
AstraZeneca’s option exercise.
The GAAP effective tax rate of 14.7 percent for the second
quarter of 2015 reflects the impacts of acquisition- and
divestiture-related costs and restructuring costs, as well as the
favorable impact of a net benefit of $370 million related to the
settlement of certain federal income tax issues and the unfavorable
impact of foreign exchange losses related to Venezuela for which no
tax benefit was recorded. The non-GAAP effective tax rate, which
excludes these items, was 26.0 percent for the second quarter of
2015.
Financial Outlook
Merck has narrowed and raised its full-year 2015 non-GAAP EPS
range to be between $3.45 and $3.55, including a negative impact
from foreign exchange. The range excludes acquisition- and
divestiture-related costs, costs related to restructuring programs
and certain other items. The company has lowered its full-year 2015
GAAP EPS range to be between $1.52 and $1.71. The change in the
GAAP EPS range reflects the incorporation of foreign exchange
losses related to Venezuela, as well as the anticipated gain on the
previously announced sale of certain migraine clinical development
programs.
At current exchange rates, the company now anticipates full-year
2015 revenues to be between $38.6 billion and $39.8 billion,
including a negative impact from foreign exchange and approximately
$1 billion of net lost sales from acquisitions and
divestitures.
In addition, the company continues to expect full-year 2015
non-GAAP marketing and administrative expenses to be below 2014
levels and R&D expenses to be modestly above 2014 levels. The
company anticipates total operating expenses in the second half of
2015 to be approximately $200 million lower than in the second half
of 2014.
The company now anticipates its full-year 2015 non-GAAP tax rate
will be in the range of 23 to 24 percent, not including a 2015
R&D tax credit.
A reconciliation of anticipated 2015 EPS, as reported in
accordance with GAAP to non-GAAP EPS that excludes certain items,
is provided in the table below.
Full Year $ in millions, except EPS amounts
2015 GAAP EPS $1.52 to $1.71 Difference3
1.93 to 1.84 Non-GAAP EPS that excludes items listed below
$3.45 to $3.55 Acquisition- and
divestiture-related costs $5,500 to $5,300 Restructuring
costs 950 to 850 Foreign exchange losses related to
Venezuela 715 Gain on sale of certain migraine clinical
development programs (250) Net decrease (increase) in income
before taxes 6,915 to 6,615 Estimated income tax (benefit)
expense (1,415) to (1,360) Decrease (increase) in net income
$5,500 to $5,255
Total Employees
As of June 30, 2015, Merck had approximately 69,000 employees
worldwide.
Earnings Conference Call
Investors, journalists and the general public may access a live
audio webcast of the call today at 8:00 a.m. EDT on Merck’s website
at
http://www.merck.com/investors/events-and-presentations/home.html.
Institutional investors and analysts can participate in the call by
dialing (706) 758-9927 or (877) 381-5782 and using ID code number
73597302. Members of the media are invited to monitor the call by
dialing (706) 758-9928 or (800) 399-7917 and using ID code number
73597302. 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
Today’s Merck is a global health care leader working to help the
world be well. Merck is known as MSD outside the United States and
Canada. Through our prescription medicines, vaccines, biologic
therapies and animal health products, we work with customers and
operate in more than 140 countries to deliver innovative health
solutions. We also demonstrate our commitment to increasing access
to health care through far-reaching policies, programs and
partnerships. For more information, visit www.merck.com and connect
with us on Twitter, Facebook and YouTube. You can also follow our
Twitter conversation at $MRK.
Forward-Looking Statement of Merck & Co., Inc.,
Kenilworth, N.J., USA
This news release of Merck & Co., Inc., Kenilworth, N.J.,
USA (the “company”) includes “forward-looking statements” within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. These statements are
based upon the current beliefs and expectations of the company’s
management and are subject to significant risks and uncertainties.
There can be no guarantees with respect to pipeline products that
the products will receive the necessary regulatory approvals or
that they will prove to be commercially successful. If underlying
assumptions prove inaccurate or risks or uncertainties materialize,
actual results may differ materially from those set forth in the
forward-looking statements.
Risks and uncertainties include but are not limited to, general
industry conditions and competition; general economic factors,
including interest rate and currency exchange rate fluctuations;
the impact of pharmaceutical industry regulation and health care
legislation in the United States and internationally; global trends
toward health care cost containment; technological advances, new
products and patents attained by competitors; challenges inherent
in new product development, including obtaining regulatory
approval; the company’s ability to accurately predict future market
conditions; manufacturing difficulties or delays; financial
instability of international economies and sovereign risk;
dependence on the effectiveness of the company’s patents and other
protections for innovative products; and the exposure to
litigation, including patent litigation, and/or regulatory
actions.
The company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events or otherwise. Additional factors that could cause
results to differ materially from those described in the
forward-looking statements can be found in the company’s 2014
Annual Report on Form 10-K and the company’s other filings with the
Securities and Exchange Commission (SEC) available at the SEC’s
Internet site (www.sec.gov).
1 Merck is providing certain 2015 and 2014 non-GAAP information
that excludes certain items because of the nature of these items
and the impact they have on the analysis of underlying business
performance and trends. Management believes that providing this
information enhances investors’ understanding of the company’s
performance. This information should be considered in addition to,
but not in lieu of, information prepared in accordance with GAAP.
For description of the items, see Table 2a, including the related
footnotes, attached to this release.
2 Net income attributable to Merck & Co., Inc.
3 Represents the difference between calculated GAAP EPS and
calculated non-GAAP EPS, which may be different than the amount
calculated by dividing the impact of the excluded items by the
weighted-average shares for the period.
4 Includes expenses for the amortization of intangible assets
and purchase accounting adjustments to inventories recognized as a
result of acquisitions, intangible asset impairment charges and
expense or income related to changes in the fair value measurement
of contingent consideration. Also includes integration, transaction
and certain other costs related to business acquisitions and
divestitures.
5 Includes the estimated tax impact on the reconciling items. In
addition, amount for the second quarter of 2015 includes a net
benefit of $370 million related to the settlement of certain
federal income tax issues. The estimated tax impact on the
reconciling items for the second quarter of 2014 includes a net
benefit of $517 million recorded in connection with AstraZeneca’s
option exercise.
MERCK & CO., INC. CONSOLIDATED STATEMENT OF
INCOME - GAAP (AMOUNTS IN MILLIONS, EXCEPT PER SHARE
FIGURES) (UNAUDITED) Table 1
GAAP
GAAP
2Q15 2Q14
% Change
June YTD June YTD
% Change
2015 2014
Sales $ 9,785 $ 10,934 -11% $ 19,210 $ 21,198
-9% Costs, Expenses and Other Materials and production (1)
3,754 4,893 -23% 7,323 8,796 -17% Marketing and administrative (1)
2,624 2,973 -12% 5,226 5,707 -8% Research and development (1) 1,670
1,664 -- 3,407 3,238 5% Restructuring costs (2) 191 163 17% 273 288
-5% Other (income) expense, net (1) (3) 739 (650 ) * 793 (813 ) *
Income Before Taxes 807 1,891 -57% 2,188 3,982 -45% Income Tax
Provision 119 (142 ) 542 218 Net Income 688 2,033 -66% 1,646 3,764
-56% Less: Net Income Attributable to Noncontrolling Interests 1 29
7 55 Net Income Attributable to Merck & Co., Inc. $ 687 $ 2,004
-66% $ 1,639 $ 3,709 -56% Earnings per Common Share Assuming
Dilution $ 0.24 $ 0.68 -65% $ 0.57
$ 1.25 -54%
Average Shares Outstanding Assuming Dilution 2,850 2,949 2,856
2,957 Tax Rate (4) 14.7 % -7.5 % 24.8 %
5.5 %
* 100% or greater
(1) Amounts include the impact of acquisition and
divestiture-related costs, restructuring costs and certain other
items. See accompanying tables for details.
(2) Represents separation and other related costs associated
with restructuring activities under the company's formal
restructuring programs.
(3) Other (income) expense, net in the second quarter and first
six months of 2015 includes foreign exchange losses of $715 million
to revalue the company's net monetary assets in Venezuela. Other
(income) expense, net in the second quarter and first six months of
2014 includes a gain of $741 million related to AstraZeneca's
option exercise. In addition, other (income) expense, net in the
first six months of 2014 includes gains of $204 million related to
the divestiture of the company's Sirna Therapeutics, Inc.
subsidiary. Other (income) expense, net includes equity income from
affiliates. Prior period amounts have been reclassified to conform
to the current presentation.
(4) The effective income tax rates for the second quarter and
first six months of 2015 reflect a net benefit of $370 million
related to the settlement of certain federal income tax issues,
partially offset by the unfavorable impact of foreign exchange
losses recorded in connection with the revaluation of the company's
net monetary assets in Venezuela for which no tax benefit was
recorded. The effective income tax rates for the second quarter and
first six months of 2014 reflect a net benefit of $517 million
recorded in connection with AstraZeneca's option exercise. In
addition, the effective income tax rate for the first six months of
2014 reflects a benefit of approximately $300 million associated
with a capital loss generated in the first quarter of 2014.
MERCK & CO., INC. CONSOLIDATED STATEMENT OF
INCOME GAAP TO NON-GAAP RECONCILIATION SECOND QUARTER
2015 (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED) Table 2a
Acquisition and Restructuring Certain Other
Adjustment GAAP Divestiture-
Costs (2)
Items (3)
Subtotal Non-GAAP
Related Costs (1)
Sales
$
9,785 $ 9,785 Costs, Expenses and Other Materials and
production
3,754 1,241 105 1,346 2,408 Marketing and
administrative
2,624 136 17 153 2,471 Research and
development
1,670 71 15 86 1,584 Restructuring costs
191 191 191 - Other (income) expense, net (4)
739 715
715 24 Income Before Taxes
807 (1,448 ) (328 ) (715 ) (2,491
) 3,298 Taxes on Income
119 (737 )
(5)
856 Net Income
688 (1,754 ) 2,442 Less: Net Income
Attributable to Noncontrolling Interests
1 1 Net Income
Attributable to Merck & Co., Inc.
$ 687 (1,754 )
$ 2,441 Earnings per Common Share Assuming Dilution
$
0.24 $ 0.86 Average Shares
Outstanding Assuming Dilution
2,850 2,850 Tax Rate
14.7 % 26.0 %
Merck is providing non-GAAP information that excludes certain
items because of the nature of these items and the impact they have
on the analysis of underlying business performance and trends.
Management believes that providing this information enhances
investors' understanding of the company's performance. This
information should be considered in addition to, but not in lieu
of, information prepared in accordance with GAAP.
(1) Amounts included in materials and production costs reflect
$1.2 billion of expenses for the amortization of intangible assets
recognized as a result of acquisitions, as well as $44 million of
amortization of purchase accounting adjustments to inventories as a
result of the Cubist acquisition. Amounts included in marketing and
administrative expenses reflect integration, transaction and
certain other costs related to business acquisitions, including
severance costs which are not part of the company's formal
restructuring programs, as well as transaction and certain other
costs related to divestitures. Amounts included in research and
development expenses reflect $59 million of in-process research and
development ("IPR&D") impairment charges, as well as $12
million of charges to increase the fair value of liabilities for
contingent consideration.
(2) Amounts primarily include employee separation costs and
accelerated depreciation associated with facilities to be closed or
divested related to activities under the company's formal
restructuring programs.
(3) Represents foreign exchange losses of $715 million to
revalue the company's net monetary assets in Venezuela.
(4) Other (income) expense, net includes equity income from
affiliates.
(5) Represents the estimated tax impact on the reconciling
items, as well as a net benefit of $370 million on the settlement
of certain federal income tax issues.
MERCK & CO., INC. CONSOLIDATED STATEMENT OF
INCOME GAAP TO NON-GAAP RECONCILIATION SIX MONTHS
ENDED JUNE 30, 2015 (AMOUNTS IN MILLIONS, EXCEPT PER SHARE
FIGURES) (UNAUDITED) Table 2b
Acquisition and Restructuring Certain
Other Adjustment GAAP Divestiture-
Costs (2)
Items (3)
Subtotal Non-GAAP
Related Costs (1)
Sales
$
19,210 $ 19,210 Costs, Expenses and Other Materials
and production
7,323 2,491 210 2,701 4,622 Marketing and
administrative
5,226 363 53 416 4,810 Research and
development
3,407 134 17 151 3,256 Restructuring costs
273 273 273 - Other (income) expense, net (4)
793 701
701 92 Income Before Taxes
2,188 (2,988 ) (553 ) (701 )
(4,242 ) 6,430 Taxes on Income
542 (1,015 )
(5)
1,557 Net Income
1,646 (3,227 ) 4,873 Less: Net Income
Attributable to Noncontrolling Interests
7 7 Net Income
Attributable to Merck & Co., Inc.
$ 1,639 (3,227
) $ 4,866 Earnings per Common Share Assuming Dilution
$
0.57 $ 1.70 Average Shares
Outstanding Assuming Dilution
2,856 2,856 Tax Rate
24.8 % 24.2 %
Merck is providing non-GAAP information that
excludes certain items because of the nature of these items and the
impact they have on the analysis of underlying business performance
and trends. Management believes that providing this information
enhances investors' understanding of the company's performance.
This information should be considered in addition to, but not in
lieu of, information prepared in accordance with GAAP.
(1) Amounts included in materials and production costs reflect
$2.4 billion of expenses for the amortization of intangible assets
recognized as a result of acquisitions, as well as $65 million of
amortization of purchase accounting adjustments to inventories as a
result of the Cubist acquisition. Amounts included in marketing and
administrative expenses reflect integration, transaction and
certain other costs related to business acquisitions, including
severance costs which are not part of the company's formal
restructuring programs, as well as transaction and certain other
costs related to divestitures. Amounts included in research and
development expenses reflect $73 million of charges to increase the
fair value of liabilities for contingent consideration, as well as
$61 million of in-process research and development (“IPR&D”)
impairment charges.
(2) Amounts primarily include employee separation costs and
accelerated depreciation associated with facilities to be closed or
divested related to activities under the company's formal
restructuring programs.
(3) Includes foreign exchange losses of $715 million to revalue
the company's net monetary assets in Venezuela.
(4) Other (income) expense, net includes equity income from
affiliates.
(5) Represents the estimated tax impact on the reconciling
items, as well as a net benefit of $370 million on the settlement
of certain federal income tax issues.
MERCK & CO., INC. FRANCHISE / KEY PRODUCT
SALES (AMOUNTS IN MILLIONS) Table 3
2015 2014
% Change June June
Full June 1Q
2Q YTD 1Q 2Q
YTD 3Q 4Q Year
2Q YTD TOTAL SALES (1) $
9,425 $ 9,785 $ 19,210 $
10,264 $ 10,934 $ 21,198
$ 10,557 $ 10,482 $ 42,237
-11 -9 PHARMACEUTICAL 8,266
8,564 16,830 8,451 9,087 17,538
9,134 9,370 36,042 -6 -4
Primary Care & Women's Health Cardiovascular Zetia 568
635 1,202 611 717 1,328 660 662 2,650 -11 -9 Vytorin 320 320 640
361 417 777 369 370 1,516 -23 -18 Diabetes Januvia 884 1,044 1,928
858 1,058 1,916 933 1,082 3,931 -1 1 Janumet 509 554 1,063 476 519
995 505 570 2,071 7 7 General Medicine & Women's Health
NuvaRing 166 182 348 168 178 346 186 191 723 2 1 Implanon /
Nexplanon 137 124 261 102 119 221 158 123 502 4 18 Dulera 130 120
251 102 103 205 124 132 460 17 22 Follistim AQ 82 111 193 110 102
213 97 102 412 9 -9
Hospital and Specialty Hepatitis
PegIntron 56 52 108 112 103 216 84 81 381 -50 -50 HIV Isentress 385
375 760 390 453 843 412 418 1,673 -17 -10 Hospital Acute Care
Cubicin(2) 187 293 480 5 6 11 7 7 25 * * Cancidas 163 134 297 166
156 322 183 175 681 -14 -8 Invanz 132 139 271 114 134 249 141 139
529 4 9 Noxafil 111 117 228 74 98 172 107 122 402 19 32 Bridion 85
87 172 73 82 155 90 95 340 6 11 Primaxin 65 88 153 71 81 151 91 86
329 9 1 Immunology Remicade 501 455 956 604 607 1,211 604 557 2,372
-25 -21 Simponi 158 169 327 157 174 330 170 188 689 -3 -1
Oncology Emend 122 134 255 122 144 266 136 151 553 -7 -4
Keytruda 83 110 192 0 0 0 4 50 55 * * Temodar 74 80 155 83 93 176
88 86 350 -14 -12
Diversified Brands Respiratory Nasonex 289
215 504 312 258 570 261 268 1,099 -16 -11 Singulair 245 212 457 271
284 554 218 319 1,092 -25 -18 Clarinex 51 55 106 62 69 131 49 52
232 -20 -19 Other Cozaar / Hyzaar 185 189 374 205 214 419 195 192
806 -12 -11 Arcoxia 123 115 238 128 141 268 132 118 519 -18 -11
Fosamax 94 96 190 123 121 245 114 112 470 -21 -22 Zocor 49 63 112
64 69 133 61 64 258 -9 -16 Propecia 53 39 92 74 58 131 66 67 264
-32 -30
Vaccines Gardasil / Gardasil 9 359 427 785 383 409
792 590 356 1,738 4 -1 ProQuad, M-M-R II and Varivax 348 358 705
280 326 606 421 366 1,394 10 16 Zostavax 175 149 324 142 156 298
181 285 765 -4 9 RotaTeq 192 89 281 169 147 316 174 169 659 -40 -11
Pneumovax 23 110 106 216 101 102 203 197 346 746 4 7
Other
Pharmaceutical (3) 1,075 1,128 2,206 1,378 1,389 2,769
1,326 1,269 5,356 -19 -20
ANIMAL HEALTH 829
840 1,669 813 872 1,685
885 885 3,454 -4 -1
CONSUMER CARE (4) 2 0 2
546 583 1,130 401 16
1,547 * * Other Revenues
(5) 328 381 709
454 392 845 137
211 1,194 -3 -16
* 100% or greater
Sum of quarterly amounts may not equal year-to-date amounts due
to rounding.
(1) Only select products are shown.
(2) Cubicin results for the first quarter 2015 represent sales
for the two months following Merck's acquisition of Cubist. Cubicin
sales for 2014 represent the previous licensing agreement in Japan
prior to the acquisition.
(3) Includes Pharmaceutical products not individually shown
above. Other Vaccines sales included in Other Pharmaceutical were
$78 million and $76 million for the first and second quarters of
2015. Other Vaccines sales included in Other Pharmaceutical were
$98 million, $76 million, $116 million and $88 million for the
first, second, third and fourth quarters of 2014, respectively.
(4) On October 1, 2014, the company divested the Consumer Care
business to Bayer.
(5) Other revenues are comprised primarily of alliance revenue,
third-party manufacturing sales and miscellaneous corporate
revenues, including revenue hedging activities. On June 30, 2014,
AstraZeneca exercised its option to buy Merck's interest in a
subsidiary and through it, Merck's interest in Nexium and Prilosec.
As a result, the company no longer records supply sales for these
products. Other revenues in the first quarter 2014 include $232
million of revenue recognized in connection with the sale of U.S.
Saphris rights.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150728005827/en/
MerckMedia:Lainie Keller, 908-236-5036Steven Cragle,
908-740-1801orInvestors:Justin Holko, 908-740-1879Joe Romanelli,
908-740-1986
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