- Second-Quarter 2016 Worldwide Sales
Were $9.8 Billion, an Increase of 1 Percent, Including a 2 Percent
Negative Impact from Foreign Exchange
- Second-Quarter 2016 GAAP EPS Was $0.43;
Second-Quarter Non-GAAP EPS Was $0.93
- Company Updates EPS Guidance: Full-Year
2016 GAAP EPS Range to be Between $1.98 and $2.08; Full-Year 2016
Non-GAAP EPS Range of $3.67 to $3.77
- Advanced KEYTRUDA Development Program
- KEYTRUDA Demonstrated Superior
Progression-Free Survival and Overall Survival Compared to
Chemotherapy in Patients with Previously Untreated Advanced
Non-Small Cell Lung Cancer (NSCLC) Whose Tumors Expressed PD-L1 in
KEYNOTE-024 Study
- Merck Received Positive Opinion from
Committee for Medicinal Products for Human Use of the European
Medicines Agency for KEYTRUDA for the Treatment of Previously
Treated Advanced NSCLC in Patients Whose Tumors Express PD-L1
Merck (NYSE:MRK), known as MSD outside the United States and
Canada, today announced financial results for the second quarter of
2016.
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“Our results this quarter reflect our strategic focus on key
launches, including KEYTRUDA and ZEPATIER, as well as our priority
inline programs,” said Kenneth C. Frazier, chairman and chief
executive officer, Merck. “We remain committed to advancing our
pipeline, delivering a balanced and differentiated portfolio, and
achieving long-term, sustainable growth.”
Financial Summary
$ in millions, except EPS amounts
Second
Quarter 2016 2015 Sales $9,844
$9,785 GAAP EPS 0.43 0.24
Non-GAAP EPS that excludes items listed
below1
0.93 0.86
GAAP net income2
1,205 687
Non-GAAP net income that excludes items
listed below1,2
2,587 2,441
Worldwide sales were $9.8 billion for the second quarter of
2016, an increase of 1 percent compared with the second quarter of
2015, including a 2 percent negative impact from foreign
exchange.
GAAP (generally accepted accounting principles) earnings per
share (EPS) were $0.43 for the second quarter. Non-GAAP EPS of
$0.93 for the second quarter excludes acquisition- and
divestiture-related costs and restructuring costs.
Pipeline Highlights
In the second quarter of 2016, the company advanced its
late-stage pipeline in multiple priority areas and executed on key
launches, including KEYTRUDA (pembrolizumab), an anti-PD-1 therapy
for the treatment of metastatic NSCLC in previously treated
patients whose tumors express PD-L1, as well as advanced melanoma;
and ZEPATIER (elbasvir and grazoprevir), a once-daily, fixed-dose
combination tablet for the treatment of adult patients with chronic
hepatitis C virus (HCV) genotype (GT) 1 or GT4 infection, with or
without ribavirin.
- The company advanced its clinical
development program for KEYTRUDA.
- The company announced topline results
from the KEYNOTE-024 trial investigating the use of KEYTRUDA in
patients with previously untreated advanced NSCLC whose tumors
expressed high levels of PD-L1 (tumor proportion score of 50
percent or more).
- In this study, KEYTRUDA was superior
compared to chemotherapy for the primary endpoint of
progression-free survival and the secondary endpoint of overall
survival.
- Based on these results, an independent
Data Monitoring Committee recommended that the trial be stopped and
that patients receiving chemotherapy in KEYNOTE-024 be offered the
opportunity to receive KEYTRUDA.
- The U.S. Food and Drug Administration
(FDA) accepted for review a supplemental Biologics License
Application for KEYTRUDA for the treatment of patients with
recurrent or metastatic head and neck squamous cell carcinoma with
disease progression on or after platinum-containing chemotherapy.
The FDA granted Priority Review with a PDUFA action date of Aug. 9,
2016.
- The Committee for Medicinal Products
for Human Use (CHMP) of the European Medicines Agency (EMA) adopted
a positive opinion recommending approval of KEYTRUDA for the
treatment of locally advanced or metastatic NSCLC in adults whose
tumors express PD-L1 and who have received at least one prior
chemotherapy regimen.
- At the 52nd Annual Meeting of the
American Society of Clinical Oncology in June, data were presented
evaluating the use of KEYTRUDA as a monotherapy and in combination
with other therapies in more than 15 different cancers, including
melanoma, NSCLC, head and neck cancer, classical Hodgkin lymphoma,
multiple myeloma, colorectal cancer and esophageal cancer. Data
evaluating KEYTRUDA in new tumor types were presented for the first
time in cervical, endometrial, pancreatic, salivary and thyroid
cancers.
- The KEYTRUDA research program includes
more than 300 clinical trials evaluating KEYTRUDA across more than
30 tumor types. To date, clinical activity has been shown in more
than 20 tumor types.
- Last week, the European Commission
approved ZEPATIER for the treatment of chronic HCV in adult
patients, allowing marketing of ZEPATIER in all 28 European Union
(EU) member states. The company continues to work to supply the EU
market, with product launches estimated to begin between the fourth
quarter of 2016 and the first quarter of 2017. Product launches are
expected to continue across the EU through 2017.
- At the 76th Scientific Sessions of the
American Diabetes Association in June, Merck and Pfizer announced
that two pivotal Phase 3 studies of ertugliflozin, an
investigational oral SGLT-2 inhibitor for the treatment of patients
with type 2 diabetes, met their primary endpoints, showing
significant reductions in A1C (a measure of average blood glucose).
The companies continue to expect to submit New Drug Applications to
the FDA for ertugliflozin as a monotherapy and two fixed-dose
combination tablets (ertugliflozin plus JANUVIA [sitagliptin], and
ertugliflozin plus metformin) by the end of 2016.
Business Development Highlights
Business development remains a critical component of Merck’s
strategy, and the company is actively engaged in seeking external
opportunities to complement and strengthen its pipeline and
portfolio. The company recently engaged in the following scientific
collaborations and acquisitions:
- Earlier this week, the company
completed its acquisition of Afferent Pharmaceuticals, a leader in
the development of investigational therapeutic candidates for the
treatment of common, poorly managed, neurogenic conditions, such as
chronic cough.
- The company announced a new
collaboration with Moderna Therapeutics to develop and
commercialize personalized cancer vaccines, combining KEYTRUDA and
Moderna’s messenger-RNA technology.
- Merck Animal Health announced it will
acquire a controlling interest in Vallée S.A., a privately held
producer of animal health products in Brazil with a portfolio of
more than 100 products for livestock, horses and companion
animals.
Second-Quarter Revenue Performance
The following table reflects sales of the company’s top
pharmaceutical products, as well as total sales of Animal Health
products.
$ in
millions
Second Quarter Change
Change
Ex-Exchange
2016 2015 Total Sales $9,844 $9,785 1%
3% Pharmaceutical 8,700 8,564 2% 2% JANUVIA / JANUMET 1,634 1,598
2% 2% ZETIA / VYTORIN 994 955 4% 4% GARDASIL / GARDASIL 9 393 427
-8% -7% PROQUAD / M-M-R II / VARIVAX 383 358 7% 10% CUBICIN 357 293
22% 22% REMICADE 339 455 -26% -26% ISENTRESS 338 375 -10% -9%
KEYTRUDA 314 110 * * Animal Health 898 840 7% 10% Other Revenues
246 381 -36% -2%
* >100%
Pharmaceutical Revenue
Second-quarter pharmaceutical sales increased 2 percent to $8.7
billion, reflecting higher sales in oncology, hospital acute care,
the cardiovascular franchise and vaccines.
Growth in oncology was driven by higher sales of KEYTRUDA as the
company continues to launch the product with new indications
globally.
Growth in hospital acute care reflects higher sales of CUBICIN
(daptomycin for injection), an I.V. antibiotic, partially due to
price increases in the United States, and the U.S. launch of
BRIDION (sugammadex) Injection 100 mg/mL, an agent for the reversal
of neuromuscular blockade induced by rocuronium bromide or
vecuronium bromide in adults undergoing surgery. In June 2016, the
company lost U.S. patent protection for CUBICIN, and, going
forward, the company anticipates a significant decline in CUBICIN
sales.
Higher sales in the cardiovascular portfolio were primarily
driven by an increase in sales of ZETIA (ezetimibe), a medicine for
lowering LDL cholesterol, largely due to price increases in the
United States, and ADEMPAS (riociguat), a medicine for treating
pulmonary arterial hypertension and chronic thromboembolic
pulmonary hypertension, which the company is now promoting and
distributing in Europe.
Growth in vaccines resulted largely from higher sales of
pediatric vaccines, partially offset by lower sales in the
franchise of GARDASIL 9 (Human Papillomavirus 9-valent Vaccine,
Recombinant) and GARDASIL [Human Papillomavirus Quadrivalent (Types
6, 11, 16, and 18) Vaccine, Recombinant], vaccines to prevent
cancers and other diseases caused by HPV, due to the timing of
public sector purchases.
Pharmaceutical sales growth also reflects the launch of
ZEPATIER, which had sales of $112 million in the quarter.
Second-quarter pharmaceutical sales reflect a decline in
REMICADE (infliximab), a treatment for inflammatory diseases, due
to the impact of biosimilar competition in the company’s marketing
territories in Europe. Pharmaceutical sales also reflect a decrease
in sales of NASONEX (mometasone furoate monohydrate), an inhaled
nasal corticosteroid for the treatment of nasal allergy symptoms,
due to loss of exclusivity in the United States.
Animal Health Revenue
Animal Health sales totaled $898 million for the second quarter
of 2016, an increase of 7 percent compared with the second quarter
of 2015, including a 3 percent negative impact from foreign
exchange. Excluding the impact of exchange, sales across all
species grew, particularly in products for companion animals, led
by BRAVECTO (fluralaner), a chewable tablet that kills fleas and
ticks in dogs for up to 12 weeks.
In the second quarter, the company received marketing approval
from the EMA for BRAVECTO Spot-On Solution for cats and dogs; last
week, the company received approval in the United States to market
the product under the tradename BRAVECTO Topical (fluralaner
topical solution) for cats and dogs.
Second-Quarter Expense, EPS and Related Information
The tables below present selected expense information.
$ in
millions
GAAP
Acquisition- and
Divestiture-Related Costs3
Restructuring Costs
Non-GAAP1
Second-Quarter 2016 Materials and production $3,578 $1,120
$66 $2,392 Marketing and administrative 2,458 18 87 2,353 Research
and development 2,151 207 64 1,880 Restructuring costs 134 – 134 –
Second-Quarter 2015 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 –
GAAP Expense, EPS and Related Information
On a GAAP basis, the gross margin was 63.7 percent for the
second quarter of 2016 compared to 61.6 percent for the second
quarter of 2015. The increase for the second quarter of 2016
reflects the favorable impacts of foreign exchange; product mix;
lower acquisition- and divestiture-related costs; and lower
restructuring costs. Acquisition- and divestiture-related costs and
restructuring costs negatively affected gross margin by 12.0 and
13.8 percentage points for the second quarters of 2016 and 2015,
respectively.
Marketing and administrative expenses were $2.5 billion in the
second quarter of 2016, a 6 percent decrease compared to the second
quarter of 2015. The decline reflects lower acquisition- and
divestiture-related costs, as well as lower administrative costs,
such as legal defense reserves, partially offset by higher
restructuring costs.
Research and development (R&D) expenses were $2.2 billion in
the second quarter of 2016, a 29 percent increase compared to the
second quarter of 2015. The increase primarily reflects higher
licensing costs, increased clinical development spending and
intangible asset impairment charges.
Other (income) expense, net, was $19 million of expense in the
second quarter of 2016 compared to $739 million of expense in the
second quarter of 2015. The second quarter of 2015 includes foreign
exchange losses of $715 million related to the devaluation of the
company’s net monetary assets in Venezuela.
GAAP EPS was $0.43 for the second quarter of 2016 compared with
$0.24 for the second quarter of 2015.
Non-GAAP Expense, EPS and Related Information
The non-GAAP gross margin was 75.7 percent for the second
quarter of 2016 compared to 75.4 percent for the second quarter of
2015. The increase for the second quarter of 2016 reflects the
favorable impacts of foreign exchange and product mix.
Non-GAAP marketing and administrative expenses were $2.4 billion
in the second quarter of 2016, a 5 percent decline compared to the
second quarter of 2015. The decline reflects lower administrative
costs, such as legal defense reserves.
Non-GAAP R&D expenses were $1.9 billion in the second
quarter of 2016, a 19 percent increase compared to the second
quarter of 2015. The increase primarily reflects higher licensing
costs and increased clinical development spending.
Non-GAAP EPS was $0.93 for the second quarter of 2016 compared
with $0.86 for the second quarter of 2015.
A reconciliation of GAAP to non-GAAP net income and EPS is
provided in the table that follows. Year-to-date results can be
found in the attached tables.
$ in millions, except EPS amounts
Second Quarter 2016 2015 EPS
GAAP EPS $0.43 $0.24
Difference4
0.50 0.62
Non-GAAP EPS that excludes items listed
below1
$0.93 $0.86
Net Income GAAP net income2 $1,205 $687
Difference 1,382 1,754 Non-GAAP net income that excludes items
listed below1,2 $2,587 $2,441
Decrease (Increase) in Net
Income Due to Excluded Items: Acquisition- and
divestiture-related costs3 $ 1,345 $1,448 Restructuring costs 351
328 Foreign exchange losses related to Venezuela – 715 Net decrease
(increase) in income before taxes 1,696 2,491
Income tax (benefit) expense5
(314) (737) Decrease (increase) in net income $ 1,382
$1,754
Financial Outlook
Merck has lowered its full-year 2016 GAAP EPS range to be
between $1.98 and $2.08, reflecting the impact of intangible asset
impairment charges and higher restructuring costs incurred in the
second quarter of 2016. The company has raised the bottom end of
its full-year 2016 non-GAAP EPS range and is now targeting a range
of $3.67 to $3.77, including an approximately 1 percent negative
impact from foreign exchange at current exchange rates. The
non-GAAP range excludes acquisition- and divestiture-related costs
and costs related to restructuring programs.
Merck has narrowed its full-year 2016 revenue range to be
between $39.1 billion and $40.1 billion, including an approximately
2 percent negative impact from foreign exchange at current exchange
rates.
The following table summarizes the company’s 2016 financial
guidance.
GAAP
Non-GAAP1 Revenue $39.1 to $40.1 billion $39.1 to $40.1
billion** Marketing and administrative expenses Lower than 2015
Lower than 2015 R&D expenses Higher than 2015 Higher than 2015
Effective tax rate 26.0% to 27.0% 21.5% to 22.5% EPS $1.98
to $2.08 $3.67 to $3.77
** The company does not have any non-GAAP
adjustments to revenue.
A reconciliation of anticipated 2016 GAAP EPS to non-GAAP EPS
and the items excluded from non-GAAP EPS are provided in the table
below.
$ in millions, except EPS amounts
Full-Year 2016 GAAP EPS $1.98 to $2.08 Difference4
1.69 Non-GAAP EPS that excludes items listed below1 $3.67 to $3.77
Acquisition- and divestiture-related costs $4,750
Restructuring costs 900 Net decrease (increase) in income before
taxes 5,650 Estimated income tax (benefit) expense (955) Decrease
(increase) in net income $4,695
The expected full-year 2016 GAAP effective tax rate of 26.0 to
27.0 percent reflects an unfavorable impact of approximately 4.5
percentage points from the above items.
Total Employees
As of June 30, 2016, Merck had approximately 68,000 employees
worldwide.
Earnings Conference Call
Investors, journalists and the general public may access a live
audio webcast of the call today at 8:00 a.m. EDT on Merck’s website
at
http://investors.merck.com/investors/webcasts-and-presentations/default.aspx.
Institutional investors and analysts can participate in the call by
dialing (706) 758-9927 or (877) 381-5782 and using ID code number
34462082. Members of the media are invited to monitor the call by
dialing (706) 758-9928 or (800) 399-7917 and using ID code number
34462082. Journalists who wish to ask questions are requested to
contact a member of Merck’s Media Relations team at the conclusion
of the call.
About Merck
For 125 years, Merck has been 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, YouTube and
LinkedIn. 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 2015
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 2016 and 2015 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. Management uses these measures internally for planning
and forecasting purposes and to measure the performance of the
company along with other metrics. Senior management’s annual
compensation is derived in part using non-GAAP income and non-GAAP
EPS. This information should be considered in addition to, but not
as a substitute for or superior to, information prepared in
accordance with GAAP. For a description of the items, see Table 2a
attached to this release.
2 Net income attributable to Merck & Co., Inc.
3 Includes expenses for the amortization of intangible assets
and purchase accounting adjustments to inventories recognized as a
result of acquisitions, intangible asset impairment charges and
expense or income related to changes in the estimated fair value
measurement of contingent consideration. Also includes integration,
transaction and certain other costs related to business
acquisitions and divestitures.
4 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.
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.
MERCK & CO., INC. CONSOLIDATED STATEMENT OF
INCOME - GAAP (AMOUNTS IN MILLIONS, EXCEPT PER SHARE
FIGURES) (UNAUDITED) Table 1
GAAP % Change GAAP % Change 2Q16
2Q15
June YTD 2016
June YTD 2015
Sales $
9,844 $ 9,785 1% $ 19,156 $ 19,210 -- Costs,
Expenses and Other Materials and production (1) 3,578 3,754 -5%
7,150 7,323 -2% Marketing and administrative (1) 2,458 2,624 -6%
4,776 5,226 -9% Research and development (1) 2,151 1,670 29% 3,810
3,407 12% Restructuring costs (2) 134 191 -30% 225 273 -18% Other
(income) expense, net (1) (3) 19 739 -97% 67 793 -92% Income Before
Taxes 1,504 807 86% 3,128 2,188 43% Taxes on Income 295 119 789 542
Net Income 1,209 688 76% 2,339 1,646 42% Less: Net Income
Attributable to Noncontrolling Interests 4 1 9 7 Net Income
Attributable to Merck & Co., Inc. $ 1,205 $ 687 75% $ 2,330 $
1,639 42% Earnings per Common Share Assuming Dilution $ 0.43
$ 0.24 79% $ 0.83 $ 0.57 46%
Average Shares Outstanding Assuming Dilution 2,789
2,850 2,792 2,856 Tax Rate (4) 19.6% 14.7%
25.2% 24.8% (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 2016 includes a $115
million gain related to settlement of certain patent litigation.
Other (income) expense, net in the second quarter and first six
months of 2015 includes foreign exchange losses of $715 million to
devalue the company's net monetary assets in Venezuela. (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 non-deductible foreign exchange losses
recorded in connection with the devaluation of the company's net
monetary assets in Venezuela.
MERCK & CO.,
INC. GAAP TO NON-GAAP RECONCILIATION SECOND QUARTER
2016 (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED) Table 2a
GAAP
Acquisition and
Divestiture-Related Costs (1)
Restructuring Costs
(2)
Adjustment Subtotal
Non-GAAP Materials and production
$
3,578 1,120 66 1,186 $ 2,392 Marketing and administrative
2,458 18 87 105 2,353 Research and development
2,151
207 64 271 1,880 Restructuring costs
134 134 134 - Income
Before Taxes
1,504 (1,345) (351) (1,696) 3,200 Tax Provision
(Benefit)
295 (235) (3) (79) (3) (314) 609 Net Income
1,209 (1,110) (272) (1,382) 2,591 Net Income Attributable to
Merck & Co., Inc.
1,205 (1,110) (272) (1,382) 2,587
Earnings per Common Share Assuming Dilution
$ 0.43
(0.40) (0.10) (0.50) $ 0.93 Tax Rate
19.6% 19.0% Only the line items that are
affected by non-GAAP adjustments are shown. 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. Management uses this
information internally for planning and forecasting purposes and to
measure the performance of the company along with other metrics.
Senior management's annual compensation is derived in part using
non-GAAP income and non-GAAP EPS. This information should be
considered in addition to, but not as a substitute for or superior
to, information prepared in accordance with GAAP. (1)
Amounts included in materials and production costs reflect $1.0
billion of expenses for the amortization of intangible assets
recognized as a result of acquisitions, as well as $95 million of
impairment charges on product intangibles. Amounts included in
marketing and administrative expenses reflect integration,
transaction and certain other costs related to business
acquisitions, including severance costs which are not part of the
company's formal restructuring programs, as well as transaction and
certain other costs related to divestitures. Amounts included in
research and development expenses primarily reflect 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) Represents the estimated tax
impact on the reconciling items, based on applying the statutory
rate of the originating territory of the non-GAAP adjustments.
MERCK & CO., INC. GAAP TO NON-GAAP
RECONCILIATION SIX MONTHS ENDED JUNE 30, 2016
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED) Table 2b
GAAP
Acquisition and
Divestiture-Related Costs (1)
Restructuring Costs
(2)
Adjustment Subtotal
Non-GAAP Materials and production
$
7,150 2,506 113 2,619 $ 4,531 Marketing and administrative
4,776 20 90 110 4,666 Research and development
3,810
242 119 361 3,449 Restructuring costs
225 225 225 - Income
Before Taxes
3,128 (2,768) (547) (3,315) 6,443 Tax Provision
(Benefit)
789 (444) (3) (122) (3) (566) 1,355 Net Income
2,339 (2,324) (425) (2,749) 5,088 Net Income Attributable to
Merck & Co., Inc.
2,330 (2,324) (425) (2,749) 5,079
Earnings per Common Share Assuming Dilution
$ 0.83
(0.84) (0.15) (0.99) $ 1.82 Tax Rate
25.2% 21.0% Only the line items that are
affected by non-GAAP adjustments are shown. 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. Management uses this
information internally for planning and forecasting purposes and to
measure the performance of the company along with other metrics.
Senior management's annual compensation is derived in part using
non-GAAP income and non-GAAP EPS. This information should be
considered in addition to, but not as a substitute for or superior
to, information prepared in accordance with GAAP. (1)
Amounts included in materials and production costs reflect $2.1
billion of expenses for the amortization of intangible assets
recognized as a result of acquisitions, as well as $347 million of
impairment charges on product intangibles. Amounts included in
marketing and administrative expenses reflect integration,
transaction and certain other costs related to business
acquisitions, including severance costs which are not part of the
company's formal restructuring programs, as well as transaction and
certain other costs related to divestitures. Amounts included in
research and development expenses primarily reflect 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) Represents the estimated tax
impact on the reconciling items, based on applying the statutory
rate of the originating territory of the non-GAAP adjustments.
MERCK & CO., INC. FRANCHISE / KEY PRODUCT
SALES (AMOUNTS IN MILLIONS) Table 3
2016 2015 % Change
1Q 2Q June YTD 1Q
2Q June YTD 3Q 4Q
FY 2Q June YTD TOTAL
SALES(1) $ 9,312 $
9,844 $ 19,156 $ 9,425
$ 9,785 $ 19,210
$ 10,073 $ 10,215
$ 39,498 1 0
PHARMACEUTICAL 8,104 8,700
16,804 8,266 8,564 16,830
8,925 9,027 34,782
2 0 Primary Care and Women's Health
Cardiovascular Zetia 612 702 1,314 568 635 1,202 633 691 2,526 11 9
Vytorin 277 293 570 320 320 640 302 308 1,251 -9 -11 Diabetes
Januvia 906 1,064 1,970 884 1,044 1,928 1,014 921 3,863 2 2 Janumet
506 569 1,075 509 554 1,063 562 526 2,151 3 1 General Medicine
& Women's Health NuvaRing 175 200 376 166 182 348 190 193 732
10 8 Implanon / Nexplanon 134 164 298 137 124 261 176 151 588 32 14
Dulera 113 121 234 130 120 251 133 153 536 1 -7 Follistim AQ 94 73
167 82 111 193 95 95 383 -35 -13
Hospital and Specialty
Hepatitis Zepatier 50 112 161 0 0 0 0 0 0 * * HIV Isentress 340 338
678 385 375 760 377 374 1,511 -10 -11 Hospital Acute Care
Cubicin(2) 292 357 649 187 293 480 325 322 1,127 22 35 Noxafil 145
143 288 111 117 228 132 128 487 22 26 Cancidas 133 131 263 163 134
297 139 137 573 -2 -11 Invanz 114 143 257 132 139 271 153 144 569 3
-5 Bridion 90 113 204 85 87 172 89 92 353 30 18 Primaxin 73 81 154
65 88 153 75 86 313 -8 1 Immunology Remicade 349 339 688 501 455
956 442 396 1,794 -26 -28 Simponi 188 199 387 158 169 327 178 185
690 18 19
Oncology Keytruda 249 314 563 83 110 192 159 214
566 * * Emend 126 143 268 122 134 255 141 139 535 7 5 Temodar 66 73
139 74 80 155 83 75 312 -9 -10
Diversified Brands
Respiratory Singulair 237 229 465 245 212 457 201 273 931 8 2
Nasonex 229 101 331 289 215 504 121 231 858 -53 -34 Other Cozaar /
Hyzaar 126 132 258 185 189 374 150 143 667 -30 -31 Arcoxia 111 117
228 123 115 238 123 110 471 2 -4 Fosamax 75 73 148 94 96 190 86 82
359 -24 -22 Zocor 46 50 96 49 63 112 56 49 217 -21 -15
Vaccines Gardasil / Gardasil 9 378 393 770 359 427 785 625
497 1,908 -8 -2 ProQuad / M-M-R II / Varivax 357 383 739 348 358
705 390 409 1,505 7 5 RotaTeq 188 130 318 192 89 281 160 169 610 46
13 Zostavax 125 149 274 175 149 324 179 246 749 0 -15 Pneumovax 23
107 120 228 110 106 216 138 188 542 14 5
Other
Pharmaceutical(3) 1,093 1,151 2,246 1,235 1,274 2,512
1,298 1,300 5,105 -9 -11
ANIMAL HEALTH 829
898 1,727 829 840 1,669
825 830 3,324 7 4
Other Revenues(4) 379
246 625 330
381 711 323
358 1,392 -36
-12 * 100% or greater Sum of quarterly amounts
may not equal year-to-date amounts due to rounding. (1) Only
select products are shown. (2) First quarter of 2015
reflects approximately two months of sales following the
acquisition of Cubist Pharmaceuticals, Inc. by Merck on January 21,
2015. (3) Includes Pharmaceutical products not individually
shown above. Other Vaccines sales included in Other Pharmaceutical
were $103 million in the first quarter and $91 million in the
second quarter of 2016. Other Pharmaceutical sales were $78
million, $76 million, $99 million and $148 million for the first,
second, third and fourth quarters of 2015, respectively. (4)
Other revenues are comprised primarily of alliance revenue,
third-party manufacturing sales and miscellaneous corporate
revenues, including revenue hedging activities.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160729005318/en/
MerckMedia:Lainie Keller, 908-236-5036orInvestors:Teri Loxam,
908-740-1986Justin Holko, 908-740-1879
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