Merck : 3Q20 Merck Other Financial Disclosures

Merck & Co., Inc.
Financial Highlights Package
Third Quarter 2020
Table of Contents
Table 1: GAAP P&L..........................................................................	1
Table 1a: GAAP P&L - Current Year and Prior Year by Quarter......	2
Table 2a: GAAP to Non-GAAP Reconciliation 3Q20.........................	3
Table 2b: GAAP to Non-GAAP Reconciliation Sept YTD 20...........	..4
Table 2c: GAAP to Non-GAAP Reconciliation 3Q19.......................	..5
Table 2d: GAAP to Non-GAAP Reconciliation Sept YTD 19 ...........	.6
Table 3: Sales - Current Year and Prior Year by Quarter ..............	.7
Table 3a: Sales - U.S. / Ex- U.S. 3Q20...........................................	..8
Table 3b: Sales - U.S. / Ex- U.S. Sept YTD 20 ..............................	.9
Table 3c: Sales - Pharmaceutical Geographic Split .......................	10
Table 4: Other (Income) Expense .................................................	11

1

1

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1

		GAAP						GAAP
						% Change							% Change
		3Q20		3Q19				Sep YTD		Sep YTD
							2020		2019
Sales	$	12,551	$	12,397		1%		$	35,479	$	34,972		1%
Costs, Expenses and Other
Cost of sales (1)		3,481		3,990		-13%			9,952		10,443		-5%
Selling, general and administrative (1)		2,450		2,589		-5%			7,383		7,726		-4%
Research and development (1)		3,390		3,204		6%			7,721		7,324		5%
Restructuring costs (2)		114		232		-51%			269		444		-39%
Other (income) expense, net (1)		(312)		35		*			(630)		362		*
Income Before Taxes		3,428		2,347		46%			10,784		8,673		24%
Taxes on Income (1)		483		440					1,611		1,259
Net Income		2,945		1,907		54%			9,173		7,414		24%
Less: Net Income (Loss) Attributable to Noncontrolling Interests (1)		4		6					12		(73)
Net Income Attributable to Merck & Co., Inc.	$	2,941	$	1,901		55%		$	9,161	$	7,487		22%
Earnings per Common Share Assuming Dilution	$	1.16	$	0.74		57%		$	3.61	$	2.89		25%
Average Shares Outstanding Assuming Dilution		2,538		2,572					2,541		2,587
Tax Rate (3)		14.1%		18.7%					14.9%		14.5%

* 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. The effective income tax rates for the third quarter and the first nine months of 2019 include the unfavorable impact of a charge for the acquisition of Peloton Therapeutics, Inc. for which no tax benefit was recognized and the favorable impact of product mix. The effective income tax rate for the first nine months of 2019 reflects a net tax benefit of $360 million related to the settlement of certain federal income tax matters.

2

2

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1a

				2020										2019							% Change
		1Q		2Q		3Q	Sep YTD			1Q		2Q		3Q	Sep YTD		4Q	Full Year		3Q	Sep YTD
	.									.
Sales	$	12,057	$	10,872	$	12,551	$	35,479		$	10,816	$	11,760	$	12,397	$	34,972	$	11,868	$	46,840		1%	1%
Costs, Expenses and Other
Cost of sales		3,312		3,159		3,481		9,952			3,052		3,401		3,990		10,443		3,669		14,112		-13%	-5%
Selling, general and administrative		2,555		2,378		2,450		7,383			2,425		2,712		2,589		7,726		2,888		10,615		-5%	-4%
Research and development		2,209		2,123		3,390		7,721			1,931		2,189		3,204		7,324		2,548		9,872		6%	5%
Restructuring costs		72		83		114		269			153		59		232		444		194		638		-51%	-39%
Other (income) expense, net		71		(390)		(312)		(630)			188		140		35		362		(223)		139		*	*
Income Before Taxes		3,838		3,519		3,428		10,784			3,067		3,259		2,347		8,673		2,792		11,464		46%	24%
Taxes on Income		619		509		483		1,611			205		615		440		1,259		428		1,687
Net Income		3,219		3,010		2,945		9,173			2,862		2,644		1,907		7,414		2,364		9,777		54%	24%
Less: Net Income (Loss) Attributable to Noncontrolling Interests		-		8		4		12			(53)		(26)		6		(73)		7		(66)
Net Income Attributable to Merck & Co., Inc.	$	3,219	$	3,002	$	2,941	$	9,161		$	2,915	$	2,670	$	1,901	$	7,487	$	2,357	$	9,843		55%	22%
Earnings per Common Share Assuming Dilution	$	1.26	$	1.18	$	1.16	$	3.61		$	1.12	$	1.03	$	0.74	$	2.89	$	0.92	$	3.81		57%	25%
Average Shares Outstanding Assuming Dilution		2,547		2,536		2,538		2,541			2,603		2,588		2,572		2,587		2,559		2,580
Tax Rate		16.1%		14.5%		14.1%		14.9%			6.7%		18.9%		18.7%		14.5%		15.3%		14.7%

* 100% or greater

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

3

3

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

THIRD QUARTER 2020

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2a

				Acquisition and		Restructuring		Certain Other		Adjustment
	GAAP			Divestiture-Related						Non-GAAP
				Costs	(2)		Items	(4)		Subtotal
				Costs (1)
Cost of sales	$	3,481	285			38					323		$	3,158
Selling, general and administrative		2,450	207			15					222			2,228
Research and development		3,390	16			19			1,082		1,117			2,273
Restructuring costs		114					114					114			-
Other (income) expense, net		(312)								(1)		(1)			(311)
Income Before Taxes		3,428	(508)			(186)			(1,081)		(1,775)			5,203
Income Tax Provision (Benefit)		483	(17) (3)		(25) (3)		(247)	(3)	(289)			772
Net Income		2,945	(491)			(161)			(834)		(1,486)			4,431
Net Income Attributable to Merck & Co., Inc.		2,941	(491)			(161)			(834)		(1,486)			4,427
Earnings per Common Share Assuming Dilution	$	1.16	(0.19)			(0.06)			(0.33)		(0.58)		$	1.74
Tax Rate		14.1%													14.8%

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 this information enhances investors' understanding of the company's results as it permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management's annual compensation is derived in part using non-GAAP pretax income. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

1. Amount included in cost of sales primarily reflects expenses for the amortization of intangible assets recognized as a result of business acquisitions. Amount included in selling, general and administrative expenses reflects $182 million related to the company's planned spin-off of Organon & Co., and other acquisition and divestiture-related costs.
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. Acquisition and divestiture-related costs also includes a tax cost of $67 million, representing an adjustment to the tax benefits recorded in conjunction with the 2015 Cubist Pharmaceuticals, Inc. acquisition.
4. Amount included in research and development reflects expenses for upfront payments related to license and collaboration agreements.

4

4

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

NINE MONTHS ENDED SEPTEMBER 30, 2020

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2b

				Acquisition and		Restructuring		Certain Other		Adjustment
		GAAP		Divestiture-Related						Non-GAAP
				Costs	(2)		Items	(4)		Subtotal
				Costs (1)
Cost of sales	$	9,952	863			131					994		$	8,958
Selling, general and administrative		7,383	648			37					685			6,698
Research and development		7,721	(12)			67			1,082		1,137			6,584
Restructuring costs		269					269					269			-
Other (income) expense, net		(630)	52						(17)		35			(665)
Income Before Taxes		10,784	(1,551)			(504)			(1,065)		(3,120)			13,904
Income Tax Provision (Benefit)		1,611	(248)	(3)		(59) (3)		(242)	(3)	(549)			2,160
Net Income		9,173	(1,303)			(445)			(823)		(2,571)			11,744
Net Income Attributable to Merck & Co., Inc.		9,161	(1,303)			(445)			(823)		(2,571)			11,732
Earnings per Common Share Assuming Dilution	$	3.61	(0.51)			(0.18)			(0.32)		(1.01)		$	4.62
Tax Rate		14.9%													15.5%

Only the line items that are affected by non-GAAP adjustments are shown.

Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors' understanding of the company's results as it permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management's annual compensation is derived in part using non-GAAP pretax income. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

1. Amount included in cost of sales primarily reflects expenses for the amortization of intangible assets recognized as a result of business acquisitions. Amount included in selling, general and administrative expenses reflects $466 million related to the company's planned spin-off of Organon & Co., approximately $95 million of costs related to the acquisition of ArQule, Inc., and other acquisition and divestiture-related costs. Amount included in research and development expenses primarily reflects a reduction in expenses related to a decrease in the estimated fair value measurement of liabilities for contingent consideration. Amount included in other (income) expense, net, primarily reflects an increase in the estimated fair value measurement of liabilities for contingent consideration related to the termination of the Sanofi-Pasteur MSD joint venture, partially offset by royalty income.
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. Acquisition and divestiture-related costs also includes a tax cost of $67 million, representing an adjustment to the tax benefits recorded in conjunction with the 2015 Cubist Pharmaceuticals, Inc. acquisition.
4. Amount included in research and development reflects expenses for upfront payments related to license and collaboration agreements.

5

5

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

THIRD QUARTER 2019

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2c

				Acquisition and		Restructuring		Certain Other		Adjustment
	GAAP			Divestiture-Related						Non-GAAP
				Costs	(2)		Items	(4)		Subtotal
				Costs (1)
Cost of sales	$	3,990	941			62				1,003		$	2,987
Selling, general and administrative		2,589	22			1				23			2,566
Research and development		3,204	6			1			982	989			2,215
Restructuring costs		232					232				232			-
Other (income) expense, net		35	6							6			29
Income Before Taxes		2,347	(975)			(296)			(982)	(2,253)			4,600
Income Tax Provision (Benefit)		440	(231) (3)		(50) (3)		-	(281)			721
Net Income		1,907	(744)			(246)			(982)	(1,972)			3,879
Net Income Attributable to Merck & Co., Inc.		1,901	(744)			(246)			(982)	(1,972)			3,873
Earnings per Common Share Assuming Dilution	$	0.74	(0.29)			(0.10)			(0.38)	(0.77)		$	1.51
Tax Rate		18.7%													15.7%

Only the line items that are affected by non-GAAP adjustments are shown.

Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors' understanding of the company's results as it permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management's annual compensation is derived in part using non-GAAP pretax income. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

1. Amount included in cost of sales primarily reflects $320 million of expenses for the amortization of intangible assets recognized as a result of business acquisitions, as well as $612 million of intangible asset impairment charges related to SIVEXTRO. Amount included in selling, general and administrative expenses primarily reflects integration, transaction and certain other costs related to business acquisitions and divestitures.
2. Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities under the company's formal restructuring programs.
3. Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.
4. Amount included in research and development represents the charge related to the acquisition of Peloton Therapeutics, Inc.

6

6

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

NINE MONTHS ENDED SEPTEMBER 30, 2019

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2d

				Acquisition and		Restructuring		Certain Other		Adjustment
		GAAP		Divestiture-Related						Non-GAAP
				Costs	(2)		Items	(4)		Subtotal
				Costs (1)
Cost of sales	$	10,443	1,801			161					1,962		$	8,481
Selling, general and administrative		7,726	82			33					115			7,611
Research and development		7,324	(21)			4			982		965			6,359
Restructuring costs		444					444					444			-
Other (income) expense, net		362	321						48		369			(7)
Income Before Taxes		8,673	(2,183)			(642)			(1,030)		(3,855)			12,528
Income Tax Provision (Benefit)		1,259	(438)	(3)		(106) (3)		(304)	(5)	(848)			2,107
Net Income		7,414	(1,745)			(536)			(726)		(3,007)			10,421
Less: Net (Loss) Income Attributable to		(73)	(89)								(89)			16
Noncontrolling Interests
Net Income Attributable to Merck & Co., Inc.		7,487	(1,656)			(536)			(726)		(2,918)			10,405
Earnings per Common Share Assuming Dilution	$	2.89	(0.64)			(0.21)			(0.28)		(1.13)		$	4.02
Tax Rate		14.5%													16.8%

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 this information enhances investors' understanding of the company's results as it permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management's annual compensation is derived in part using non-GAAP pretax income. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

1. Amount included in cost of sales primarily reflects $1.1 billion of expenses for the amortization of intangible assets recognized as a result of business acquisitions, as well as $693 million of intangible asset impairment charges, including $612 million related to SIVEXTRO. Amount included in selling, general and administrative expenses primarily reflects integration, transaction and certain other costs related to business acquisitions and divestitures, including costs related to the acquisition of Antelliq Corporation. Amount included in research and development expenses primarily reflects a reduction in expenses related to a decrease in the estimated fair value measurement of liabilities for contingent consideration. Amount included in other (income) expense, net primarily reflects goodwill and intangible asset impairment charges related to certain businesses in the Healthcare Services segment and expenses related to an increase in the estimated fair value measurement of liabilities for contingent consideration, partially offset by royalty income related to the termination of the Sanofi-Pasteur MSD joint venture.
2. Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities under the company's formal restructuring programs.
3. Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.
4. Amount included in research and development represents the charge related to the acquisition of Peloton Therapeutics, Inc.
5. Primarily reflects a $360 million net tax benefit related to the settlement of certain federal income tax matters and a $67 million tax charge related to the finalization of treasury regulations associated with the 2017 enactment of U.S. tax legislation.

7

7

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3

		2020						2019				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)
$12,057	$10,872		$12,551	$35,479		$10,816	$11,760	$12,397	$34,972	$11,868	$46,840		1	2		1	3
PHARMACEUTICAL	10,655	9,679		11,320	31,654		9,663	10,460	11,095	31,218	10,533	41,751		2	2		1	3
Oncology
Keytruda	3,284	3,388		3,715	10,387		2,269	2,634	3,070	7,973	3,111	11,084		21	21		30	31
Alliance Revenue - Lynparza (2)	145	178		196	519		79	111	123	313	132	444		59	58		66	67
Alliance Revenue - Lenvima (2)	128	151		142	421		74	97	109	280	124	404		30	29		50	50
Emend	43	33		39	115		117	121	98	336	53	388		-60	-59		-66	-65
Vaccines (3)
Gardasil / Gardasil 9	1,097	656		1,187	2,941		838	886	1,320	3,044	693	3,737		-10	-10		-3	-2
ProQuad / M-M-R II / Varivax	435	378		576	1,390		496	675	623	1,794	481	2,275		-8	-7		-23	-22
Pneumovax 23	256	117		375	748		185	170	237	592	334	926		58	58		26	27
RotaTeq	222	168		210	601		211	172	180	564	227	791		16	17		7	8
Vaqta	60	28		51	139		47	58	62	167	71	238		-18	-17		-17	-15
Hospital Acute Care
Bridion	299	224		320	843		255	278	284	817	313	1,131		13	13		3	4
Noxafil	94	73		79	247		190	193	177	560	103	662		-55	-55		-56	-55
Prevymis	60	63		77	200		32	38	45	115	50	165		72	69		74	74
Primaxin	51	64		74	189		59	71	77	207	67	273		-4	-4		-9	-7
Invanz	64	43		51	159		72	78	57	206	57	263		-10	-6		-23	-19
Cancidas	55	43		50	148		61	67	62	191	58	249		-20	-19		-22	-20
Cubicin	46	32		39	116		88	67	52	207	50	257		-26	-25		-44	-43
Zerbaxa	37	32		43	112		26	27	35	88	32	121		22	24		27	29
Immunology
Simponi	215	191		209	615		208	214	203	625	205	830		3			-2	-1
Remicade	88	73		82	242		123	98	101	322	89	411		-19	-20		-25	-24
Neuroscience
Belsomra	79	84		81	244		67	76	80	223	83	306		1			9	8
Virology
Isentress / Isentress HD	245	196		205	646		255	247	250	752	223	975		-18	-18		-14	-12
Zepatier	55	39		28	122		114	108	83	304	66	370		-67	-67		-60	-59
Cardiovascular
Zetia	145	137		103	384		140	156	147	443	146	590		-30	-30		-13	-13
Vytorin	53	39		47	139		97	76	57	231	54	285		-17	-16		-40	-38
Atozet	122	115		111	348		94	92	97	283	108	391		14	12		23	25
Alliance Revenue - Adempas (4)	53	79		83	216		42	51	50	144	60	204		67	67		50	50
Adempas (5)	56	57		55	167		48	53	57	158	57	215		-5	-7		6	6
Diabetes (6)
Januvia	774	854		821	2,449		824	908	807	2,539	943	3,482		2	2		-4	-3
Janumet	503	490		506	1,499		530	533	503	1,567	475	2,041			2		-4	-2
Women's Health
Implanon / Nexplanon	195	132		189	515		199	183	199	581	206	787		-5	-4		-11	-10
NuvaRing	63	63		58	184		219	240	241	700	179	879		-76	-76		-74	-73
Diversified Brands
Singulair	155	100		82	338		191	160	152	503	195	698		-46	-46		-33	-32
Cozaar / Hyzaar	102	98		91	292		103	109	116	329	113	442		-21	-20		-11	-9
Arcoxia	70	65		68	204		75	75	72	221	67	288		-5	-2		-8	-5
Nasonex	71	49		41	161		96	72	58	226	67	293		-30	-29		-29	-27
Follistim AQ	41	44		50	136		57	63	62	182	58	241		-18	-18		-26	-25
Other Pharmaceutical (7)	1,194	1,103		1,186	3,478		1,082	1,203	1,149	3,431	1,183	4,615		3	4		1	3
ANIMAL HEALTH	1,214	1,101		1,220	3,535		1,025	1,124	1,122	3,271	1,122	4,393		9	12		8	12
Livestock	739	648		758	2,145		611	671	726	2,007	777	2,784		5	8		7	11
Companion Animals	475	453		462	1,390		414	453	396	1,264	345	1,609		17	18		10	12
Other Revenues (8)	188	92		11	290		128	176	180	483	213	696		-94	-33		-40	-12

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

1. Only select products are shown.
2. Alliance Revenue represents Merck's share of profits, which are product sales net of cost of sales and commercialization costs.
3. Total Vaccines sales were $2,155 million, $1,418 million and $2,521 million in the first, second and third quarters of 2020 and $1,887 million, $2,037 million, $2,517 million and $1,928 million in the first, second, third and fourth quarters of 2019, respectively.
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 $1,353 million, $1,418 million and $1,405 million in the first, second and third quarters of 2020 and $1,402 million, $1,480 million, $1,360 million and $1,472 million in the first, second, third and fourth quarters of 2019, respectively.
7. Includes Pharmaceutical products not individually shown above.
8. Other Revenues are comprised primarily of Healthcare Services segment revenues, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities.

88

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

THIRD QUARTER 2020

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3a

		Global			U.S.			International
	3Q 2020	3Q 2019	% Change	3Q 2020	3Q 2019	% Change	3Q 2020	3Q 2019	% Change
TOTAL SALES (1)	$12,551	$12,397	1	$5,625	$5,573	1	$6,926	$6,824	1
PHARMACEUTICAL	11,320	11,095	2	5,218	5,180	1	6,102	5,914	3
Oncology
Keytruda	3,715	3,070	21	2,157	1,743	24	1,559	1,327	17
Alliance Revenue - Lynparza (2)	196	123	59	107	71	52	89	53	70
Alliance Revenue - Lenvima (2)	142	109	30	82	65	26	60	44	36
Emend	39	98	-60	8	42	-82	31	56	-44
Vaccines (3)
Gardasil / Gardasil 9	1,187	1,320	-10	579	761	-24	608	558	9
ProQuad / M-M-R II / Varivax	576	623	-8	437	482	-9	139	141	-2
Pneumovax 23	375	237	58	276	179	54	99	58	72
RotaTeq	210	180	16	114	102	11	96	78	23
Vaqta	51	62	-18	32	36	-11	19	26	-26
Hospital Acute Care
Bridion	320	284	13	162	133	22	157	151	4
Noxafil	79	177	-55	13	77	-83	66	100	-34
Prevymis	77	45	72	32	22	42	46	23	101
Primaxin	74	77	-4	1	2	-34	73	75	-3
Invanz	51	57	-10	1	(1)	*	50	58	-14
Cancidas	50	62	-20	1		80	49	62	-21
Zerbaxa	43	35	22	20	20	4	23	15	47
Cubicin	39	52	-26	11	14	-22	28	38	-28
Immunology
Simponi	209	203	3				209	203	3
Remicade	82	101	-19				82	101	-19
Neuroscience
Belsomra	81	80	1	18	23	-24	63	57	11
Virology
Isentress / Isentress HD	205	250	-18	92	102	-10	113	149	-24
Zepatier	28	83	-67	6	24	-76	22	59	-63
Cardiovascular
Zetia	103	147	-30	(1)	5	-115	103	142	-27
Vytorin	47	57	-17	3	5	-34	44	52	-16
Atozet	111	97	14				111	97	14
Alliance Revenue - Adempas (4)	83	50	67	78	48	64	5	2	117
Adempas (5)	55	57	-5				55	57	-5
Diabetes (6)
Januvia	821	807	2	342	367	-7	479	440	9
Janumet	506	503		105	129	-18	400	375	7
Women's Health
Implanon / Nexplanon	189	199	-5	137	136	1	52	62	-17
NuvaRing	58	241	-76	24	202	-88	34	39	-13
Diversified Brands
Cozaar / Hyzaar	91	116	-21	5	6	-7	86	110	-22
Singulair	82	152	-46	4	11	-61	78	140	-44
Arcoxia	68	72	-5				68	72	-5
Follistim AQ	50	62	-18	20	27	-28	31	35	-11
Nasonex	41	58	-30		4	-110	41	55	-24
Other Pharmaceutical (7)	1,186	1,149	3	352	343	3	834	804	4
ANIMAL HEALTH
1,220	1,122	9	398	337	18	822	785	5
Livestock	758	726	5	164	144	14	594	582	2
Companion Animals	462	396	17	234	193	22	228	203	12
Other Revenues (8)
11	180	-94	9	56	-85	2	125	-99

* 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. Total Vaccines sales were $2,521 million and $2,517 million on a global basis in the third quarter of 2020 and 2019, respectively.
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 $1,405 million and $1,360 million on a global basis in the third quarter of 2020 and 2019, respectively.
7. Includes Pharmaceutical products not individually shown above.
8. Other Revenues are comprised primarily of Healthcare Services segment revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities.

99

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES SEPTEMBER YEAR-TO-DATE 2020 (AMOUNTS IN MILLIONS) (UNAUDITED)

Table 3b

		Global			U.S.			International
	Sep YTD 2020	Sep YTD 2019	% Change	Sep YTD 2020	Sep YTD 2019	% Change	Sep YTD 2020	Sep YTD 2019	% Change
TOTAL SALES (1)	$35,479	$34,972	1	$15,396	$15,320		$20,084	$19,652	2
PHARMACEUTICAL	31,654	31,218	1	14,202	14,202		17,452	17,016	3
Oncology
Keytruda	10,387	7,973	30	6,106	4,525	35	4,281	3,448	24
Alliance Revenue - Lynparza (2)	519	313	66	297	186	59	223	126	76
Alliance Revenue - Lenvima (2)	421	280	50	270	169	60	152	112	36
Emend	115	336	-66	18	173	-89	96	163	-41
Vaccines (3)
Gardasil / Gardasil 9	2,941	3,044	-3	1,209	1,579	-23	1,732	1,464	18
ProQuad / M-M-R II / Varivax	1,390	1,794	-23	1,033	1,325	-22	356	469	-24
Pneumovax 23	748	592	26	478	428	12	270	164	64
RotaTeq	601	564	7	355	360	-2	246	203	21
Vaqta	139	167	-17	79	103	-23	60	65	-7
Hospital Acute Care
Bridion	843	817	3	412	381	8	431	437	-1
Noxafil	247	560	-56	27	268	-90	220	291	-25
Prevymis	200	115	74	87	60	45	113	55	106
Primaxin	189	207	-9	2	2		187	204	-9
Invanz	159	206	-23	7	30	-77	152	176	-14
Cancidas	148	191	-22	2	5	-63	147	187	-21
Cubicin	116	207	-44	36	78	-54	80	129	-37
Zerbaxa	112	88	27	57	45	27	54	43	26
Immunology
Simponi	615	625	-2				615	625	-2
Remicade	242	322	-25				242	322	-25
Neuroscience
Belsomra	244	223	9	67	68	-2	177	155	14
Virology
Isentress / Isentress HD	646	752	-14	243	304	-20	403	449	-10
Zepatier	122	304	-60	38	96	-60	83	208	-60
Cardiovascular
Zetia	384	443	-13	(4)	11	-140	389	432	-10
Vytorin	139	231	-40	9	11	-23	130	219	-41
Atozet	348	283	23				348	283	23
Alliance Revenue - Adempas (4)	216	144	50	200	137	46	16	7	130
Adempas (5)	167	158	6				167	158	6
Diabetes (6)
Januvia	2,449	2,539	-4	1,110	1,223	-9	1,339	1,317	2
Janumet	1,499	1,567	-4	361	462	-22	1,138	1,105	3
Women's Health
Implanon / Nexplanon	515	581	-11	374	421	-11	142	160	-12
NuvaRing	184	700	-74	85	593	-86	98	107	-8
Diversified Brands
Singulair	338	503	-33	14	24	-44	324	479	-32
Cozaar / Hyzaar	292	329	-11	17	16	6	275	313	-12
Arcoxia	204	221	-8				204	221	-8
Nasonex	161	226	-29	9	2	*	152	224	-32
Follistim AQ	136	182	-26	60	80	-26	76	102	-26
Other Pharmaceutical (7)	3,478	3,431	1	1,144	1,037	10	2,334	2,394	-3
ANIMAL HEALTH
3,535	3,271	8	1,124	966	16	2,411	2,305	5
Livestock	2,145	2,007	7	448	406	10	1,697	1,601	6
Companion Animals	1,390	1,264	10	676	560	21	714	704	2
Other Revenues (8)
290	483	-40	70	152	-54	221	331	-33

* 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. Total Vaccines sales were $6,094 million and $6,441 million on a global basis for September YTD 2020 and 2019, respectively.
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 $4,177 million and $4,242 million on a global basis for September YTD 2020 and 2019, respectively.
7. Includes Pharmaceutical products not individually shown above.
8. Other Revenues are comprised primarily of Healthcare Services segment revenues, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities.

1010

MERCK & CO., INC.

PHARMACEUTICAL GEOGRAPHIC SALES

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3c

2020

2019

% Change

1Q

2Q

3Q

Sep YTD

1Q

2Q

3Q

Sep YTD

4Q

Full Year

3Q

TOTAL PHARMACEUTICAL		$10,655	$9,679	$11,320	$31,654			$9,663	$10,460	$11,095	$31,218	$10,533	$41,751		2
United States (1)	4,714	4,270	5,218	14,202	4,215	4,807	5,180	14,202	4,751	18,953	1
% Pharmaceutical Sales	44.2%	44.1%	46.1%	44.9%	43.6%	46.0%	46.7%	45.5%	45.1%	45.4%
Europe (2)	2,543	2,196	2,549	7,288	2,335	2,301	2,304	6,941	2,373	9,314	11
% Pharmaceutical Sales	23.9%	22.7%	22.5%	23.0%	24.2%	22.0%	20.8%	22.2%	22.5%	22.3%
China	846	811	990	2,646	725	745	898	2,368	773	3,141	10
% Pharmaceutical Sales	7.9%	8.4%	8.7%	8.4%	7.5%	7.1%	8.1%	7.6%	7.3%	7.5%
Japan	789	847	805	2,441	779	900	894	2,573	921	3,494	-10
% Pharmaceutical Sales	7.4%	8.8%	7.1%	7.7%	8.1%	8.6%	8.1%	8.2%	8.7%	8.4%
Asia Pacific (other than China and Japan)	613	555	601	1,769	642	606	638	1,886	614	2,500	-6
% Pharmaceutical Sales	5.8%	5.7%	5.3%	5.6%	6.6%	5.8%	5.8%	6.0%	5.8%	6.0%
Eastern Europe/Middle East/Africa	490	416	419	1,325	343	388	423	1,154	423	1,577	-1
% Pharmaceutical Sales	4.6%	4.3%	3.7%	4.2%	3.6%	3.7%	3.8%	3.7%	4.0%	3.8%
Latin America	419	399	477	1,294	427	523	534	1,484	429	1,914	-11
% Pharmaceutical Sales	3.9%	4.1%	4.2%	4.1%	4.4%	5.0%	4.8%	4.8%	4.1%	4.6%
Canada	212	160	216	589	177	179	211	568	216	783	2
% Pharmaceutical Sales	2.0%	1.7%	1.9%	1.9%	1.8%	1.7%	1.9%	1.8%	2.0%	1.9%
Other (1)	29	25	45	100	20	11	13	42	33	75	246
% Pharmaceutical Sales	0.3%	0.3%	0.4%	0.3%	0.2%	0.1%	0.1%	0.1%	0.3%	0.2%

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

1. Alliance revenue related to Adempas attributable to the United States has been reclassified from Other.
2. Europe primarily represents all European Union countries and the European Union accession markets.

11

11

MERCK & CO., INC.

OTHER (INCOME) EXPENSE, NET - GAAP

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 4

OTHER (INCOME) EXPENSE, NET
			3Q20		3Q19	Sep YTD 2020	Sep YTD 2019
	Interest income	$	(9)	$	(61)	$	(48)	$	(225)
	Interest expense		203		231		624		674
	Exchange losses		10		38		89		166
	Income from investments in equity securities, net (1)		(360)		(16)		(964)		(50)
	Net periodic defined benefit plan (credit) cost other than service cost		(88)		(128)		(259)		(409)
	Other, net		(68)		(29)		(72)		206
	Total	$	(312)	$	35	$	(630)	$	362

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 ownership interests in investment funds are accounted for on a one quarter lag.