- Fourth-Quarter 2020 Worldwide Sales Were $12.5 Billion, an
Increase of 5%
- Fourth-Quarter 2020 GAAP Loss per Share Was $0.83, Reflecting
Charges Related to Acquisitions and Intangible Asset Impairments;
Fourth-Quarter Non-GAAP EPS Was $1.32
- Full-Year 2020 Worldwide Sales Were $48.0 Billion, an Increase
of 2%; Excluding the Impact from Foreign Exchange, Sales Grew 4%
- KEYTRUDA 2020 Worldwide Sales Grew 30% to $14.4 Billion
- BRIDION 2020 Worldwide Sales Grew 6% to $1.2 Billion; Excluding
the Impact from Foreign Exchange, Sales Grew 7%
- Animal Health 2020 Worldwide Sales Grew 7% to $4.7 Billion;
Excluding the Impact from Foreign Exchange, Sales Grew 10%
- Full-Year 2020 GAAP EPS Was $2.78, Reflecting Charges Related
to Acquisitions, Collaborations and Intangible Asset Impairments;
Full-Year Non-GAAP EPS Was $5.94
- 2021 Financial Outlook
- Anticipates Full-Year 2021 Worldwide Sales to Be Between $51.8
Billion and $53.8 Billion, Including a Positive Impact from Foreign
Exchange of Approximately 2%
- Expects Full-Year 2021 GAAP EPS to Be Between $5.52 and $5.72;
Expects Non-GAAP EPS to Be Between $6.48 and $6.68, Including a
Positive Impact from Foreign Exchange of Approximately 3%
- Changes to the Treatment of Certain Items for Purposes of
Non-GAAP Reporting to Begin in 2021
- Expects Organon & Co. Spinoff in Late Second-Quarter
2021
Merck (NYSE: MRK), known as MSD outside the United States and
Canada, today announced financial results for the fourth quarter
and full year of 2020.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20210204005437/en/
“Despite extraordinary challenges brought on by the COVID-19
pandemic, Merck achieved solid growth and made meaningful progress
in our pipeline in 2020. We remain focused on our science-led
strategy and are confident that this approach will continue to
deliver value to patients and shareholders,” said Kenneth C.
Frazier, chairman and chief executive officer, Merck. “Our
scientists continue to advance our internal pipeline of promising
medicines and vaccines, including in oncology, HIV, and
pneumococcal disease, and, more recently, therapeutics for
COVID-19. These pipeline developments provide us with increasing
line-of-sight to significant potential growth drivers later this
decade and into the next.”
Financial Summary
$ in millions, except EPS amounts
Fourth Quarter
Year Ended
2020
2019
Change
Change Ex- Exchange
Dec. 31, 2020
Dec. 31, 2019
Change
Change Ex- Exchange
Sales
$12,514
$11,868
5%
5%
$47,994
$46,840
2%
4%
GAAP net (loss) income1
(2,094)
2,357
*
*
7,067
9,843
-28%
-25%
Non-GAAP net income that excludes certain
items1,2**
3,350
2,978
12%
16%
15,082
13,382
13%
16%
GAAP EPS
(0.83)
0.92
*
*
2.78
3.81
-27%
-24%
Non-GAAP EPS that excludes certain
items2**
1.32
1.16
14%
17%
5.94
5.19
14%
17%
*Greater than 100%.
**Refer to table on page 12.
GAAP (generally accepted accounting principles) (loss) earnings
per share assuming dilution (EPS) was $(0.83) for the fourth
quarter and $2.78 for the full year of 2020. Non-GAAP EPS was $1.32
for the fourth quarter and $5.94 for the full year of 2020. GAAP
EPS for the fourth quarter and full year of 2020 reflect a $2.7
billion charge for the acquisition of VelosBio Inc. (VelosBio). The
fourth quarter and full year of 2020 also include a $1.6 billion
pretax intangible asset impairment charge related to ZERBAXA
(ceftolozane and tazobactam), resulting from a recall in December
2020 and a temporary suspension of sales which reduced expected
future cash flows of this product. In addition, the full year of
2020 reflects pretax charges of $1.1 billion related to certain
license and collaboration agreements. Non-GAAP EPS excludes the
charges noted above, other acquisition- and divestiture-related
costs, restructuring costs and certain other items. Refer to the
GAAP to non-GAAP reconciliation table on page 12 for further
details.
COVID-19 Research Highlights
Building on the company’s experience with antivirals, Merck
advanced its scientific programs in an effort to help combat
SARS-CoV-2, specifically:
- Molnupiravir (also known as MK-4482) – Merck continued
the clinical development of molnupiravir, an orally available
antiviral candidate for the treatment of COVID-19, in collaboration
with Ridgeback Biotherapeutics LP. It is currently being evaluated
in Phase 2/3 clinical trials in both the hospital and outpatient
settings. The primary completion date for the Phase 2/3 studies is
May 2021. The company anticipates interim efficacy data in the
first quarter of 2021.
- MK-7110 (also known as CD24Fc) – In December 2020, Merck
acquired OncoImmune, a privately held, clinical-stage
biopharmaceutical company, to accelerate the development of
MK-7110, a therapeutic candidate for the treatment of patients with
severe and critical COVID-19.
- In December 2020, Merck entered into a supply agreement with
the U.S. government to support the development, manufacture and
initial distribution of MK-7110 upon approval or Emergency Use
Authorization from the U.S. Food and Drug Administration
(FDA).
- Topline results from a pre-planned interim efficacy analysis
from a Phase 3 study of MK-7110 were released in Sept. 2020. Full
study results are expected in the first quarter of 2021.
Oncology Pipeline Highlights
Merck continued to advance the development programs for KEYTRUDA
(pembrolizumab), the company’s anti-PD-1 therapy; Lynparza
(olaparib), a PARP inhibitor being co-developed and
co-commercialized with AstraZeneca; and Lenvima (lenvatinib
mesylate), an orally available tyrosine kinase inhibitor being
co-developed and co-commercialized with Eisai Co., Ltd.
(Eisai).
- Merck announced the following regulatory milestones for
KEYTRUDA:
- Approval in the United States by the FDA in combination with
chemotherapy for the treatment of patients with locally recurrent
unresectable or metastatic triple-negative breast cancer whose
tumors express PD-L1 (Combined Positive Score [CPS]≥10), based on
results from the KEYNOTE-355 study;
- Approval in the United States by the FDA of an expanded
indication as monotherapy for the treatment of adult patients with
relapsed or refractory classical Hodgkin lymphoma (cHL) based on
the Phase 3 KEYNOTE-204 trial; and an updated pediatric indication
for the treatment of pediatric patients with refractory cHL or cHL
that has relapsed after two or more lines of therapy, both of which
were previously approved under the FDA’s accelerated approval
process;
- Filing acceptance with priority review by the FDA for a
supplemental Biologics License Application (sBLA) for KEYTRUDA plus
chemotherapy as first-line treatment for locally advanced
unresectable or metastatic esophageal and gastroesophageal junction
cancer based on results from the KEYNOTE-590 study. A Prescription
Drug User Fee Act (PDUFA) date is set for April 18, 2021;
- Filing acceptance in January 2021 by the FDA for an sBLA
seeking use of KEYTRUDA for the treatment of patients with locally
advanced cutaneous squamous cell carcinoma (cSCC) that is not
curable by surgery or radiation based on the results of the
KEYNOTE-629 trial. The FDA has set a PDUFA date of Sept. 9, 2021;
and
- Approval in January 2021 in the European Union for KEYTRUDA as
first-line treatment in adult patients with metastatic
microsatellite instability-high (MSI-H) or mismatch repair
deficient (dMMR) colorectal cancer based on results from the
KEYNOTE-177 study.
- Merck announced that the FDA’s Oncologic Drugs Advisory
Committee will discuss Merck’s application for KEYTRUDA for the
treatment of patients with high-risk, early-stage triple-negative
breast cancer based on the results from the Phase 3 KEYNOTE-522
study. The meeting will be held on Feb. 9, 2021.
- Merck’s Phase 3 KEYNOTE-122 trial evaluating KEYTRUDA versus
standard of care (capecitabine, gemcitabine, or docetaxel) for the
treatment of recurrent or metastatic nasopharyngeal cancer (NPC)
did not meet its primary endpoint of overall survival (OS). Full
results will be presented at a future medical meeting.
- Merck and Eisai announced the Phase 3 KEYNOTE-581/CLEAR trial
(Study 307) met its primary endpoint of progression free survival
(PFS) and its key secondary endpoints of OS and objective response
rate (ORR) for KEYTRUDA plus Lenvima as a first-line treatment for
patients with advanced renal cell carcinoma (RCC). In a second arm
of the trial, Lenvima plus everolimus also met the trial’s primary
endpoint of OS and the key secondary endpoint of ORR as a
first-line treatment for patients with advanced RCC. Full results
from the trial will be presented at the 2021 Genitourinary Cancers
Symposium (ASCO GU) on Feb. 13, 2021.
- Merck and Eisai announced the Phase 3 KEYNOTE-775/Study 309
trial evaluating the investigational use of KEYTRUDA and Lenvima
met its dual primary endpoints of OS and PFS and its secondary
endpoint of ORR in patients with advanced endometrial cancer
following at least one prior platinum-based regimen.
- Merck and AstraZeneca announced two European Union approvals of
Lynparza:
- As monotherapy for the treatment of adult patients with
metastatic castration-resistant prostate cancer and BRCA1/2
mutations (germline and/or somatic) who have progressed following a
prior therapy that included a new hormonal agent; and
- As first-line maintenance treatment in combination with
bevacizumab for adult patients with advanced (FIGO stages III and
IV) high-grade epithelial ovarian, fallopian tube or primary
peritoneal cancer who are in response (complete or partial)
following completion of first-line platinum-based chemotherapy in
combination with bevacizumab and whose cancer is associated with
homologous recombination deficiency (HRD)-positive status defined
by either a breast susceptibility gene 1/2 (BRCA1/2) mutation
and/or genomic instability.
- Merck and AstraZeneca announced three approvals of Lynparza in
Japan for:
- Maintenance treatment after first-line chemotherapy containing
bevacizumab (genetical recombination) in patients with HRD ovarian
cancer;
- Treatment of patients with BRCA gene-mutated (BRCAm)
castration-resistant prostate cancer with distant metastasis;
and
- Maintenance treatment after platinum-based chemotherapy for
patients with BRCAm curatively unresectable pancreas cancer.
Other Pipeline Highlights
- In January 2021, Merck announced approval in the United States
by the FDA of Verquvo (vericiguat), a soluble guanylate cyclase
(sGC) stimulator, to reduce the risk of cardiovascular death and
heart failure hospitalization following a hospitalization for heart
failure or need for outpatient intravenous (IV) diuretics in adults
with symptomatic chronic heart failure and ejection fraction less
than 45%, based on the results of the Phase 3 VICTORIA trial.
Verquvo is being jointly developed with Bayer AG.
- In January 2021, Merck announced filing acceptance with
priority review by the FDA of a Biologics License Application (BLA)
for V114, Merck’s investigational 15-valent pneumococcal conjugate
vaccine for use in adults 18 years of age and older. A PDUFA date
is set for July 18, 2021. Previously, Merck also announced the
submission of an application for V114 to the European Medicines
Agency.
- Merck announced that two Phase 3 adult studies (the PNEU-PATH
[V114-016] and PNEU-DAY [V114-017] trials), evaluating the safety,
tolerability and immunogenicity of V114, each met their primary
immunogenicity objectives.
- Merck presented Week 96 data from the Phase 2b trial
(NCT03272347) that showed islatravir, the company’s investigational
oral nucleoside reverse transcriptase translocation inhibitor
(NRTTI), in combination with doravirine (PIFELTRO), maintained
viral suppression in treatment-naïve adults with HIV-1
infection.
- Merck announced a collaboration with the Bill & Melinda
Gates Foundation where the foundation will provide funding to
support the Phase 3 IMPOWER 22 trial evaluating the safety and
efficacy of investigational islatravir for both treatment and
prevention in women and adolescent girls at high-risk for acquiring
HIV-1 infection in sub-Saharan Africa.
- Merck also announced plans to conduct additional studies in HIV
prevention with investigational islatravir including IMPOWER 24, a
global Phase 3 clinical trial to evaluate islatravir as a
once-monthly oral agent for pre-exposure prophylaxis (PrEP) at
sites across the world and among other key populations impacted by
the epidemic, including men who have sex with men and transgender
women.
- In January 2021, Merck announced interim data from the Phase 2a
trial (NCT04003103) in adults evaluating the safety, tolerability
and pharmacokinetics (PK) of the investigational once-monthly oral
islatravir tablet for PrEP. Interim findings demonstrated that
once-monthly oral islatravir achieved the pre-specified efficacy PK
threshold for PrEP at both of the two doses studied (60 mg and 120
mg).
- Merck continued to advance MK-8507, the company’s
investigational once-weekly oral non-nucleoside reverse
transcriptase inhibitor (NNRTI). The company presented results from
Phase 1/1b studies that supported further investigation for
once-weekly oral administration as part of combination
antiretroviral therapy. Enrollment in a Phase 2 trial evaluating a
switch to islatravir and MK-8507 once weekly in adult participants
with HIV-1 who have been virologically suppressed for ≥6 months on
bictegravir/emtricitabine/tenofovir alafenamide (BIC/FTC/TAF)
once-daily, is currently ongoing.
Business Development
- In December 2020, Merck acquired VelosBio, a privately held,
clinical-stage biopharmaceutical company, to strengthen Merck’s
oncology pipeline with MK-2140 (formerly known as VLS-101), an
investigational antibody-drug conjugate to treat hematological
malignancies and solid tumors.
Fourth-Quarter and Full-Year Financial Impact of
COVID-19
In the fourth quarter, the estimated negative impact of the
COVID-19 pandemic to Merck’s pharmaceutical revenue was
approximately $400 million. As expected, within the company’s human
health business, revenue was negatively impacted by reduced access
to health care providers given social distancing measures, which
negatively affected vaccine sales in particular.
Operating expenses were positively impacted in the fourth
quarter by approximately $50 million, primarily driven by lower
promotional and selling costs, partially offset by higher research
and development (R&D) expenses, net of investments in
COVID-19-related antiviral and vaccine research programs.
The estimated overall negative impact of the COVID-19 pandemic
to Merck’s revenue for the full year 2020 was approximately $2.5
billion, largely attributable to the human health business but
including approximately $50 million attributable to Animal
Health.
Operating expenses for the full year were positively impacted by
approximately $600 million, primarily driven by lower promotional
and selling costs, as well as lower R&D expenses, net of
investments in COVID-19-related antiviral and vaccine research
programs.
Fourth-Quarter and Full-Year Revenue Performance
The following table reflects sales of the company’s top
pharmaceutical products, as well as sales of animal health
products.
$ in millions
Fourth Quarter
Year Ended
2020
2019
Change
Change Ex- Exchange
Dec. 31, 2020
Dec. 31, 2019
Change
Change Ex- Exchange
Total Sales
$12,514
$11,868
5%
5%
$47,994
$46,840
2%
4%
Pharmaceutical
11,367
10,533
8%
6%
43,021
41,751
3%
4%
KEYTRUDA
3,993
3,111
28%
27%
14,380
11,084
30%
30%
JANUVIA / JANUMET
1,328
1,418
-6%
-7%
5,276
5,524
-4%
-4%
GARDASIL / GARDASIL 9
998
693
44%
41%
3,938
3,737
5%
6%
PROQUAD, M-M-R II and VARIVAX
488
481
2%
1%
1,878
2,275
-17%
-17%
BRIDION
355
313
13%
13%
1,198
1,131
6%
7%
PNEUMOVAX 23
339
334
1%
0%
1,087
926
17%
18%
SIMPONI
223
205
9%
4%
838
830
1%
1%
ISENTRESS / ISENTRESS HD
211
223
-5%
-6%
857
975
-12%
-11%
Lynparza*
206
132
56%
53%
725
444
63%
62%
ROTATEQ
196
227
-14%
-14%
797
791
1%
1%
IMPLANON / NEXPLANON
165
206
-20%
-20%
680
787
-14%
-13%
Lenvima*
158
124
28%
26%
580
404
44%
43%
Animal Health
1,168
1,122
4%
6%
4,703
4,393
7%
10%
Livestock
794
777
2%
4%
2,939
2,784
6%
9%
Companion Animals
374
345
8%
9%
1,764
1,609
10%
11%
Other Revenues**
(21)
213
-110%
-45%
270
696
-61%
-22%
*Alliance revenue for these products represents Merck’s share of
profits, which are product sales net of cost of sales and
commercialization costs. **Other revenues are comprised primarily
of third-party manufacturing sales and miscellaneous corporate
revenues, including revenue hedging activities. The revenue hedging
activities resulted in negative revenue in the fourth quarter of
2020.
Pharmaceutical Revenue
Fourth-quarter pharmaceutical sales increased 8% to $11.4
billion. Excluding the favorable effect from foreign exchange,
sales grew 6%. The increase was driven by growth in oncology,
vaccines, reflecting the replenishment of GARDASIL 9 doses
previously borrowed from the U.S. Centers for Disease Control and
Prevention (CDC) Pediatric Vaccine Stockpile as discussed below,
and hospital acute care, partially offset by the negative impact of
the COVID-19 pandemic and the ongoing impacts of the loss of market
exclusivity for several products.
Growth in oncology was largely driven by sales of KEYTRUDA,
which were $4.0 billion for the quarter. Global sales growth of
KEYTRUDA reflects continued strong momentum from the non-small-cell
lung cancer indications as well as continued uptake in other
indications, including adjuvant melanoma, RCC, bladder, head and
neck squamous cell carcinoma (HNSCC) and MSI-H cancers, as well as
uptake following the recent launch of the 400mg every 6 week adult
dosing regimen in the U.S., partially offset by the negative
impacts of the COVID-19 pandemic and pricing in Japan. Also
contributing to growth in oncology was higher alliance revenue
related to Lynparza and Lenvima reflecting continued uptake in
approved indications in the U.S., Europe and China.
Growth in vaccines for the fourth quarter was driven by higher
sales of GARDASIL [Human Papillomavirus Quadrivalent (Types 6, 11,
16 and 18) Vaccine, Recombinant] and GARDASIL 9 (Human
Papillomavirus 9-valent Vaccine, Recombinant). Fourth-quarter 2020
GARDASIL 9 sales were increased by $120 million due to the
replenishment of doses that were borrowed in the fourth quarter of
2019 from the CDC Pediatric Vaccine Stockpile. GARDASIL 9 sales in
the fourth quarter of 2019 were decreased by $120 million due to
the borrowing. GARDASIL/GARDASIL 9 sales growth also reflects
higher demand in China. Growth was partially offset by the negative
impact of the COVID-19 pandemic globally. Excluding the
borrowing-related activity in both periods, GARDASIL/GARDASIL 9
sales grew 8% in the quarter, or 6% excluding the favorable impact
from foreign exchange.
Growth in hospital acute care reflects higher demand globally
for BRIDION (sugammadex) Injection 100 mg/mL, a medicine for the
reversal of neuromuscular blockade induced by rocuronium bromide or
vecuronium bromide in adults undergoing surgery; and the continued
uptake of PREVYMIS (letermovir), a medicine for prophylaxis
(prevention) of cytomegalovirus (CMV) infection and disease in
adult CMV-seropositive recipients of an allogeneic hematopoietic
stem cell transplant.
Pharmaceutical sales in the quarter were negatively affected by
the ongoing impacts from the loss of market exclusivity, including
for NUVARING (etonogestrel/ethinyl estradiol vaginal ring), ZETIA
(ezetimibe) and certain products in diversified brands. In
addition, the decline in sales of JANUVIA (sitagliptin) and JANUMET
(sitagliptin and metformin HCI) reflects continued pricing pressure
in the United States, which more than offset higher demand in
certain international markets.
Full-year 2020 pharmaceutical sales increased 3% to $43.0
billion; excluding the unfavorable effect from foreign exchange,
sales grew 4%, primarily due to higher sales in oncology,
reflecting strong growth in KEYTRUDA, higher sales of certain
vaccines including PNEUMOVAX 23 (pneumococcal vaccine polyvalent),
a vaccine to help prevent pneumococcal disease, and higher sales of
certain hospital acute care products, including PREVYMIS and
BRIDION. As discussed above, the COVID-19 pandemic negatively
affected sales in 2020. Also negatively affecting sales in 2020 was
the ongoing impacts of the loss of market exclusivity for several
products, lower sales of pediatric vaccines, as well as pricing
pressure in diabetes.
Animal Health Revenue
Animal Health sales totaled $1.2 billion for the fourth quarter
of 2020, an increase of 4% compared with the fourth quarter of
2019; excluding the unfavorable effect from foreign exchange,
Animal Health sales grew 6%. Growth in the quarter reflects a net
favorable impact of one-time items, including an additional month
of sales in the current quarter related to the 2019 acquisition of
Antelliq Corporation (Antelliq), partially offset by distributor
purchasing patterns. Also contributing to growth were contributions
from smaller acquisitions, as well as the underlying performance of
the business driven by companion animal products, reflecting higher
demand in companion animal vaccines and parasiticides.
Worldwide sales for the full year of 2020 were $4.7 billion, an
increase of 7%; excluding the unfavorable effect from foreign
exchange, sales grew 10%. Full-year sales growth was primarily
driven by livestock sales which included an additional five months
of sales in the year related to the 2019 acquisition of Antelliq,
along with higher sales of companion animal products, primarily the
BRAVECTO (fluralaner) line of products for parasitic control, and
companion animal vaccines.
Fourth-Quarter and Full-Year Expense, EPS and Related
Information
The tables below present selected expense information.
$ in millions
Fourth-Quarter 2020
GAAP
Acquisition- and Divestiture-
Related Costs3,4
Restructuring Costs
Certain Other Items
Non-GAAP2
Cost of sales
$5,532
$1,855
$44
$260
$3,373
Selling, general and administrative
3,086
287
10
−
2,789
Research and development
5,838
13
16
3,161
2,648
Restructuring costs
309
−
309
−
−
Other (income) expense, net
(258)
(2)
−
(3)
(253)
Fourth-Quarter 2019
Cost of sales
$3,669
$325
$90
$−
$3,254
Selling, general and administrative
2,888
44
1
−
2,843
Research and development
2,548
166
−
11
2,371
Restructuring costs
194
−
194
−
−
Other (income) expense, net
(223)
(37)
−
7
(193)
$ in millions
Year Ended Dec. 31, 2020
GAAP
Acquisition- and Divestiture-
Related Costs3,4
Restructuring Costs
Certain Other Items
Non-GAAP2
Cost of sales
$15,485
$2,718
$175
$260
$12,332
Selling, general and administrative
10,468
935
47
−
9,486
Research and development
13,558
1
83
4,243
9,231
Restructuring costs
578
−
578
−
−
Other (income) expense, net
(886)
50
−
(20)
(916)
Year Ended Dec. 31, 2019
Cost of sales
$14,112
$2,126
$251
$−
$11,735
Selling, general and administrative
10,615
126
34
−
10,455
Research and development
9,872
145
4
993
8,730
Restructuring costs
638
−
638
−
−
Other (income) expense, net
139
284
−
55
(200)
GAAP Expense, EPS and Related Information
Gross margin was 55.8% for the fourth quarter of 2020 compared
to 69.1% for the fourth quarter of 2019. The decrease reflects
higher acquisition- and divestiture-related costs, including an
impairment charge related to ZERBAXA, a charge related to the
discontinuation of COVID-19 vaccine development programs, higher
inventory write-offs due to a recall of ZERBAXA, pricing pressure
and foreign exchange, partially offset by the favorable effects of
product mix and manufacturing variances.
Gross margin was 67.7% for the full year of 2020 compared to
69.9% for the full year of 2019. The decrease in gross margin for
the full year of 2020 reflects higher acquisition- and
divestiture-related costs, including an impairment charge related
to ZERBAXA, pricing pressure, a charge related to the
discontinuation of COVID-19 vaccine development programs, higher
amortization of intangible assets related to collaborations, and
higher inventory write-offs, partially offset by the favorable
effects of product mix and lower restructuring costs.
Selling, general and administrative expenses were $3.1 billion
in the fourth quarter of 2020, an increase of 7% compared to the
fourth quarter of 2019. The increase was largely driven by higher
acquisition- and divestiture-related costs, primarily reflecting
costs related to the company’s planned spinoff of Organon & Co.
(Organon), as well as a $100 million contribution to the Merck
Foundation to support philanthropic programs and initiatives that
help address health disparities and strengthen communities in the
U.S. and around the world; partially offset by lower selling and
administrative costs, including less travel and meeting expenses,
due in part to the COVID-19 pandemic. Full-year 2020 selling,
general and administrative expenses were $10.5 billion, a decrease
of 1% compared to the full year of 2019. The decrease primarily
reflects lower administrative, selling and promotional costs, due
in part to the COVID-19 pandemic, largely offset by higher
acquisition- and divestiture-related costs, primarily reflecting
costs related to the company’s planned spinoff of Organon.
R&D expenses were $5.8 billion in the fourth quarter of
2020, compared with $2.5 billion in the fourth quarter of 2019.
R&D expenses were $13.6 billion for the full year of 2020, a
37% increase compared to the full year of 2019. The increase in
both periods was primarily driven by higher upfront payments for
acquisitions and collaborations, including a $2.7 billion charge in
2020 for the acquisition of VelosBio. In addition, the increase in
both periods reflects higher expenses related to clinical
development and increased investment in discovery research and
early drug development. These increases were partially offset by
lower travel and meeting expenses due to the COVID-19 pandemic, as
well as lower acquisition- and divestiture-related costs.
Other (income) expense, net, was $258 million of income in the
fourth quarter of 2020 compared to $223 million of income in the
fourth quarter of 2019, primarily reflecting higher income from
investments in equity securities, net, which was $375 million in
2020 compared with $119 million in 2019, largely from the
recognition of unrealized gains on securities. Other (income)
expense, net, was $886 million of income for the full year of 2020
compared to $139 million of expense for the full year of 2019,
primarily reflecting higher income from investments in equity
securities, net, which was $1.3 billion in 2020 compared with $170
million in 2019, largely from the recognition of unrealized gains
on securities.
The effective income tax rates were (5.0)% for the fourth
quarter and 19.4% for the full year of 2020. The effective income
tax rates for the fourth quarter and full year of 2020 reflect the
unfavorable impact of the charge for the acquisition of VelosBio
for which no tax benefit was recognized.
GAAP EPS was $(0.83) for the fourth quarter of 2020 compared
with $0.92 for the fourth quarter of 2019. GAAP EPS was $2.78 for
the full year of 2020 compared with $3.81 for the full year of
2019.
Non-GAAP Expense, EPS and Related Information
Non-GAAP gross margin was 73.0% for the fourth quarter of 2020
compared to 72.6% for the fourth quarter of 2019. The increase in
the fourth quarter reflects the favorable effects of product mix
and manufacturing variances, partially offset by higher inventory
write-offs due to a recall of ZERBAXA, pricing pressure and foreign
exchange.
Non-GAAP gross margin was 74.3% for the full year of 2020
compared to 74.9% for the full year of 2019. The decrease reflects
pricing pressure, higher amortization of intangible assets related
to collaborations and higher inventory write-offs, partially offset
by the favorable effect of product mix.
Non-GAAP selling, general and administrative expenses were $2.8
billion in the fourth quarter of 2020, a decrease of 2% compared to
the fourth quarter of 2019. Full-year 2020 non-GAAP selling,
general and administrative expenses were $9.5 billion, a decrease
of 9% compared to the full year of 2019. The decrease in both
periods primarily reflects lower administrative and selling costs,
including less travel and meeting expenses, due in part to the
COVID-19 pandemic. The declines were partially offset by the
contribution to the Merck Foundation.
Non-GAAP R&D expenses were $2.6 billion in the fourth
quarter of 2020, a 12% increase compared to the fourth quarter of
2019. Non-GAAP R&D expenses were $9.2 billion for the full year
of 2020, a 6% increase compared to the full year of 2019. The
increase in both periods was primarily driven by higher expenses
related to clinical development and increased investment in
discovery research and early drug development, partially offset by
lower travel and meeting expenses due to the COVID-19 pandemic.
Non-GAAP other (income) expense, net, was $253 million of income
in the fourth quarter of 2020 compared to $193 million of income in
the fourth quarter of 2019, primarily reflecting higher income from
investments in equity securities, net, which was $375 million in
2020 compared with $119 million in 2019, largely from the
recognition of unrealized gains on securities. Non-GAAP other
(income) expense, net, for the full year of 2020 was $916 million
of income compared to $200 million of income for the full year of
2019, primarily driven by higher income from investments in equity
securities, net, which was $1.3 billion in 2020 compared with $170
million in 2019, largely from the recognition of unrealized gains
on securities.
The non-GAAP effective income tax rates were 15.3% for the
fourth quarter of 2020 and 15.5% for the full year of 2020.
Non-GAAP EPS was $1.32 for the fourth quarter of 2020 compared
with $1.16 for the fourth quarter of 2019. Non-GAAP EPS was $5.94
for the full year of 2020 compared with $5.19 for the full year of
2019.
A reconciliation of GAAP to non-GAAP net income and EPS is
provided in the table that follows.
$ in millions, except EPS amounts
Fourth Quarter
Year Ended
2020
2019
Dec. 31, 2020
Dec. 31, 2019
EPS
GAAP EPS
$(0.83)
$0.92
$2.78
$3.81
Difference
2.15
0.24
3.16
1.38
Non-GAAP EPS that excludes items listed
below2
$1.32
$1.16
$5.94
$5.19
Net Income
GAAP net (loss) income1
$(2,094)
$2,357
$7,067
$9,843
Difference
5,444
621
8,015
3,539
Non-GAAP net income that excludes items
listed below1,2
$3,350
$2,978
$15,082
$13,382
Decrease (Increase) in Net Income Due
to Excluded Items:
Acquisition-related intangible asset
impairment charges4
$1,594
$12
$1,609
$705
Other acquisition- and divestiture-related
costs3
559
486
2,095
1,976
Total acquisition- and divestiture-related
costs
2,153
498
3,704
2,681
Restructuring costs
379
285
883
927
Charge for the acquisition of VelosBio
2,660
−
2,660
−
Charge for the acquisition of
OncoImmune
462
−
462
−
Charge for the discontinuation of COVID-19
vaccine development programs
305
−
305
−
Charges for the formation of
collaborations5
(6)
−
1,076
−
Charge for the acquisition of Peloton
Therapeutics, Inc.
−
11
−
993
Other
(3)
7
(20)
55
Net decrease (increase) in income before
taxes
5,950
801
9,070
4,656
Income tax (benefit) expense6
(506)
(180)
(1,055)
(1,028)
Acquisition- and divestiture-related costs
attributable to non-controlling interests
−
−
−
(89)
Decrease (increase) in net income
$5,444
$621
$8,015
$3,539
Financial Outlook
The guidance provided below is based on the assumption that the
Organon business will be part of Merck for all of 2021; however,
the Company expects that the Organon spinoff will occur late in the
second quarter of 2021. If the spinoff occurs, these financial
estimates will be updated.
At mid-January 2021 exchange rates, Merck anticipates full-year
2021 revenue to be between $51.8 billion and $53.8 billion,
including a positive impact from foreign exchange of approximately
2%.
Merck expects full-year 2021 GAAP EPS to be between $5.52 and
$5.72.
Beginning in 2021, the Company will be changing the treatment of
certain items for the purposes of its non-GAAP reporting.
Historically, Merck’s non-GAAP results excluded the amortization of
intangible assets recognized in connection with business
acquisitions but did not exclude the amortization of intangibles
originating from collaborations, asset acquisitions or licensing
arrangements. Beginning in 2021, Merck’s non-GAAP results will no
longer differentiate between the nature of the intangible assets
being amortized and will exclude all amortization of intangible
assets. Also, beginning in 2021, Merck’s non-GAAP results will
exclude gains and losses on investments in equity securities.
On this new basis, Merck expects full-year 2021 non-GAAP EPS to
be between $6.48 and $6.68, including an approximately 3% positive
impact from foreign exchange. The non-GAAP range also excludes
acquisition- and divestiture-related costs and costs related to
restructuring programs. The changes to non-GAAP reporting resulted
in a positive impact to projected 2021 non-GAAP EPS of
approximately $0.08. For comparative purposes, Merck’s non-GAAP EPS
in 2020 would have been $5.79 if reported under the new basis.
The full-year guidance includes Merck’s current assumption of
the impact from the COVID-19 pandemic. Merck projects strong
underlying business growth for 2021. This growth is partially
offset by the anticipated continuing impacts of the pandemic into
2021. Merck believes that global health systems and patients have
largely adapted to the impacts of COVID-19 disease, but the
company’s assumption is that ongoing residual negative impacts will
persist, particularly during the first half of 2021 and most
notably with respect to vaccine sales, which are expected to be
more acute in the United States.
For full-year 2021, Merck assumes an unfavorable impact to
revenue of approximately 2% due to the COVID-19 pandemic, all of
which relates to pharmaceutical segment sales. For full-year 2021,
with respect to the COVID-19 pandemic, Merck expects a net negative
impact on operating expenses, as spending on the development of its
COVID-19 antiviral programs is expected to exceed the favorable
impact of lower spending in other areas due to the COVID-19
pandemic. Neither the sales nor the EPS guidance ranges provided
above include the impact of the potential launches of Merck’s
COVID-19 antiviral drug candidates.
The following table summarizes the company’s full-year 2021
financial guidance.
GAAP
Non-GAAP2
Revenue
$51.8 to $53.8 billion
$51.8 to $53.8 billion*
Operating expenses
Lower than 2020 by a low-double-digit
rate
Higher than 2020 by a high-single
to low-double-digit rate
Effective tax rate
15% to 16%
15% to 16%
EPS**
$5.52 to $5.72
$6.48 to $6.68
*The company does not have any non-GAAP adjustments to revenue.
**EPS guidance for 2021 assumes a share count (assuming dilution)
of approximately 2.53 billion shares.
A reconciliation of anticipated 2021 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 2021
GAAP EPS
$5.52 to $5.72
Difference
$0.96
Non-GAAP EPS that excludes items listed
below2
$6.48 to $6.68
Acquisition- and divestiture-related
costs
$2,900
Restructuring costs
700
(Gains) losses on investments in equity
securities
(800)
Net decrease (increase) in income before
taxes
2,800
Estimated income tax (benefit) expense
(360)
Decrease (increase) in net income
$2,440
Organon Update
Merck expects the spinoff of Organon to be completed late in the
second quarter of 2021. The transaction is expected to create two
companies with enhanced strategic and operational focus, improved
agility, simplified operating models, optimized capital structures
and improved financial profiles. Merck believes the transaction
will deliver significant benefits for both Merck and Organon and
create value for Merck shareholders.
In 2020, the products that will comprise Organon achieved
revenues of $6.5 billion. In 2021, assuming it operated as an
independent company for the full year, Organon is expected to
generate $6.0 billion to $6.5 billion in revenue. As it nears the
end of loss of exclusivity exposure to key brands, Organon will be
well positioned for growth led by its Women’s Health and
Biosimilars portfolios, with expected low to mid-single digit
annual revenue growth off of a 2021 base year.
As a standalone company post spinoff, Organon anticipates having
non-GAAP operating margins in the mid-30% range. This compares to a
non-GAAP operating margin of approximately 45% within Merck, with
the difference reflecting additional costs Organon will incur to
operate as an independent company. Earnings before interest, taxes,
depreciation and amortization (EBITDA) margins are anticipated in
the high 30% range post spinoff. Organon’s operating and EBITDA
margins are expected to increase over time.
At this time, Organon is expected to have $9.0 billion to $9.5
billion in initial debt and is expected to pay a special tax-free
dividend to Merck of approximately $8.5 billion to $9.0 billion.
The remaining cash, as well as ongoing cash flows from operations,
is expected to provide the company with ample cash flow and
financial flexibility for potential business development
opportunities, debt paydown and a meaningful dividend that will be
incremental to the dividend Merck currently pays its shareholders.
Actual debt balances will be determined based on market conditions
and desired bond rating.
For Merck, the spinoff of Organon will allow it to increase
focus on key growth pillars, result in higher revenue and EPS
growth rates and enable incremental operating efficiencies of
approximately $1.5 billion which are expected to be achieved
ratably over three years, with approximately $500 million reflected
in Merck’s 2021 financial outlook. Merck will continue to incur
overhead costs previously allocated to the Organon products, which
are estimated to be approximately $400 million on a full-year
basis. These costs are expected to be reduced over time and are
netted into the overall efficiency target. In addition, the special
tax-free dividend from Organon will be allocated to business
development or share repurchase.
As a result of stronger growth Organon is expected to achieve as
a standalone company, combined with the benefit of operating
efficiencies at Merck enabled by the spinoff, Merck expects
combined non-GAAP EPS of the two companies to be higher within
12-24 months post-spinoff versus what would have been achieved
assuming no transaction.
Merck will host an investor event prior to the completion of the
spinoff at which time Organon management will present its strategy,
opportunities for growth and financial outlook. Further details
will be announced at a future date.
Earnings Conference Call
Investors, journalists and the general public may access a live
audio webcast of the call today at 8:00 a.m. EST on Merck’s website
at
https://www.merck.com/investor-relations/events-and-presentations/.
Institutional investors and analysts can participate in the call by
dialing (833) 353-0277 or (469) 886-1947 and using ID code number
2268598. Members of the media are invited to monitor the call by
dialing (833) 353-0277 or (469) 886-1947 and using ID code number
2268598. 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 130 years, Merck, known as MSD outside of the United States
and Canada, has been inventing for life, bringing forward medicines
and vaccines for many of the world’s most challenging diseases in
pursuit of our mission to save and improve lives. We demonstrate
our commitment to patients and population health by increasing
access to health care through far-reaching policies, programs and
partnerships. Today, Merck continues to be at the forefront of
research to prevent and treat diseases that threaten people and
animals – including cancer, infectious diseases such as HIV and
Ebola, and emerging animal diseases – as we aspire to be the
premier research-intensive biopharmaceutical company in the world.
For more information, visit www.merck.com and connect with us on
Twitter, Facebook, Instagram, YouTube and LinkedIn.
Forward-Looking Statement of Merck & Co., Inc.,
Kenilworth, N.J., USA
This news release of Merck & Co., Inc., Kenilworth, N.J.,
USA (the “company”) includes “forward-looking statements” within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. These statements are
based upon the current beliefs and expectations of the company’s
management and are subject to significant risks and uncertainties.
There can be no guarantees with respect to pipeline products that
the products will receive the necessary regulatory approvals or
that they will prove to be commercially successful. If underlying
assumptions prove inaccurate or risks or uncertainties materialize,
actual results may differ materially from those set forth in the
forward-looking statements.
Risks and uncertainties include but are not limited to, general
industry conditions and competition; general economic factors,
including interest rate and currency exchange rate fluctuations;
the impact of the global outbreak of novel coronavirus disease
(COVID-19); the impact of pharmaceutical industry regulation and
health care legislation in the United States and internationally;
global trends toward health care cost containment; technological
advances, new products and patents attained by competitors;
challenges inherent in new product development, including obtaining
regulatory approval; the company’s ability to accurately predict
future market conditions; manufacturing difficulties or delays;
financial instability of international economies and sovereign
risk; dependence on the effectiveness of the company’s patents and
other protections for innovative products; and the exposure to
litigation, including patent litigation, and/or regulatory
actions.
The company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events or otherwise. Additional factors that could cause
results to differ materially from those described in the
forward-looking statements can be found in the company’s 2019
Annual Report on Form 10-K and the company’s other filings with the
Securities and Exchange Commission (SEC) available at the SEC’s
Internet site (www.sec.gov).
1
Net (loss) income attributable to Merck
& Co., Inc.
2
Merck is providing certain 2020 and 2019
non-GAAP information that excludes certain items because of the
nature of these items and the impact they have on the analysis of
underlying business performance and trends. Management believes
that providing this information enhances investors’ understanding
of the company’s results and permits investors to understand how
management assesses performance. Management uses these measures
internally for planning and forecasting purposes and to measure the
performance of the company along with other metrics. 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. For a description of
the items, see Tables 2a and 2b attached to this release.
3
Includes expenses for the amortization of
intangible assets and purchase accounting adjustments to
inventories recognized as a result of acquisitions and expense or
income related to changes in the estimated fair value measurement
of liabilities for contingent consideration. Also includes
integration, transaction and certain other costs related to
business acquisitions and divestitures.
4
Fourth-quarter and full-year 2020 include
a $1.6 billion impairment charge related to ZERBAXA. Full-year 2019
includes a $612 million impairment charge related to SIVEXTRO
(tedizolid phosphate).
5
Amount for full-year 2020 includes $826
million related to collaborations with Seagen, Inc.
6
Includes the estimated tax impact on the
reconciling items. Amount for full-year 2020 includes a tax cost of
$67 million, representing an adjustment to the tax benefits
recorded in conjunction with the 2015 acquisition of Cubist
Pharmaceuticals, Inc. Amount for full-year 2019 includes a $364
million net tax benefit related to the settlement of certain
federal income tax matters, an $86 million tax benefit related to
the reversal of tax reserves established in conjunction with the
divestiture of Merck’s Consumer Care business in 2014 as a result
of the lapse in the statute of limitations, and a $117 million tax
charge related to the finalization of treasury regulations
associated with the 2017 enactment of U.S. tax legislation.
MERCK & CO., INC. CONSOLIDATED STATEMENT OF INCOME -
GAAP (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED) Table 1
GAAP
% Change
GAAP
% Change
4Q20
4Q19
Full Year 2020
Full Year 2019
Sales
$
12,514
$
11,868
5
%
$
47,994
$
46,840
2
%
Costs, Expenses and Other Cost of sales (1)
5,532
3,669
51
%
15,485
14,112
10
%
Selling, general and administrative (1)
3,086
2,888
7
%
10,468
10,615
-1
%
Research and development (1)
5,838
2,548
*
13,558
9,872
37
%
Restructuring costs (2)
309
194
59
%
578
638
-9
%
Other (income) expense, net (1)
(258
)
(223
)
16
%
(886
)
139
* (Loss) Income Before Taxes
(1,993
)
2,792
*
8,791
11,464
-23
%
Income Tax Provision (1)
99
428
1,709
1,687
Net (Loss) Income
(2,092
)
2,364
*
7,082
9,777
-28
%
Less: Net Income (Loss) Attributable to Noncontrolling Interests
(1)
2
7
15
(66
)
Net (Loss) Income Attributable to Merck & Co., Inc.
$
(2,094
)
$
2,357
*
$
7,067
$
9,843
-28
%
(Loss) Earnings per Common Share Assuming Dilution (3)
$
(0.83
)
$
0.92
*
$
2.78
$
3.81
-27
%
Average Shares Outstanding Assuming Dilution (3)
2,540
2,559
2,541
2,580
Tax Rate (4)
-5.0
%
15.3
%
19.4
%
14.7
%
* 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) Because the company recorded a net loss in the
fourth quarter of 2020, no potential dilutive common shares were
used in the computation of loss per common share assuming dilution
as the effect would have been anti-dilutive. (4) The
effective income tax rates for the fourth quarter and the full year
of 2020 include the unfavorable impact of charges for the
acquisitions of VelosBio Inc. and OncoImmune for which no tax
benefits were recognized. The effective income tax rates for the
fourth quarter and the full year 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 full
year of 2019 also reflects a net tax benefit of $364 million
related to the settlement of certain federal income tax matters.
MERCK & CO., INC. GAAP TO NON-GAAP RECONCILIATION
FOURTH QUARTER 2020 (AMOUNTS IN MILLIONS, EXCEPT PER
SHARE FIGURES) (UNAUDITED) Table 2a
GAAP Acquisition andDivestiture-RelatedCosts (1)
RestructuringCosts (2) Certain OtherItems (4)
AdjustmentSubtotal Non-GAAP Cost of
sales
$
5,532
1,855
44
260
2,159
$
3,373
Selling, general and administrative
3,086
287
10
297
2,789
Research and development
5,838
13
16
3,161
3,190
2,648
Restructuring costs
309
309
309
-
Other (income) expense, net
(258
)
(2
)
(3
)
(5
)
(253
)
(Loss) Income Before Taxes
(1,993
)
(2,153
)
(379
)
(3,418
)
(5,950
)
3,957
Income Tax Provision (Benefit)
99
(423
)
(3
)
(22
)
(3
)
(61
)
(3
)
(506
)
605
Net (Loss) Income
(2,092
)
(1,730
)
(357
)
(3,357
)
(5,444
)
3,352
Net (Loss) Income Attributable to Merck & Co., Inc.
(2,094
)
(1,730
)
(357
)
(3,357
)
(5,444
)
3,350
(Loss) Earnings per Common Share Assuming Dilution
$
(0.83
)
(0.68
)
(0.15
)
(1.32
)
(2.15
)
$
1.32
Tax Rate
-5.0
%
15.3
%
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 a $1.6 billion intangible asset
impairment charge related to ZERBAXA and $274 million for the
amortization of intangible assets recognized as a result of
business acquisitions. Amount included in selling, general and
administrative expenses reflects $244 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. (4)
Amount included in cost of sales represents a charge for the
discontinuation of COVID-19 vaccine development programs. Amount
included in research and development represents the charges of $2.7
billion for the acquisition of VelosBio Inc., $462 million for the
acquisition of OncoImmune and $45 million for the discontinuation
of COVID-19 vaccine development programs.
MERCK & CO.,
INC. GAAP TO NON-GAAP RECONCILIATION FULL YEAR
2020 (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED) Table 2b GAAP
Acquisition andDivestiture-RelatedCosts (1)
RestructuringCosts (2) Certain OtherItems (4)
AdjustmentSubtotal Non-GAAP Cost of
sales
$
15,485
2,718
175
260
3,153
$
12,332
Selling, general and administrative
10,468
935
47
982
9,486
Research and development
13,558
1
83
4,243
4,327
9,231
Restructuring costs
578
578
578
-
Other (income) expense, net
(886
)
50
(20
)
30
(916
)
Income Before Taxes
8,791
(3,704
)
(883
)
(4,483
)
(9,070
)
17,861
Income Tax Provision (Benefit)
1,709
(671
)
(3
)
(81
)
(3
)
(303
)
(3
)
(1,055
)
2,764
Net Income
7,082
(3,033
)
(802
)
(4,180
)
(8,015
)
15,097
Net Income Attributable to Merck & Co., Inc.
7,067
(3,033
)
(802
)
(4,180
)
(8,015
)
15,082
Earnings per Common Share Assuming Dilution
$
2.78
(1.19
)
(0.32
)
(1.65
)
(3.16
)
$
5.94
Tax Rate
19.4
%
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 a $1.6 billion intangible asset
impairment charge related to ZERBAXA and $1.1 billion for the
amortization of intangible assets recognized as a result of
business acquisitions. Amount included in selling, general and
administrative expenses reflects $710 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
other (income) expense, net, primarily reflects 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.
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 cost of sales represents
a charge for the discontinuation of COVID-19 vaccine development
programs. Amount included in research and development represents
the charges for the acquisitions of VelosBio Inc. and OncoImmune, a
charge for the discontinuation of COVID-19 vaccine development
programs, and upfront payments related to license and collaboration
agreements.
MERCK & CO., INC. FRANCHISE / KEY
PRODUCT SALES (AMOUNTS IN MILLIONS) (UNAUDITED)
Table 3
2020
2019
4Q
Full Year
1Q
2Q
3Q
4Q
Full Year
1Q
2Q
3Q
4Q
Full Year
Nom %
Ex-Exch %
Nom %
Ex-Exch %
TOTAL SALES (1)
$12,057
$10,872
$12,551
$12,514
$47,994
$10,816
$11,760
$12,397
$11,868
$46,840
5
5
2
4
PHARMACEUTICAL
10,655
9,679
11,320
11,367
43,021
9,663
10,460
11,095
10,533
41,751
8
6
3
4
Oncology Keytruda
3,284
3,388
3,715
3,993
14,380
2,269
2,634
3,070
3,111
11,084
28
27
30
30
Alliance Revenue – Lynparza (2)
145
178
196
206
725
79
111
123
132
444
56
53
63
62
Alliance Revenue – Lenvima (2)
128
151
142
158
580
74
97
109
124
404
28
26
44
43
Emend
43
33
39
31
145
117
121
98
53
388
-42
-42
-63
-62
Vaccines (3) Gardasil / Gardasil
9
1,097
656
1,187
998
3,938
838
886
1,320
693
3,737
44
41
5
6
ProQuad / M-M-R II / Varivax
435
378
576
488
1,878
496
675
623
481
2,275
2
1
-17
-17
Pneumovax 23
256
117
375
339
1,087
185
170
237
334
926
1
17
18
RotaTeq
222
168
210
196
797
211
172
180
227
791
-14
-14
1
1
Vaqta
60
28
51
31
170
47
58
62
71
238
-56
-56
-29
-27
Hospital Acute Care Bridion
299
224
320
355
1,198
255
278
284
313
1,131
13
13
6
7
Noxafil
94
73
79
82
329
190
193
177
103
662
-20
-22
-50
-50
Prevymis
60
63
77
80
281
32
38
45
50
165
61
57
70
69
Primaxin
51
64
74
62
251
59
71
77
67
273
-8
-12
-8
-8
Cancidas
55
43
50
65
213
61
67
62
58
249
13
11
-14
-13
Invanz
64
43
51
53
211
72
78
57
57
263
-7
-4
-20
-16
Cubicin
46
32
39
36
152
88
67
52
50
257
-27
-28
-41
-40
Zerbaxa
37
32
43
19
130
26
27
35
32
121
-42
-42
8
10
Immunology Simponi
215
191
209
223
838
208
214
203
205
830
9
4
1
1
Remicade
88
73
82
88
330
123
98
101
89
411
-2
-5
-20
-20
Neuroscience Belsomra
79
84
81
83
327
67
76
80
83
306
1
-2
7
5
Virology Isentress / Isentress
HD
245
196
205
211
857
255
247
250
223
975
-5
-6
-12
-11
Zepatier
55
39
28
45
167
114
108
83
66
370
-32
-32
-55
-54
Cardiovascular Zetia
145
137
103
98
482
140
156
147
146
590
-33
-36
-18
-19
Vytorin
53
39
47
43
182
97
76
57
54
285
-19
-20
-36
-34
Atozet
122
115
111
105
453
94
92
97
108
391
-3
-7
16
16
Alliance Revenue - Adempas (4)
53
79
83
65
281
42
51
50
60
204
8
8
38
38
Adempas (5)
56
57
55
53
220
48
53
57
57
215
-7
-11
3
2
Diabetes (6) Januvia
774
854
821
857
3,306
824
908
807
943
3,482
-9
-11
-5
-5
Janumet
503
490
506
472
1,971
530
533
503
475
2,041
-1
-1
-3
-2
Women's Health Implanon /
Nexplanon
195
132
189
165
680
199
183
199
206
787
-20
-20
-14
-13
NuvaRing
63
63
58
53
236
219
240
241
179
879
-70
-70
-73
-73
Diversified Brands Singulair
155
100
82
124
462
191
160
152
195
698
-36
-38
-34
-34
Cozaar / Hyzaar
102
98
91
94
386
103
109
116
113
442
-17
-18
-13
-11
Arcoxia
70
65
68
54
258
75
75
72
67
288
-19
-18
-11
-8
Nasonex
71
49
41
57
218
96
72
58
67
293
-14
-13
-26
-24
Follistim AQ
41
44
50
57
193
57
63
62
58
241
-2
-4
-20
-20
Other Pharmaceutical (7)
1,194
1,103
1,186
1,228
4,709
1,082
1,203
1,149
1,183
4,615
4
2
2
3
ANIMAL HEALTH
1,214
1,101
1,220
1,168
4,703
1,025
1,124
1,122
1,122
4,393
4
6
7
10
Livestock
739
648
758
794
2,939
611
671
726
777
2,784
2
4
6
9
Companion Animals
475
453
462
374
1,764
414
453
396
345
1,609
8
9
10
11
Other Revenues (8)
188
92
11
(21)
270
128
176
180
213
696
-110
-45
-61
-22
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, $2,521 million and $2,163 million
in the first, second, third and fourth 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, $1,405
million and $1,412 million in the first, second, third and fourth
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210204005437/en/
Media Contact:
Patrick Ryan (973) 275-7075
Investor Contacts:
Peter Dannenbaum (908) 740-1037
Michael DeCarbo (908) 740-1807
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