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 Merck Announces Fourth-Quarter and Full-Year 2014 Financial Results
   Wednesday, February 04, 2015 7:02:10 AM ET

--2015 Full-Year Non-GAAP EPS Target of $3.32 to $3.47, Including a $0.27 Negative Impact From Foreign Exchange and Excluding Certain Items; GAAP EPS Range of $1.62 to $1.91

--Fourth-Quarter 2014 Worldwide Sales of $10.5 Billion, a Decrease of 7 Percent, Reflecting Unfavorable Impact of Patent Expiries and Divestitures and a 3 Percent Negative Impact From Foreign Exchange

--Full-Year 2014 Worldwide Sales of $42.2 Billion, a Decrease of 4 Percent, Reflecting Unfavorable Impact of Patent Expiries and Divestitures and a 1 Percent Negative Impact From Foreign Exchange

--Full-Year Results Reflect Sales Growth in Immunology, Diabetes, Hospital Acute Care, Vaccines and Animal Health and Sales Declines in Hepatitis C

--Six New Products Were Approved in the United States in 2014; Company Accelerated KEYTRUDA and Hepatitis C Clinical Development Programs



Merck (MRK ), known as MSD outside the United States and Canada, today announced financial results for the fourth quarter and full year of 2014.

                                                                                 
                                                                               --------------------------------------------------------- ---------------------------------------
                                                                                          Fourth Quarter                            Year Ended
                                                                               --------------------------------------------------------- ---------------------------------------
                                                                                                   Dec. 31,   Dec. 31,
$ in millions, except EPS amounts                             2014      2013      2014       2013
--------------------------------------------------------- -------------------- ------- -------------------- ------- -------------------- -------- -------------------- --------
Sales                                                       $10,482   $11,319    $42,237    $44,033
--------------------------------------------------------- -------------------- ------- -------------------- ------- -------------------- -------- -------------------- --------
GAAP EPS                                                       2.54      0.26       4.07       1.47
--------------------------------------------------------- -------------------- ------- -------------------- ------- -------------------- -------- -------------------- --------
Non-GAAP EPS that excludes items listed below(1)               0.87      0.88       3.49       3.49
--------------------------------------------------------- -------------------- ------- -------------------- ------- -------------------- -------- -------------------- --------
GAAP Net Income(2)                                            7,316       781     11,920      4,404
--------------------------------------------------------- -------------------- ------- -------------------- ------- -------------------- -------- -------------------- --------
Non-GAAP Net Income that excludes items listed below(1,2)     2,504     2,599     10,215     10,443
--------------------------------------------------------- -------------------- ------- -------------------- ------- -------------------- -------- -------------------- --------
                                                                                                                                                                                 

Non-GAAP (generally accepted accounting principles) earnings per share (EPS) of $0.87 for the fourth quarter and $3.49 for the full year of 2014 exclude acquisition- and divestiture-related costs, restructuring costs and certain other items, as well as an $11.2 billion gain on the divestiture of the Consumer Care business.

A reconciliation of GAAP to non-GAAP net income and EPS is provided in the tables that follow.

                                                                                                            
                                                                                ----------------------------------------------------------------------------------- ---------------------------------------------------------------
                                                                                                        Fourth Quarter                                                     Year Ended
                                                                                ----------------------------------------------------------------------------------- ---------------------------------------------------------------
                                                                                                                                    Dec. 31,               Dec. 31,
$ in millions, except EPS amounts                                                       2014                   2013                   2014                   2013
                                                                                -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
EPS                                                                       
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
GAAP EPS                                                                    $2.54                  $0.26                  $4.07                  $1.47
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Difference(3)                                                              (1.67)                   0.62                 (0.58)                   2.02
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Non-GAAP EPS that excludes items listed below(1)                            $0.87                  $0.88                  $3.49                  $3.49
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                    
Net Income                                                                
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
GAAP net income(2)                                                         $7,316                   $781                $11,920                 $4,404
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Difference                                                                (4,812)                  1,818                (1,705)                  6,039
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Non-GAAP net income that excludes items listed below(1,2)                  $2,504                 $2,599                $10,215                $10,443
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                    
Decrease (Increase) in Net Income Due to Excluded Items:                  
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   Acquisition- and divestiture-related costs(4)                           $1,394                 $1,348                 $5,946                 $5,549
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   Restructuring costs                                                        619                    962                  1,978                  2,401
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   Gain on sale of Merck Consumer Care                                   (11,209)         -               (11,209)         -
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   Gain on AstraZeneca option exercise                             -         -                  (741)         -
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   Gain on divestiture of certain ophthalmic products                        (84)         -                  (480)         -
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   Loss on extinguishment of debt                                             628         -                    628         -
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   Additional year of health care reform fee                       -         -                    193         -
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   Other                                                                     (14)         -                    (9)                   (13)
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net decrease (increase) in income before taxes                            (8,666)                  2,310                (3,694)                  7,937
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Income tax (benefit) expense(5)                                             3,854                  (492)                  2,045                (1,898)
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Acquisition- and divestiture-related costs attributable to         -         -                   (56)         -
non-controlling interests
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Decrease (increase) in net income                                        $(4,812)                 $1,818               $(1,705)                 $6,039
---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                    

Select Business Highlights

In 2014, Merck took proactive, strategic action to sharpen its commercial and research and development (R&D) focus, redesign its operating model and reduce its cost base. Through consistent execution of these actions, the company continued to transform into a more competitive, more innovative company and is building a platform for sustained future growth.

"Our stronger focus has led to better, consistent execution, and our results in 2014 demonstrate the significant progress we’ve made in evolving the company to better serve health care markets around the world," said Kenneth C. Frazier, chairman and chief executive officer, Merck. "As we look forward to 2015 and beyond, we will continue to focus our resources on those internal and external opportunities that can generate the most value for patients, customers and shareholders."

"While we are transforming the way Merck operates and executes, our fundamental strategy has remained consistent. Our success and our future will continue to be predicated on innovating at the intersection of scientific opportunity and global unmet medical need. This is the best pathway to sustainable, long-term growth," continued Frazier.

Worldwide sales were $10.5 billion for the fourth quarter of 2014, a decrease of 7 percent compared with the fourth quarter of 2013, including a 3 percent negative impact from foreign exchange and a 7 percent negative impact from patent expiries and divestitures, including the Consumer Care business. Full-year 2014 worldwide sales were $42.2 billion, a decrease of 4 percent compared with the full year of 2013, including a 1 percent negative impact from foreign exchange and a 4 percent negative impact from patent expiries and divestitures, including the Consumer Care business.

The following table reflects sales of the company’s top pharmaceutical products, as well as total sales of Animal Health and Consumer Care products.

                                               
                                     -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                         Year                   Year                                 
                                            Fourth                                    Fourth                                                                              Change                                     Ended                                     Ended                                                                              Change
                                            Quarter                                   Quarter                                                                               Ex-                                    Dec. 31,                                  Dec. 31,                                                                               Ex-
$ in millions             2014                   2013                  Change                Exchange                 2014                   2013                  Change                Exchange
--------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Sales                    $10,482                $11,319                    -7%                    -4%                $42,237                $44,033                    -4%                    -3%
--------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Pharmaceutical                   9,370                  9,760                    -4%                     0%                 36,042                 37,437                    -4%                    -2%
--------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   JANUVIA/
   JANUMET                       1,652                  1,624                     2%                     6%                  6,002                  5,833                     3%                     4%
--------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   ZETIA/
   VYTORIN                       1,032                  1,152                   -10%                    -7%                  4,166                  4,300                    -3%                    -2%
--------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   REMICADE                        557                    620                   -10%                    -3%                  2,372                  2,271                     4%                     4%
--------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   GARDASIL                        356                    394                   -10%                    -6%                  1,738                  1,831                    -5%                    -3%
--------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   ISENTRESS                       418                    442                    -5%                    -1%                  1,673                  1,643                     2%                     3%
--------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   PROQUAD,
   M-M-R II and
   VARIVAX                         366                    273                    34%                    36%                  1,394                  1,306                     7%                     8%
--------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   NASONEX                         268                    327                   -18%                   -15%                  1,099                  1,335                   -18%                   -16%
--------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
   SINGULAIR                       319                    298                     7%                    16%                  1,092                  1,196                    -9%                    -4%
--------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Animal Health                      885                    871                     2%                     8%                  3,454                  3,362                     3%                     5%
--------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Consumer Care                       16                    390                   -96%                   -96%                  1,547                  1,894                   -18%                   -17%
--------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Other Revenues                     211                    298                   -29%                   -63%                  1,194                  1,340                   -11%                   -24%
--------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                 

Commercial and Pipeline Highlights

-- The company continued to make steady progress in advancing its late-stage pipeline, and received U.S. approval for six new products in 2014 that are launching in 2015, including novel medicines KEYTRUDA (pembrolizumab) for the treatment of advanced melanoma in patients whose disease has progressed after other therapies and BELSOMRA (suvorexant) for the treatment of insomnia.

-- Additionally, as part of its acquisition of Cubist Pharmaceuticals, Inc. (Cubist), the company acquired ZERBAXA (ceftolozane/tazobactam), an antibiotic approved by the U.S. Food and Drug Administration (FDA) in December 2014 to treat Gram-negative bacteria, a key cause of in-hospital infections. The company is preparing to launch ZERBAXA immediately in the United States.

-- Merck continued to accelerate its KEYTRUDA program. -- In September 2014, the FDA granted approval of KEYTRUDA, the first FDA-approved anti-PD-1 therapy. An estimated 2,000 patients were receiving treatment with KEYTRUDA in December 2014.

-- KEYTRUDA received Breakthrough Therapy Designation from the FDA for advanced non-small cell lung cancer (NSCLC) in 2014. Last month, the company announced that it expects to submit a supplemental Biologics License Application in mid-year 2015 to the FDA for KEYTRUDA for the treatment of patients with Epidermal Growth Factor Receptor (EGFR) mutation-negative and Anaplastic Lymphoma Kinase (ALK) rearrangement-negative NSCLC whose disease has progressed on or following platinum-containing chemotherapy.

-- KEYTRUDA continues to be studied in more than 30 cancers and in 20 combination settings, and Merck has presented data in a number of different tumor types.

-- The company accelerated its hepatitis C virus (HCV) clinical development program in 2014. -- Merck recently announced that it expects to file a New Drug Application (NDA) with the FDA in the first half of 2015 for grazoprevir/elbasvir (MK-5172/MK-8742), the company’s investigational oral, once-daily combination regimen for the treatment of chronic HCV infection. -- On Jan. 30, 2015, the company received notification from the FDA of its intent to rescind Breakthrough Therapy Designation status for this combination treatment regimen, citing the availability of other recently approved treatments for Genotype 1 patients. The company expects to discuss this matter with the FDA and does not expect that it will impact its ability to file an NDA for this combination regimen or the timing of that filing.

-- The company has started the Phase 2 C-CREST studies to study combination regimens of grazoprevir and MK-3682 (formerly IDX21437) with either elbasvir or MK-8408 for the treatment of HCV infection. The company expects to begin Phase 3 studies in 2015.

-- The company continued to build upon its legacy and leadership in vaccines with the approval of GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant), which was approved by the FDA in December 2014 to prevent cancers and other diseases caused by nine HPV types.

-- The company anticipates an FDA advisory committee meeting will be held in the first quarter of 2015 to review BRIDION (sugammadex), an investigational agent for the reversal of neuromuscular blockade induced by rocuronium or vecuronium. If approved, the company expects to launch BRIDION later in 2015.

-- The company strengthened its antibiotics portfolio by acquiring Cubist; its hepatitis pipeline by acquiring Idenix Pharmaceuticals, Inc.; and its oncology pipeline by acquiring OncoEthix.

Pharmaceutical Revenue Performance

Fourth-quarter pharmaceutical sales declined 4 percent to $9.4 billion, including a 4 percent negative impact from foreign exchange and a 3 percent negative impact reflecting approximately $200 million of lower sales from patent expiries and product divestitures. Also contributing to the decline were lower sales of ZETIA (ezetimibe)/VYTORIN (ezetimibe/ simvastatin), medicines for lowering LDL cholesterol; the HCV portfolio of VICTRELIS (boceprevir) and PEGINTRON (peginterferon alfa-2b); and REMICADE (infliximab), a treatment for inflammatory diseases. These declines were partially offset by growth in the four core therapeutic areas of vaccines, diabetes, hospital acute care and oncology. The growth in oncology reflects the launch of KEYTRUDA whose sales were $50 million in the fourth quarter of 2014. Full-year 2014 pharmaceutical sales declined 4 percent to $36.0 billion, including a 2 percent negative impact from foreign exchange and a 3 percent negative impact from patent expiries and product divestitures.

Animal Health Revenue Performance

Animal Health sales totaled $885 million for the fourth quarter of 2014, an increase of 2 percent compared with the fourth quarter of 2013, including a 6 percent negative impact from foreign exchange. Growth was driven by increases across most species. In companion animals, growth was supported by the global launch of BRAVECTO (fluralaner), a chewable tablet that kills fleas and ticks in dogs for up to 12 weeks. Worldwide sales for the full year of 2014 were $3.5 billion, an increase of 3 percent, including a 2 percent negative impact from foreign exchange. Full-year 2014 results reflect the company’s decision in the third quarter of 2013 to voluntarily suspend the sale of ZILMAX (zilpaterol hydrochloride), a feed supplement for beef cattle, in the United States and Canada. Excluding ZILMAX, full-year 2014 sales grew 7 percent, including a 2 percent negative impact from foreign exchange.

Other Revenue Performance

Other revenues - primarily comprising alliance revenue, miscellaneous corporate revenues and third-party manufacturing sales - decreased 29 percent to $211 million compared to the fourth quarter of 2013. The decrease was driven primarily by the loss of revenue from AstraZeneca (AZ) recorded by Merck, which was $193 million in the fourth quarter of 2013. On June 30, 2014, AZ exercised its option to buy the company’s interest in a subsidiary and, through it, the company’s interest in Nexium and Prilosec. Other revenues decreased 11 percent to $1.2 billion for the full year of 2014.

Fourth-Quarter and Full-Year 2014 Expense and Other Information

The costs detailed below totaled $9.3 billion on a GAAP basis during the fourth quarter of 2014 and include $2.0 billion of acquisition- and divestiture-related costs and restructuring costs and certain other items.

                                
                                                  ---------------------------------------------------------------------------------------------------------------------------------------------------
$ in millions                                                                          Included in expenses for the period
---------------------------- -------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Acquisition- and                           
                                                                                                Divestiture-
Fourth Quarter                                                                                     Related                                Restructuring
2014                                   GAAP                 Costs(4)                 Costs               Non-GAAP(1)
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Materials and production                     $3,749                   $984                   $105                 $2,660
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Marketing and administrative                  2,924                     81                     57                  2,786
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Research and development                      2,283                    329                    108                  1,846
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Restructuring costs                             349         -                    349         -
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                      
Fourth Quarter
2013                                        
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Materials and production                     $4,607                 $1,301                   $253                 $3,053
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Marketing and administrative                  2,982                     32                     81                  2,869
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Research and development                      1,836                     15                     63                  1,758
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Restructuring costs                             565         -                    565         -
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                      

The costs detailed below totaled $36.6 billion on a GAAP basis for the full year of 2014 and include $8.0 billion of acquisition-related costs and restructuring costs and certain other items.

                                                       
                                                                                            ---------------------------------------------------------------------------------------------------------------------------------------------------
$ in millions                                                                              Included in expenses for the period
---------------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Acquisition- and                                                  
                                                                                                Divestiture-
Year Ended                                                                                         Related                                Restructuring                                Certain
Dec. 31, 2014                          GAAP                 Costs(4)                 Costs               Other Items            Non-GAAP(1)
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Materials and production                    $16,768                 $5,254                   $482        $-               $ 11,032
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Marketing and administrative                 11,606                    234                    200                    193                 10,979
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Research and development                      7,180                    365                    283         -                  6,532
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Restructuring costs                           1,013         -                  1,013         -         -
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                
Year Ended
Dec. 31, 2013                                   
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Materials and production                    $16,954                 $5,176                   $446        $-                $11,332
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Marketing and administrative                 11,911                     94                    145         -                 11,672
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Research and development                      7,503                    279                    101         -                  7,123
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Restructuring costs                           1,709         -                  1,709         -         -
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                

The gross margin was 64.2 percent for the fourth quarter of 2014 compared to 59.3 percent for the fourth quarter of 2013, reflecting 10.4 and 13.7 unfavorable percentage point impacts, respectively, from the acquisition- and divestiture-related costs and restructuring costs noted above. The gross margin was 60.3 percent for the full year of 2014 compared to 61.5 percent for the full year of 2013, reflecting 13.6 and 12.8 unfavorable percentage point impacts, respectively, from the acquisition- and divestiture-related costs and restructuring costs noted above.

Marketing and administrative expenses, on a non-GAAP basis, were $2.8 billion in the fourth quarter of 2014, a decrease from $2.9 billion in the same period of 2013, which was primarily driven by the sale of the Consumer Care business. Full-year marketing and administrative expenses in 2014, on a non-GAAP basis, were $11.0 billion, a decrease from $11.7 billion in 2013. The declines were primarily due to productivity measures and divestitures.

R&D expenses, on a non-GAAP basis, were $1.8 billion in the fourth quarter of 2014, a 5 percent increase compared to the fourth quarter of 2013. Full-year R&D expenses in 2014, on a non-GAAP basis, were $6.5 billion, a decrease from $7.1 billion in 2013. The full-year decline reflects targeted cost reductions and lower clinical development spending resulting from portfolio prioritization.

Other (income) expense, net, was $10.6 billion of income in the fourth quarter of 2014 compared to $157 million of expense in the fourth quarter of 2013. Other (income) expense, net, was $11.4 billion of income for the full year of 2014 compared to $815 million of expense for the full year of 2013. Other (income) expense, net in the fourth quarter and full year of 2014 includes an $11.2 billion gain on the divestiture of the Consumer Care business and a $628 million loss on the extinguishment of debt.

The GAAP effective tax rates of 38.0 percent for the fourth quarter of 2014 and 30.9 percent for the full year of 2014 reflect the impacts of acquisition- and divestiture-related costs, restructuring costs and certain other items, including the impact of the gain on the divestiture of the Consumer Care business being taxed primarily at combined U.S. federal and state tax rates. The non-GAAP effective tax rates, which exclude these items, were 20.0 percent for the fourth quarter and 24.3 percent for the full year of 2014. Both the GAAP and non-GAAP effective tax rates for the fourth quarter and full year of 2014 include the favorable impact of tax legislation enacted in the fourth quarter of 2014.

Financial Outlook

Merck expects its full-year 2015 non-GAAP EPS range to be between $3.32 and $3.47, including a $0.27 negative impact from foreign exchange. The range excludes acquisition- and divestiture-related costs and costs related to restructuring programs. Merck expects its full-year 2015 GAAP EPS range to be between $1.62 and $1.91.

At mid-January 2015 exchange rates, Merck anticipates full-year 2015 revenues to be between $38.3 billion and $39.8 billion, including a $2.6 billion negative impact from foreign exchange and approximately $1 billion of net lost sales from acquisitions and divestitures.

In addition, the company expects full-year 2015 non-GAAP marketing and administrative expenses to be below 2014 levels and R&D expenses to be modestly above 2014 levels.

The company anticipates its full-year 2015 non-GAAP tax rate will be in the range of 22 to 23 percent, not including a 2015 R&D tax credit.

A reconciliation of anticipated 2015 EPS, as reported in accordance with GAAP to non-GAAP EPS that excludes certain items, is provided in the table below.

                                                  
                                                                    --------------------
                                                                          Full Year
$ in millions, except EPS amounts                        2015
---------------------------------------------- -------------------- --------------------
GAAP EPS                                            $1.62 to $1.91
---------------------------------------------- -------------------- --------------------
Difference(3)                                        1.70 to 1.56
---------------------------------------------- -------------------- --------------------
Non-GAAP EPS that excludes items listed below       $3.32 to $3.47
---------------------------------------------- -------------------- --------------------
                                                                     
                                                                     
Acquisition- and divestiture-related costs         $5,000 to $4,700
---------------------------------------------- -------------------- --------------------
Restructuring costs                                   950 to 750
---------------------------------------------- -------------------- --------------------
Net decrease (increase) in income before taxes      5,950 to 5,450
---------------------------------------------- -------------------- --------------------
Estimated income tax (benefit) expense            (1,100) to (1,000)
---------------------------------------------- -------------------- --------------------
Decrease (increase) in net income                  $4,850 to $4,450
---------------------------------------------- -------------------- --------------------
                                                                     

Total Employees

As of Dec. 31, 2014, Merck had approximately 70,000 employees worldwide, including the company’s joint ventures in China and Brazil.

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 http://www.merck.com/investors/events-and-presentations/home.html . Institutional investors and analysts can participate in the call by dialing (706) 758-9927 or (877) 381-5782 and using ID code number 54622693. Members of the media are invited to monitor the call by dialing (706) 758-9928 or (800) 399-7917 and using ID code number 54622693. Journalists who wish to ask questions are requested to contact a member of Merck’s Media Relations team at the conclusion of the call.

About Merck

Today’s Merck is a global health care leader working to help the world be well. Merck is known as MSD outside the United States and Canada. Through our prescription medicines, vaccines, biologic therapies and animal health products, we work with customers and operate in more than 140 countries to deliver innovative health solutions. We also demonstrate our commitment to increasing access to health care through far-reaching policies, programs and partnerships. For more information, visit www.merck.com and connect with us on Twitter, Facebook and YouTube. You can also follow our Twitter conversation at $MRK.

Forward-Looking Statement

This news release 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 Merck’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; Merck’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 Merck’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.

Merck 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 Merck’s 2013 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 2014 and 2013 non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s performance. This information should be considered in addition to, but not in lieu of, information prepared in accordance with GAAP. For description of the items, see Tables 2a and 2b, including the related footnotes, attached to this release.

(2) Net income attributable to Merck & Co., Inc.

(3) Represents the difference between calculated GAAP EPS and calculated non-GAAP EPS, which may be different than the amount calculated by dividing the impact of the excluded items by the weighted-average shares for the period.

(4) Includes expenses for the amortization of intangible assets recognized as a result of mergers and acquisitions, intangible asset impairment charges and expense or income related to changes in the fair value measurement of contingent consideration. Also includes merger integration costs, as well as transaction and certain other costs related to business acquisitions and divestitures.

(5) Includes the estimated tax impact on the reconciling items. In addition, amount for full-year 2014 includes a net benefit of $517 million recorded in connection with AstraZeneca’s option exercise, as well as a benefit of approximately $300 million associated with a capital loss generated in the first quarter. Amount for full-year 2013 also includes net benefits of approximately $325 million related to the settlements 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                                                                                                                                                            GAAP                                                             
                                                                               -----------------------------------------------------------------------------------------------------------------                                                                                                                           -----------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                           
                                                                                                      4Q14                                                                  4Q13                                                                  % Change                                                                    Dec YTD                                                               Dec YTD                                                                % Change   
                                                                                                                                                                                                                                                                                                                                                  2014                                                                  2013
                                                                               -----------------------------------------------                        ----------------------------------------------                                             ---------- --------------------                                           -----------------------------------------------                        ----------------------------------------------                                             ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                               
                                                                               --------------------------------------------------                     -------------------------------------------------                                          --------------------------------                                          --------------------------------------------------                     -------------------------------------------------                                          --------------------------------
Sales                                                                                             $  10,482                                                              $ 11,319                                                                        -7 %                                                                                 $  42,237                                                              $ 44,033                                                                        -4 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Costs, Expenses and Other
Materials and production (1)                                                                          3,749                                                                 4,607                                                                       -19 %                                                                                    16,768                                                                16,954                                                                        -1 %
Marketing and administrative (1)                                                                      2,924                                                                 2,982                                                                        -2 %                                                                                    11,606                                                                11,911                                                                        -3 %
Research and development (1)                                                                          2,283                                                                 1,836                                                                        24 %                                                                                     7,180                                                                 7,503                                                                        -4 %
Restructuring costs (2)                                                                                 349                                                                   565                                                                       -38 %                                                                                     1,013                                                                 1,709                                                                       -41 %
Equity income from affiliates (3)                                                                       (16 )                                                                 (53 )                                                                     -70 %                                                                                      (257 )                                                                (404 )                                                                     -36 %
Other (income) expense, net (1) (4)                                                                 (10,618 )                                                                 157                                                                                *                                                                              (11,356 )                                                                 815                                                                                *
Income Before Taxes                                                                                  11,811                                                                 1,225                                                                                *                                                                               17,283                                                                 5,545                                                                                *
Income Tax Provision                                                                                  4,484                                                                   410                                                                                                                                                                 5,349                                                                 1,028
Net Income                                                                                            7,327                                                                   815                                                                                *                                                                               11,934                                                                 4,517                                                                                *
Less: Net Income Attributable to Noncontrolling Interests                                                11                                                                    34                                                                                                                                                                    14                                                                   113
Net Income Attributable to Merck & Co., Inc.                                                      $   7,316                                                              $    781                                                                                *                                                                            $  11,920                                                              $  4,404                                                                                *
Earnings per Common Share Assuming Dilution                                                       $    2.54                                           $   0.26                                                             *                                                                            $    4.07                                           $   1.47                                                             *
                                                                               -------------------- ------- --------------------                      -------------------- ------ --------------------                                           --------------------------------                                          -------------------- ------- --------------------                      -------------------- ------ --------------------                                           --------------------------------
                                                                                                                                                                                                                                                                                                                                          
                                                                               --------------------------------------------------                     -------------------------------------------------                                                                                                                    --------------------------------------------------                     -------------------------------------------------
Average Shares Outstanding Assuming Dilution                                                          2,880                                                                 2,959                                                                                                                                                                 2,928                                                                 2,996
Tax Rate (5)                                                                        38.0 %                                             33.5 %                                                                                                                                             30.9 %                                             18.5 %
                                                                               -------------------- ------- --------------------                      -------------------- ------ --------------------                                                                                                                     -------------------- ------- --------------------                      -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
* 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) Reflects the performance of the company’s joint ventures and
other equity method affiliates, including the Sanofi Pasteur MSD
partnership, as well as the AstraZeneca LP partnership until its
termination on June 30, 2014.
 
(4) Other (income) expense, net in the fourth quarter and full year
of 2014 includes an $11.2 billion gain on the divestiture of Merck’s
Consumer Care business and a $628 million loss on the extinguishment
of debt. In addition, other (income) expense, net for the full year
of 2014 includes a gain of $741 million related to AstraZeneca’s
option exercise, gains of $480 million on the divestiture of certain
ophthalmic products in several international markets, and gains of
$204 million related to the divestiture of the company’s Sirna
Therapeutics, Inc. subsidiary, as well as a $93 million goodwill
impairment charge related to the company’s joint venture with Supera
Farma Laboratorios S.A. Other (income) expense, net in 2013 reflects
approximately $140 million of exchange losses as a result of a
Venezuelan currency devaluation.
 
(5) The effective income tax rates for the fourth quarter and full
year of 2014 include the impact of the gain on the divestiture of
Merck’s Consumer Care business being taxed primarily at combined
U.S. federal and state tax rates. The effective income tax rates for
the fourth quarter and full year of 2014 also reflect the favorable
impact of tax legislation enacted in the fourth quarter of 2014. In
addition, the effective income tax rate for the full year of 2014
reflects a net benefit of $517 million recorded in connection with
AstraZeneca’s option exercise, as well as a benefit of approximately
$300 million associated with a capital loss generated in the first
quarter of 2014.
 
The effective income tax rate for the full year of 2013 reflects net
benefits from the settlements of certain federal income tax issues,
reductions in tax reserves upon expiration of applicable statute of
limitations and the favorable impact of tax legislation enacted in
the first quarter of 2013.
                                                                                                                                                                                                      MERCK & CO., INC.
                                                                                                                                                                                              CONSOLIDATED STATEMENT OF INCOME
                                                                                                                                                                                                            GAAP
                                                                                                                                                                                                 TO NON-GAAP RECONCILIATION
                                                                                                                                                                                                     FOURTH QUARTER 2014
                                                                                                                                                                                                          (AMOUNTS
                                                                                                                                                                                           IN MILLIONS, EXCEPT PER SHARE FIGURES)
                                                                                                                                                                                                         (UNAUDITED)
                                                                                                                                                                                                            Table
                                                                                                                                                                                                             2a
                                                                                                                                                                                                                  
                                                                                                      GAAP                                                                 Acquisition and Divestiture-                               Restructuring                               Certain Other Items (3)                        Adjustment Subtotal                                           Non-GAAP
                                                                                                                                                                                 Related Costs (1)                                      Costs (2)
                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                                         
                                                                               --------------------------------------------------                                                                                                                                                                                                                                          -------------------------------------------------
Sales                                                                                             $  10,482                                                                                                                                                                                                                                                                                   $ 10,482
                                                                                                                                                                                                                                                                                                                                                                            
Costs, Expenses and Other
Materials and production                                                                              3,749                                                                      984                                          105                                                                                                   1,089                                                        2,660
Marketing and administrative                                                                          2,924                                                                       81                                           57                                                                                                     138                                                        2,786
Research and development                                                                              2,283                                                                      329                                          108                                                                                                     437                                                        1,846
Restructuring costs                                                                                     349                                                                                                                   349                                                                                                     349                                                            -
Equity income from affiliates                                                                           (16 )                                                                                                                                                                                                                                                                                      (16 )
Other (income) expense, net                                                                         (10,618 )                                                                                                                                                                    (10,679 )                                        (10,679 )                                                         61
Income Before Taxes                                                                                  11,811                                                                   (1,394 )                                       (619 )                                               10,679                                            8,666                                                        3,145
Taxes on Income                                                                                       4,484                                                                                                                                                                                                                         3,854     ((4 ))                                               630
Net Income                                                                                            7,327                                                                                                                                                                                                                         4,812                                                        2,515
Less: Net Income Attributable to Noncontrolling Interests                                                11                                                                                                                                                                                                                                                                                         11
Net Income Attributable to Merck & Co., Inc.                                                      $   7,316                                                                                                                                                                                                                     $   4,812                                                     $  2,504
Earnings per Common Share Assuming Dilution                                                       $    2.54                                                                                                                                                                                                                                                                $   0.87  
                                                                               -------------------- ------- --------------------                                                                                                                                                                                                                                           -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                         
                                                                               --------------------------------------------------                                                                                                                                                                                                                                          -------------------------------------------------
Average Shares Outstanding Assuming Dilution                                                          2,880                                                                                                                                                                                                                                                                                      2,880
Tax Rate                                                                            38.0 %                                                                                                                                                                                                                                                                  20.0 %
                                                                               -------------------- ------- --------------------                                                                                                                                                                                                                                           -------------------- ------ --------------------
Merck is providing non-GAAP information that excludes certain items
because of the nature of these items and the impact they have on the
analysis of underlying business performance and trends. Management
believes that providing this information enhances investors’
understanding of the company’s performance. This information should
be considered in addition to, but not in lieu of, information
prepared in accordance with GAAP.
 
(1) Amounts included in materials and production costs reflect
expenses for the amortization of intangible assets recognized as a
result of mergers and acquisitions. Amounts included in marketing
and administrative expenses reflect merger integration costs, as
well as transaction and certain other costs related to business
acquisitions and divestitures. Amounts included in research and
development expenses reflect a $316 million charge resulting from an
increase in the fair value of a liability for contingent
consideration, as well as in-process research and development
("IPR&D") impairment charges of $13 million.
 
(2) Amounts primarily include employee separation costs and
accelerated depreciation associated with facilities to be closed or
divested related to actions under the company’s formal restructuring
programs.
 
(3) Included in other (income) expense, net is an $11.2 billion gain
on the divestiture of Merck’s Consumer Care business, an additional
gain of $84 million on the divestiture of certain ophthalmic
products in several international markets and a $628 million loss on
the extinguishment of debt.
 
(4) Represents the estimated tax impact on the reconciling items.
                                                                                                                                                                                                                                     MERCK & CO., INC.
                                                                                                                                                                                                                                     CONSOLIDATED STATEMENT OF INCOME
                                                                                                                                                                                                                                     GAAP
                                                                                                                                                                                                                                     TO NON-GAAP RECONCILIATION
                                                                                                                                                                                                                                     FULL YEAR 2014
                                                                                                                                                                                                                                     (AMOUNTS
                                                                                                                                                                                                                                     IN MILLIONS, EXCEPT PER SHARE FIGURES)
                                                                                                                                                                                                                                     (UNAUDITED)
                                                                                                                                                                                                                                     Table
                                                                                                                                                                                                                                     2b
                                                                                                                                                                                                                             
                                                                                 GAAP                                                                                      Acquisition and Divestiture-                                           Restructuring                                                                Certain Other Items (3)                                             Adjustment Subtotal                                                                Non-GAAP
                                                                                                                                                                                 Related Costs (1)                                                  Costs (2)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                          --------------------------------------------------                                                                                                                                                                                                                                                                                                                                                      -------------------------------------------------
Sales                                                                        $  42,237                                                                                                                                                                                                                                                                                                                                                                                               $ 42,237
                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
Costs, Expenses and Other
Materials and production                                                        16,768                                                                                         5,254                                                                 482                                                                                                                                              5,736                                                                            11,032
Marketing and administrative                                                    11,606                                                                                           234                                                                 200                                                                          193                                                                   627                                                                            10,979
Research and development                                                         7,180                                                                                           365                                                                 283                                                                                                                                                648                                                                             6,532
Restructuring costs                                                              1,013                                                                                                                                                             1,013                                                                                                                                              1,013                                                                                 -
Equity income from affiliates                                                     (257 )                                                                                                                                                                                                                                                                                                                                                                                                 (257 )
Other (income) expense, net                                                    (11,356 )                                                                                          93                                                                                                                                          (11,811 )                                                             (11,718 )                                                                             362
Income Before Taxes                                                             17,283                                                                                        (5,946 )                                                            (1,978 )                                                                     11,618                                                                 3,694                                                                            13,589
Taxes on Income                                                                  5,349                                                                                                                                                                                                                                                                                                                2,045     ((4 ))                                                                  3,304
Net Income                                                                      11,934                                                                                                                                                                                                                                                                                                                1,649                                                                            10,285
Less: Net Income Attributable to Noncontrolling Interests                           14                                                                                           (56 )                                                                                                                                                                                                                  (56 )                                                                              70
Net Income Attributable to Merck & Co., Inc.                                 $  11,920                                                                                                                                                                                                                                                                                                            $   1,705                                                                          $ 10,215
Earnings per Common Share Assuming Dilution                                  $    4.07                                                                                                                                                                                                                                                                                                                                                                            $   3.49  
                                                          -------------------- ------- --------------------                                                                                                                                                                                                                                                                                                                                                       -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                          --------------------------------------------------                                                                                                                                                                                                                                                                                                                                                      -------------------------------------------------
Average Shares Outstanding Assuming Dilution                                     2,928                                                                                                                                                                                                                                                                                                                                                                                                  2,928
Tax Rate                                                       30.9 %                                                                                                                                                                                                                                                                                                                                                                              24.3 %
                                                          -------------------- ------- --------------------                                                                                                                                                                                                                                                                                                                                                       -------------------- ------ --------------------
Merck is providing non-GAAP information that excludes certain items
because of the nature of these items and the impact they have on the
analysis of underlying business performance and trends. Management
believes that providing this information enhances investors’
understanding of the company’s performance. This information should
be considered in addition to, but not in lieu of, information
prepared in accordance with GAAP.
 
(1) Amounts included in materials and production costs reflect
expenses of $4.2 billion for the amortization of intangible assets
recognized as a result of mergers and acquisitions, as well as $1.1
billion of impairment charges on product intangibles. Amounts
included in marketing and administrative expenses reflect merger
integration costs, as well as transaction and certain other costs
related to business acquisitions and divestitures. Amounts included
in research and development expenses reflect a charge of $316
million resulting from an increase in the fair value of a liability
for contingent consideration, as well as in-process research and
development ("IPR&D") impairment charges of $49 million primarily
related to the company’s joint venture with Supera. Amount included
in other (income) expense, net represents a goodwill impairment
charge related to the joint venture with Supera. Amount included in
net income attributable to non-controlling interests represents the
portion of intangible asset and goodwill impairment charges related
to the joint venture with Supera that are attributable to
non-controlling interests.
 
(2) Amounts primarily include employee separation costs and
accelerated depreciation associated with facilities to be closed or
divested related to actions under the company’s formal restructuring
programs.
 
(3) Amount included in marketing and administrative expenses
represents an additional year of expense related to the healthcare
reform fee in accordance with final regulations issued in the third
quarter by the Internal Revenue Service. Included in other (income)
expense, net is an $11.2 billion gain on the divestiture of Merck’s
Consumer Care business, a $741 million gain related to AstraZeneca’s
option exercise, gains of $480 million on the divestiture of certain
ophthalmic products in several international markets and a $628
million loss on the extinguishment of debt.
 
(4) Represents the estimated tax impact on the reconciling items,
including a net benefit of approximately $517 million recorded in
connection with AstraZeneca’s option exercise, as well as a benefit
of approximately $300 million associated with a capital loss
generated in the first quarter.
                                                                                                                                                                                                                               MERCK & CO., INC.
                                                                                                                                                                                                                         FRANCHISE / KEY PRODUCT SALES
                                                                                                                                                                                                                                   (AMOUNTS
                                                                                                                                                                                                                                 IN MILLIONS)
                                                                                                                                                                                                                                    Table 3
                                                                                         
                              -------------------------------------------- ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------ -------------------- ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------ -------------------- -------------------- --------------------
                                                                                                                              2014                                                                                                                                                                                                                      2013                                                                                                       % Change               % Change
                              ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                         1Q                       2Q                      3Q                      4Q                             Full Year                             1Q                      2Q                      3Q                      4Q                   Full Year                                
                              -------------------------------------------- ------------------------------------------ ------------------------------------------ ------------------------------------------ --------------------------------------------------------------- ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------------------------------------------------ --------------------
                                                                                             4Q                  Full Year
                              -------------------------------------------- ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------ -------------------- ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------ -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                               
TOTAL SALES (1)                         $      10,264                               $     10,934                               $     10,557                               $     10,482                               $     42,237                                                    $     10,671                               $     11,010                               $     11,032                               $     11,319                               $     44,033                                        -7                                        -4
                              ----------- -----------                      ---------- ----------                      ---------- ----------                      ---------- ----------                      ---------- ----------                                           ---------- ----------                      ---------- ----------                      ---------- ----------                      ---------- ----------                      ---------- ----------                      --------------------                      --------------------
PHARMACEUTICAL                                  8,451                                      9,087                                      9,134                                      9,370                                     36,042                                                           8,891                                      9,310                                      9,475                                      9,760                                     37,437                                        -4                                        -4
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Primary Care and Women’s Health
Cardiovascular
Zetia                                             611                                        717                                        660                                        662                                      2,650                                                             629                                        650                                        662                                        716                                      2,658                                        -8                                         0
Vytorin                                           361                                        417                                        369                                        370                                      1,516                                                             394                                        417                                        396                                        436                                      1,643                                       -15                                        -8
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Diabetes
Januvia                                           858                                      1,058                                        933                                      1,082                                      3,931                                                             884                                      1,072                                        927                                      1,121                                      4,004                                        -3                                        -2
Janumet                                           476                                        519                                        505                                        570                                      2,071                                                             409                                        474                                        442                                        503                                      1,829                                        13                                        13
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
General Medicine & Women’s Health
NuvaRing                                          168                                        178                                        186                                        191                                        723                                                             151                                        171                                        170                                        193                                        686                                        -1                                         5
Implanon / Nexplanon                              102                                        119                                        158                                        123                                        502                                                              84                                        102                                         96                                        120                                        403                                         2                                        25
Dulera                                            102                                        103                                        124                                        132                                        460                                                              68                                         79                                         82                                         95                                        324                                        39                                        42
Follistim AQ                                      110                                        102                                         97                                        102                                        412                                                             122                                        134                                        124                                        101                                        481                                         1                                       -14
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Hospital and Specialty
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Hepatitis
PegIntron                                         112                                        103                                         84                                         81                                        381                                                             126                                        142                                        104                                        124                                        496                                       -34                                       -23
Victrelis                                          59                                         46                                         27                                         21                                        153                                                             110                                        116                                        121                                         81                                        428                                       -74                                       -64
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
HIV
Isentress                                         390                                        453                                        412                                        418                                      1,673                                                             362                                        412                                        427                                        442                                      1,643                                        -5                                         2
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Acute Care
Cancidas                                          166                                        156                                        183                                        175                                        681                                                             162                                        163                                        151                                        183                                        660                                        -4                                         3
Invanz                                            114                                        134                                        141                                        139                                        529                                                             110                                        120                                        130                                        128                                        488                                         9                                         8
Noxafil                                            74                                         98                                        107                                        122                                        402                                                              65                                         71                                         75                                         98                                        309                                        25                                        30
Bridion                                            73                                         82                                         90                                         95                                        340                                                              63                                         69                                         75                                         82                                        288                                        15                                        18
Primaxin                                           71                                         81                                         91                                         86                                        329                                                              84                                         85                                         88                                         79                                        335                                         9                                        -2
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Immunology
Remicade                                          604                                        607                                        604                                        557                                      2,372                                                             549                                        527                                        574                                        620                                      2,271                                       -10                                         4
Simponi                                           157                                        174                                        170                                        188                                        689                                                             108                                        120                                        126                                        146                                        500                                        29                                        38
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Other
Cosopt / Trusopt                                   99                                        100                                         34                                         25                                        257                                                             105                                        103                                        104                                        103                                        416                                       -76                                       -38
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Oncology
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Emend                                             122                                        144                                        136                                        151                                        553                                                             116                                        135                                        123                                        134                                        507                                        13                                         9
Temodar                                            83                                         93                                         88                                         86                                        350                                                             216                                        219                                        162                                        111                                        708                                       -23                                       -51
Keytruda                                            0                                          0                                          4                                         50                                         55                                                               0                                          0                                          0                                          0                                          0                                         *                                         *
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Diversified Brands
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Respiratory
Nasonex                                           312                                        258                                        261                                        268                                      1,099                                                             385                                        325                                        297                                        327                                      1,335                                       -18                                       -18
Singulair                                         271                                        284                                        218                                        319                                      1,092                                                             337                                        281                                        280                                        298                                      1,196                                         7                                        -9
Clarinex                                           62                                         69                                         49                                         52                                        232                                                              61                                         64                                         54                                         55                                        235                                        -6                                        -1
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Other
Cozaar / Hyzaar                                   205                                        214                                        195                                        192                                        806                                                             267                                        255                                        238                                        246                                      1,006                                       -22                                       -20
Arcoxia                                           128                                        141                                        132                                        118                                        519                                                             121                                        121                                        112                                        131                                        484                                        -9                                         7
Fosamax                                           123                                        121                                        114                                        112                                        470                                                             137                                        144                                        140                                        139                                        560                                       -20                                       -16
Propecia                                           74                                         58                                         66                                         67                                        264                                                              68                                         67                                         71                                         77                                        283                                       -13                                        -7
Zocor                                              64                                         69                                         61                                         64                                        258                                                              82                                         74                                         65                                         79                                        301                                       -19                                       -14
Remeron                                            50                                         40                                         47                                         56                                        193                                                              52                                         53                                         44                                         56                                        206                                        -1                                        -6
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Vaccines
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Gardasil                                          383                                        409                                        590                                        356                                      1,738                                                             390                                        383                                        665                                        394                                      1,831                                       -10                                        -5
ProQuad, M-M-R II and Varivax                     280                                        326                                        421                                        366                                      1,394                                                             272                                        339                                        421                                        273                                      1,306                                        34                                         7
Zostavax                                          142                                        156                                        181                                        285                                        765                                                             168                                        141                                        185                                        264                                        758                                         8                                         1
Pneumovax 23                                      101                                        102                                        197                                        346                                        746                                                             111                                        108                                        193                                        241                                        653                                        44                                        14
RotaTeq                                           169                                        147                                        174                                        169                                        659                                                             162                                        144                                        201                                        129                                        636                                        31                                         4
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Other Pharmaceutical (2)                        1,175                                      1,209                                      1,225                                      1,174                                      4,778                                                           1,361                                      1,430                                      1,350                                      1,435                                      5,570                                       -18                                       -14
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
ANIMAL HEALTH                                     813                                        872                                        885                                        885                                      3,454                                                             840                                        851                                        800                                        871                                      3,362                                         2                                         3
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
CONSUMER CARE (3)                                 546                                        583                                        401                                         16                                      1,547                                                             571                                        490                                        443                                        390                                      1,894                                       -96                                       -18
Claritin OTC                                      170                                        153                                        110                                          1                                        434                                                             177                                         78                                        123                                         92                                        471                                       -99                                        -8
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Other Revenues (4)                                454                                        392                                        137                                        211                                      1,194                                                             369                                        359                                        314                                        298                                      1,340                                       -29                                       -11
Astra                                             147                                        316                                          1                                          0                                        465                                                             262                                        245                                        220                                        193                                        920                                         *                                       -50
                                                                                         
                              -------------------------------------------- ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------ -------------------- ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------ -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
* 100% or greater
Sum of quarterly amounts may not equal year-to-date amounts due to
rounding.
 
(1) Only select products are shown.
 
(2) Includes Pharmaceutical products not individually
shown above. Other Vaccines sales included in Other Pharmaceutical
were $98 million, $76 million, $116 million and $88 million for the
first, second, third and fourth quarters of 2014, respectively.
Other Vaccines sales included in Other Pharmaceutical were $53
million, $86 million, $127 million, and $101 million for the first,
second, third, and fourth quarters of 2013, respectively.
 
(3) On October 1, 2014, the company divested the Consumer Care
business to Bayer. Fourth quarter 2014 reflect sales in Mexico and
Korea. These markets had not yet received regulatory approval of the
divestiture.
 
(4) Other revenues are comprised primarily of alliance revenue,
third-party manufacturing sales and miscellaneous corporate
revenues, including revenue hedging activities. On October 1, 2013,
the company divested a substantial portion of its third-party
manufacturing sales. On June 30, 2014, AstraZeneca exercised its
option to buy Merck’s interest in a subsidiary and through it,
Merck’s interest in Nexium and Prilosec. As a result, the company no
longer records supply sales for these products. In addition, Other
revenues in the fourth quarter and full year of 2013 reflect $50
million of revenue for the out-license of a pipeline compound.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20150204005459r1&sid=cmtx6&distro=nx&lang=en

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SOURCE: Merck

Merck 
Media: 
Lainie Keller, 908-236-5036 
Steven Cragle, 908-740-1801 
or 
Investors: 
Justin Holko, 908-740-1879 
Joe Romanelli, 908-740-1986


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