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 Merck Announces Second-Quarter 2017 Financial Results
   Friday, July 28, 2017 6:45:00 AM ET

--Second-Quarter 2017 GAAP EPS Was $0.71; Second-Quarter Non-GAAP EPS Was $1.01

--Company Narrows and Raises 2017 Full-Year Revenue Range to be Between $39.4 Billion and $40.4 Billion, Including an Approximately 1 Percent Negative Impact from Foreign Exchange

--Company Reduces 2017 Full-Year GAAP EPS Range to be Between $1.60 and $1.72; Continues to Expect 2017 Full-Year Non-GAAP EPS Range to be Between $3.76 and $3.88, Including an Approximately 1 Percent Negative Impact from Foreign Exchange

--KEYTRUDA Development Program Significantly Advances with Several Key Regulatory Approvals

--Merck Enters Global Strategic Oncology Collaboration with AstraZeneca

Merck (MRK ), known as MSD outside the United States and Canada, today announced financial results for the second quarter of 2017.



This Smart News Release features multimedia. View the full release here: http://www.businesswire.com/news/home/20170728005136/en/

"We continued to deliver strong results in the second quarter, driven by robust momentum for KEYTRUDA and good progress with other products in our portfolio," said Kenneth C. Frazier, chairman and chief executive officer, Merck. "The company continues to invest in innovative science that addresses the critical needs of population health, which benefits patients while creating long-term value for shareholders."

Financial Summary

                                            
--------------------------------------------------------- -------------------- -------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    Second Quarter
$ in millions, except EPS amounts                                                                   2017               2016
Sales                                                                                               $9,930                                                                                                                                             $9,844
GAAP net income(1)                                                                                   1,946                                                                                                                                              1,205
Non-GAAP net income that excludes items listed below(1,2)                                            2,778                                                                                                                                              2,587
GAAP EPS                                                                                              0.71                                                                                                                                               0.43
Non-GAAP EPS that excludes items listed below(2)                1.01                             0.93
--------------------------------------------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                          

Worldwide sales were $9.9 billion for the second quarter of 2017, an increase of 1 percent compared with the second quarter of 2016, including a 1 percent negative impact from foreign exchange.

GAAP (generally accepted accounting principles) earnings per share assuming dilution (EPS) were $0.71 for the second quarter of 2017. Non-GAAP EPS of $1.01 for the second quarter of 2017 excludes acquisition- and divestiture-related costs, restructuring costs and certain other items. Year-to-date results can be found in the attached tables.

Pipeline Highlights

Merck made significant advances in the development program for KEYTRUDA (pembrolizumab), an anti-PD-1 therapy, receiving key regulatory approvals and a supplemental Biologics License Application (sBLA) acceptance.

-- The U.S. Food and Drug Administration (FDA) approved KEYTRUDAunder its Accelerated Approval program: -- In combination with pemetrexed and carboplatin for the treatment of patients with metastatic nonsquamous non-small cell lung cancer (NSCLC) regardless of PD-L1 expression. This is the first regulatory approval of KEYTRUDA in combination with another treatment. The National Cancer Care Network (NCCN) also recommended the combination for the treatment of patients with metastatic nonsquamous NSCLC.

-- For the treatment of previously treated patients with advanced microsatellite instability-high cancers.

-- For the treatment of certain patients with locally advanced or metastatic urothelial carcinoma, a type of bladder cancer, for first-line use in patients who are ineligible for cisplatin-containing therapy.

-- The FDA approved KEYTRUDA for the treatment of certain patients with locally advanced or metastatic urothelial carcinoma in the second-line setting for patients who have disease progression during or following platinum-containing chemotherapy.

-- The European Commission approved KEYTRUDA for the treatment of adult patients with relapsed or refractory classical Hodgkin lymphoma who have failed autologous stem cell transplant and brentuximab vedotin (BV), or who are transplant-ineligible and have failed BV.

-- The Committee for Medicinal Products for Human Use of the European Medicines Agency (EMA) adopted a positive opinion recommending approval of KEYTRUDAfor the treatment of certain patients with locally advanced or metastatic urothelial carcinoma, with a final decision expected in the third quarter of 2017.

-- The FDA accepted for review the sBLA for KEYTRUDA for the treatment of patients with recurrent or advanced gastric or gastroesophageal junction adenocarcinoma who have already received two or more lines of chemotherapy. The FDA granted Priority Review with a PDUFA action date of Sept. 22, 2017.

-- The FDA granted Breakthrough Therapy Designation for KEYTRUDA in combination with axitnib as a first-line treatment for patients with advanced or metastatic renal cell carcinoma.

The company previously announced that the pivotal Phase 3 KEYNOTE-040 trial investigating KEYTRUDA in previously treated patients with recurrent or metastatic head and neck squamous cell carcinoma did not meet its primary endpoint of overall survival (HR, 0.82 [95% CI, 0.67-1.01]; one-sided p = 0.03). The safety profile observed in KEYNOTE-040 was consistent with that observed in previously reported studies of KEYTRUDA without new safety signals identified. The final data from KEYNOTE-040 will be presented at an upcoming medical meeting.

At the 77th Scientific Sessions of the American Diabetes Association, Merck in partnership with Pfizer presented data from two Phase 3 studies of ertugliflozin, an investigational oral SGLT-2 inhibitor in development to help improve glycemic control in adults with type 2 diabetes, which met their primary endpoints. Three New Drug Applications for medicines containing ertugliflozin are currently under review with the FDA and EMA.

Phase 3 results from the REVEAL (Randomized EValuation of the Effects of Anacetrapib through Lipid modification) outcomes study of anacetrapib met its primary endpoint, significantly reducing major coronary events (defined as the composite of coronary death, myocardial infarction, and coronary revascularization) compared to placebo in patients at risk for cardiac events who are already receiving an effective LDL-C lowering regimen. The safety profile of anacetrapib in the early analysis was generally consistent with that demonstrated in previous studies of the drug, including accumulation of anacetrapib in adipose tissue, as has been previously reported. Merck plans to review the results of the trial with external experts, and will consider whether to file new drug applications with the FDA and other regulatory agencies.

New data from the company’s HIV portfolio and pipeline were presented at the 9th IAS Conference on HIV Science.

-- Week 96 results from the pivotal Phase 3 ONCEMRK study evaluating the efficacy and safety of ISENTRESS HD, a 1200 mg once-daily dose of the company’s integrase inhibitor, ISENTRESS (raltegravir), met its primary efficacy endpoint of non-inferiority to twice-daily ISENTRESS, with a similar safety and tolerability profile, reaffirming the comparable efficacy and safety of ISENTRESS HD. ISENTRESS HD is now approved in the United States and European Union.

-- 48 week data from DRIVE-AHEAD, the second of two pivotal Phase 3 studies evaluating doravirine (MK-1439), an investigational non-nucleoside reverse transcriptase inhibitor, for the treatment of HIV-1 infection showed that a once-daily single tablet, fixed-dose combination of doravirine, lamivudine and tenofovir disoproxil fumarate met its primary endpoint. Based on these findings the company plans to file regulatory applications in the fourth quarter of 2017.

-- Results from a Phase 1 study of MK-8591, Merck’s investigational nucleoside reverse transcriptase translocation inhibitor in adult patients with HIV-1 infection.

Merck entered into an exclusive worldwide license agreement with Teijin Pharma for the development, manufacture and commercialization of an investigational preclinical antibody candidate targeting the protein tau. Changes in tau are associated with a number of diseases affecting the nervous system, including Alzheimer’s disease.

Recent Developments

Merck entered a global strategic oncology collaboration with AstraZeneca to co-develop and co-commercialize AstraZeneca’s Lynparza (olaparib), a PARP inhibitor, and investigational medicine selemetinib, a MEK inhibitor, as monotherapy and in combination treatments for multiple cancer types. Merck and AstraZeneca will independently develop and commercialize Lynparza and selumetinib in combinations with the companies’ respective PD-1 and PD-L1 immuno-oncology medicines KEYTRUDA and Imfinzi (durvalumab). The companies will share development and marketing costs equally, as well as gross profits from Lynparza and selumetinib.

Second-Quarter Revenue Performance

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

                  
--------------------------- -------------------- -------------------- -------------------- -------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
$ in millions                                                                                                                                                                   Second Quarter
                                                                                                                  2017           2016         Change                       Change
                                                                                                                                                                                                                                                                                                                                                                                                          Ex-Exchange
Total Sales                                                                                                     $9,930                                                                                     $9,844                                                                                         1%                                                                                                       2%
Pharmaceutical                                                                                                   8,759                                                                                      8,700                                                                                         1%                                                                                                       2%
   JANUVIA / JANUMET                                                                                             1,511                                                                                      1,634                                                                                        -8%                                                                                                      -7%
   KEYTRUDA                                                                                                        881                                                                                        314                                                                                       180%                                                                                                     183%
   ZETIA / VYTORIN                                                                                                 549                                                                                        994                                                                                       -45%                                                                                                     -44%
   ZEPATIER                                                                                                        517                                                                                        112                                                                                          *                                                                                                        *
   GARDASIL / GARDASIL 9                                                                                           469                                                                                        393                                                                                        19%                                                                                                      20%
   PROQUAD,
   M-M-R II and VARIVAX                                                                                            399                                                                                        383                                                                                         4%                                                                                                       5%
   ISENTRESS / ISENTRESS HD                                                                                        282                                                                                        338                                                                                       -17%                                                                                                     -15%
   REMICADE                                                                                                        208                                                                                        339                                                                                       -39%                                                                                                     -36%
   SINGULAIR                                                                                                       203                                                                                        229                                                                                       -11%                                                                                                     -10%
Animal Health                                                                                                      955                                                                                        900                                                                                         6%                                                                                                       7%
Other Revenues                         216            244           -11%                          -5%
--------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                     *Growth comparison not meaningful due to ongoing product launch.
                                                                                                                                                                                                                                                                                                                                                                                                  

Pharmaceutical Revenue

Second-quarter pharmaceutical sales increased 1 percent to $8.8 billion, including a 1 percent negative impact from foreign exchange. The growth was primarily driven by product launches and vaccines, largely offset by the loss of market exclusivity for several products, as well as lower sales in the diabetes franchise.

Growth in oncology was due to higher sales of KEYTRUDA as the company continues to launch the product with new indications globally. Strong momentum from NSCLC, as KEYTRUDA is the only anti-PD-1 approved in the first-line setting, contributed significantly to KEYTRUDA’s overall growth.

Growth in hepatitis C was driven by ZEPATIER (elbasvir and grazoprevir), a medicine for the treatment of chronic hepatitis C virus genotypes 1 or 4 infection, due to ongoing launches globally.

Additionally, the ongoing launch of BRIDION (sugammadex) Injection 100 mg/mL, a medicine for the reversal of neuromuscular blockade induced by rocuronium bromide or vecuronium bromide in adults undergoing surgery, generated sales of $163 million and also contributed to growth during the second quarter of 2017.

Growth in vaccines was primarily driven by higher sales of GARDASIL [Human Papillomavirus Quadrivalent (Types 6, 11, 16 and 18) Vaccine, Recombinant] and GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant), vaccines to prevent certain cancers and other diseases caused by HPV, reflecting strong demand in Asia Pacific and the timing of sales in Brazil. Growth in vaccines also reflects higher sales of PNEUMOVAX 23 (pneumococcal vaccine polyvalent), a vaccine to help prevent pneumococcal disease, largely driven by volume growth and pricing in the United States. Additionally, vaccines sales growth reflects incremental sales of approximately $70 million, of which approximately $40 million relates to GARDASIL and GARDASIL 9, due to the recording of vaccine sales from 19 European countries that were part of the Sanofi Pasteur MSD (SPMSD) vaccines joint venture, which was terminated on Dec. 31, 2016.

Pharmaceutical sales reflect a decrease in the diabetes franchise of JANUVIA and JANUMET (sitagliptin and metformin HCl), medicines that help lower blood sugar in adults with type 2 diabetes, primarily due to lower sales in the United States, reflecting continued pricing pressure and lower customer inventory levels that were partially offset by continued volume growth. Pharmaceutical sales growth also was offset by the loss of U.S. market exclusivity for ZETIA (ezetimibe) in late 2016 and VYTORIN (ezetimibe/simvastatin) in April 2017, medicines for lowering LDL cholesterol, and the ongoing impacts of generic competition for CUBICIN (daptomycin for injection), an I.V. antibiotic, and biosimilar competition for REMICADE (infliximab), a treatment for inflammatory diseases, in the company’s marketing territories in Europe. In the aggregate, sales of these products declined $830 million during the second quarter of 2017 compared to the second quarter of 2016.

Animal Health Revenue

Animal Health sales totaled $955 million for the second quarter of 2017, an increase of 6 percent compared with the second quarter of 2016, including a 1 percent negative impact from foreign exchange. Growth was primarily due to sales increases in companion animal products, driven by the BRAVECTO (fluralaner) line of products that kill fleas and ticks in dogs and cats for up to 12 weeks, and the NOBIVAC Canine Flu Bivalent vaccine, as well as sales increases in ruminants products, reflecting the positive impact of the Vallee S.A. acquisition.

Second-Quarter Expense, EPS and Related Information

The table below presents selected expense information.

                                     
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Second-Quarter 2017                        Acquisition- and            Restructuring          
                                                                                       GAAP                                                   Divestiture-                                                          Costs                                                                                              Non-GAAP(2)
                                                                                                                                                   Related
                                                                                                                                                  Costs(3)
Materials and production                                                             $3,080                                                           $827                                                            $33                                                                                                   $2,220
Marketing and administrative                                                          2,438                                                              9                                                              2                                                                                                    2,427
Research and development                                                              1,749                                                              7                                                              9                                                                                                    1,733
Restructuring costs                                                                     166                                                             --                                                            166                                                                                                       --
Other (income) expense, net                                                              58                                                             39                                                             --                                                                                                       19
                                                                                                                                                                                                                                                                                                               
Second-Quarter 2016
Materials and production                                                             $3,578                                                         $1,120                                                            $66                                                                                                   $2,392
Marketing and administrative                                                          2,458                                                             18                                                             87                                                                                                    2,353
Research and development                                                              2,151                                                            207                                                             64                                                                                                    1,880
Restructuring costs                                                                     134                                                             --                                                            134                                                                                                       --
Other (income) expense, net                        19                       --                       --                           19
---------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                               

GAAP Expense, EPS and Related Information

On a GAAP basis, the gross margin was 69.0 percent for the second quarter of 2017 compared to 63.7 percent for the second quarter of 2016. The increase in gross margin for the second quarter of 2017 was primarily driven by lower acquisition- and divestiture-related costs and restructuring costs, which reduced gross margin by 8.6 percentage points in the second quarter of 2017 compared with 12.0 percentage points in the second quarter of 2016. The increase also reflects the favorable effects of product mix and lower inventory write-offs.

Marketing and administrative expenses were $2.4 billion in the second quarter of 2017, a 1 percent decrease compared to the second quarter of 2016. The decrease primarily reflects lower restructuring costs partially offset by higher administrative costs including costs associated with the company now operating its European vaccines business in the countries that were part of the SPMSD vaccines joint venture, which was terminated on Dec. 31, 2016, and higher promotion expenses related to product launches.

Research and development (R&D) expenses were $1.7 billion in the second quarter of 2017, a 19 percent decrease compared to the second quarter of 2016. The decrease primarily reflects lower intangible asset impairment charges and licensing costs.

GAAP EPS was $0.71 for the second quarter of 2017 compared with $0.43 for the second quarter of 2016.

Non-GAAP Expense, EPS and Related Information

The non-GAAP gross margin was 77.6 percent for the second quarter of 2017 compared to 75.7 percent for the second quarter of 2016. The increase in non-GAAP gross margin was largely driven by the favorable effects of product mix and lower inventory write-offs.

Non-GAAP marketing and administrative expenses were $2.4 billion in the second quarter of 2017, an increase of 3 percent compared to the second quarter of 2016. The increase was driven primarily by higher administrative costs, including costs associated with the company now operating its European vaccines business in the countries that were previously part of the SPMSD vaccines joint venture, and higher promotion expenses related to product launches.

Non-GAAP R&D expenses were $1.7 billion in the second quarter of 2017, an 8 percent decrease compared to the second quarter of 2016. The decrease primarily reflects lower licensing costs.

Non-GAAP EPS was $1.01 for the second quarter of 2017 compared with $0.93 for the second quarter of 2016.

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

                                            
--------------------------------------------------------- -------------------- -------------------- ----------------------------------------------------------------------
$ in millions, except EPS amounts                                                         Second Quarter
                                                                                                      2017                     2016
EPS
GAAP EPS                                                                                             $0.71                                                          $0.43
Difference(4)                                                                                         0.30                                                           0.50
Non-GAAP EPS that excludes items listed below(2)                                                     $1.01                                                          $0.93
                                                                                                                                                      
Net Income
GAAP net income(1)                                                                                  $1,946                                                         $1,205
Difference                                                                                             832                                                          1,382
Non-GAAP net income that excludes items listed below(1,2)                                           $2,778                                                         $2,587
                                                                                                                                                      
Decrease (Increase) in Net Income Due to Excluded Items:
   Acquisition- and divestiture-related costs(3)                                                      $882                                                         $1,345
   Restructuring costs                                                                                 210                                                            351
Net decrease (increase) in income before taxes                                                       1,092                                                          1,696
Income tax (benefit) expense(5)                                                                      (260)                                                          (314)
Decrease (increase) in net income                               $832                   $1,382
--------------------------------------------------------- -------------------- -------------------- ------ -------------------- -------------------- --------------------
                                                                                                                                                      

Financial Outlook

On June 27, 2017, the company experienced a network cyber-attack that led to a disruption of its worldwide operations, including manufacturing, research and sales operations. While the company does not yet know the magnitude of the impact of the disruption, which remains ongoing in certain operations, it continues to work to minimize the effects.

The company is in the process of restoring its manufacturing operations. To date, Merck has largely restored its packaging operations and has partially restored its formulation operations. The company is in the process of restoring its Active Pharmaceutical Ingredient operations but is not yet producing bulk product. The company’s external manufacturing was not impacted. Throughout this time, Merck has continued to fulfill orders and ship product.

The company is confident in the continuous supply of key products such as KEYTRUDA, JANUVIA and ZEPATIER. In addition, Merck does not currently expect a significant impact to sales of its other top products; however, the company anticipates that it will have temporary delays in fulfilling orders for certain other products in certain markets.

The financial outlook below reflects the current state of the company’s manufacturing operations as well as its plans to restore those operations and potential costs associated with the remediation efforts.

Merck has reduced its full-year 2017 GAAP EPS range to be between $1.60 and $1.72. The change in the GAAP EPS range reflects the inclusion of licensing expenses related to the collaboration with AstraZeneca. Merck has maintained its full-year 2017 non-GAAP EPS range to be between $3.76 and $3.88, including an approximately 1 percent negative impact from foreign exchange at mid-July 2017 exchange rates. The non-GAAP range excludes acquisition- and divestiture-related costs, costs related to restructuring programs and certain other items, including licensing expenses related to the collaboration with AstraZeneca as shown in the table below.

Merck has narrowed and raised its full-year 2017 revenue range to be between $39.4 billion and $40.4 billion, including an approximately 1 percent negative impact from foreign exchange at mid-July 2017 exchange rates.

The following table summarizes the company’s 2017 financial guidance.

               
-------------------- -------------------- -------------------- ---------------------- -------------------- -------------------- -------------------------------------------
                                           GAAP                                     Non-GAAP(2)
                                                                                                                                 
Revenue                                                        $39.4 to $40.4 billion                                                              $39.4 to $40.4 billion**
Operating expenses                                                    Lower than 2016                                           Higher than 2016 by a mid-single digit rate
Effective tax rate                                                     32.0% to 33.0%                                                                        21.0% to 22.0%
EPS                              $1.60 to $1.72                                  $3.76 to $3.88
-------------------- -------------------- -------------------- ---------------------- -------------------- -------------------- -------------------------------------------
                                                                                                           **The company does not have any non-GAAP adjustments to revenue.
                                                                                                                                 

A reconciliation of anticipated 2017 GAAP EPS to non-GAAP EPS and the items excluded from non-GAAP EPS are provided in the table below.

                                             
---------------------------------------------------------- -------------------- -------------------- --------------------
$ in millions, except EPS amounts                                    Full-Year 2017
                                                                                                      
GAAP EPS                                                                                                   $1.60 to $1.72
Difference(4)                                                                                                        2.16
Non-GAAP EPS that excludes items listed below(1)                                                           $3.76 to $3.88
                                                                                                      
   Acquisition- and divestiture-related costs                                                                      $3,600
   Restructuring costs                                                                                                600
   Licensing expense relating to AstraZeneca collaboration                                                          2,350
Net decrease (increase) in income before taxes                                                                      6,550
Estimated income tax (benefit) expense                                                                              (610)
Decrease (increase) in net income                                            $5,940
---------------------------------------------------------- -------------------- -------------------- --------------------
                                                                                                      

The expected full-year 2017 GAAP effective tax rate of 32.0 to 33.0 percent reflects an unfavorable impact of approximately 11 percentage points from the above items.

Total Employees

As of June 30, 2017, Merck had approximately 69,000 employees worldwide.

Earnings Conference Call

Investors, journalists and the general public may access a live audio webcast of the call today at 8:00 a.m. EDT on Merck’s website at http://investors.merck.com/events-and-presentations/default.aspx . Institutional investors and analysts can participate in the call by dialing (706) 758-9927 or (877) 381-5782 and using ID code number 36593115. Members of the media are invited to monitor the call by dialing (706) 758-9928 or (800) 399-7917 and using ID code number 36593115. Journalists who wish to ask questions are requested to contact a member of Merck’s Media Relations team at the conclusion of the call.

About Merck

For more than a century, Merck, a leading global biopharmaceutical company known as MSD outside of the United States and Canada, has been inventing for life, bringing forward medicines and vaccines for many of the world’s most challenging diseases. 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. Today, Merck continues to be at the forefront of research to advance the prevention and treatment of diseases that threaten people and communities around the world - including cancer, cardio-metabolic diseases, emerging animal diseases, Alzheimer’s disease and infectious diseases including HIV and Ebola. For more information, visit www.merck.com and connect with us on Twitter, Facebook, YouTube and LinkedIn. You can also follow our Twitter conversation at $MRK.

Forward-Looking Statement of Merck & Co., Inc., Kenilworth, N.J., USA

This news release of Merck & Co., Inc., Kenilworth, N.J., USA (the "company") includes "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline products that the products will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.

Risks and uncertainties include but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.

The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s 2016 Annual Report on Form 10-K and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (www.sec.gov).

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

(2) Merck is providing certain 2017 and 2016 non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results as it permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. Senior management’s annual compensation is derived in part using non-GAAP income and non-GAAP EPS. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP. For a description of the items, see Table 2a attached to this release.

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

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

(5) Includes the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments, as well as a benefit of $88 million related to the settlement of a state income tax issue.

                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                     MERCK & CO., INC.
                                                                                                                                                                                                                                     CONSOLIDATED STATEMENT OF INCOME - GAAP
                                                                                                                                                                                                                                     (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
                                                                                                                                                                                                                                     (UNAUDITED)
                                                                                                                                                                                                                                     Table 1
                                                                                                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                    ---------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------                                                                                    --------------------                                                                                     -------------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------                                                                                    --------------------
                                                                                                                                                                            GAAP                                                                                                                                                                  % Change                                                                                                                                                                        GAAP                                                                                                                                                                       % Change
                                                                                                    ----------------------------------------------------------------------------------------------------------------------------------------------------                                                                                                                                                                                             --------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                  2Q17                                    2Q16                                                                                                                                                                                                       June YTD                                          June YTD
                                                                                                                                                                                                                                                                                                                                                                                                                                                   2017                                                                                                                          2016
                                                                                                    ------------------------------  -------------------- -------------------- -------------------- -------------------- ------------------------------                                                                                                                                                                          ----------------------------------------  -------------------- -------------------- -------------------- -------------------- ----------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                    ---------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------                                                                                    --------------------                                                                                     -------------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------                                                                                    --------------------
Sales                                                                                                                  $      9,930                                                                                                        $      9,844                                                                                              1%                                                                                                                 $               19,365                                                                                                        $     19,156                                                                                              1%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Costs, Expenses and Other
   Materials and production (1)                                                                                               3,080                                                                                                               3,578                                                                                             -14%                                                                                                                                 6,095                                                                                                               7,150                                                                                             -15%
   Marketing and administrative (1)                                                                                           2,438                                                                                                               2,458                                                                                              -1%                                                                                                                                 4,849                                                                                                               4,776                                                                                              2%
   Research and development (1)                                                                                               1,749                                                                                                               2,151                                                                                             -19%                                                                                                                                 3,545                                                                                                               3,810                                                                                              -7%
   Restructuring costs (2)                                                                                                      166                                                                                                                 134                                                                                              24%                                                                                                                                   317                                                                                                                 225                                                                                              41%
   Other (income) expense, net (1)                                                                                               58                                                                                                                  19                                                                                               *                                                                                                                                    117                                                                                                                  67                                                                                              75%
Income Before Taxes                                                                                                           2,439                                                                                                               1,504                                                                                              62%                                                                                                                                 4,442                                                                                                               3,128                                                                                              42%
Taxes on Income                                                                                                                 488                                                                                                                 295                                                                                                                                                                                                                                    935                                                                                                                 789
Net Income                                                                                                                    1,951                                                                                                               1,209                                                                                              61%                                                                                                                                 3,507                                                                                                               2,339                                                                                              50%
Less: Net Income Attributable to Noncontrolling Interests                                                                         5                                                                                                                   4                                                                                                                                                                                                                                     11                                                                                                                   9
Net Income Attributable to Merck & Co., Inc.                                                                           $      1,946                                                                                                        $      1,205                                                                                              61%                                                                                                                $                3,496                                                                                                        $      2,330                                                                                              50%
Earnings per Common Share Assuming Dilution                                                                            $       0.71                            $       0.43                                                                                              65%                                                                                                                $                 1.27                            $       0.83                                                                                              53%
                                                                                                    -------------------- ---------- -------------------- -------------------- -------------------- -------------------- -------------------- ----------                                                                                     --------------------                                                                                     -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ----------                                                                                     --------------------
                                                                                                                                                                                                                                                                                                                                                                   
                                                                                                    ---------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------                                                                                                                                                                                             -------------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------
Average Shares Outstanding Assuming Dilution                                                                                  2,752                                                                                                               2,789                                                                                                                                                                                                                                  2,759                                                                                                               2,792
Tax Rate                                                                                                   20.0%                19.6%                                                                                                                                                                                                               21.0%                25.2%
                                                                                                    -------------------- ---------- -------------------- -------------------- -------------------- -------------------- -------------------- ----------                                                                                                                                                                                              -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ----------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

* 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.

 
                                                                                                                                                                                                                                     MERCK & CO., INC.
                                                                                                                                                                                                                                     GAAP TO NON-GAAP RECONCILIATION
                                                                                                                                                                                                                                     SECOND QUARTER 2017
                                                                                                                                                                                                                                     (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
                                                                                                                                                                                                                                     (UNAUDITED)
                                                                                                                                                                                                                                     Table 2a
                                                                                                                       
                                                                                       -------------------------------------------------                                                                                    ----------------------                                          ----------------------                                          ----------------------                                          ---------------------                                                                                    -------------------------------------------------
                                                                                                             GAAP                                                                                                               Acquisition and                                                  Restructuring                                                   Certain Other                                                   Adjustment                                                                                                              Non-GAAP
                                                                                                                                                                                                                              Divestiture-Related                                                  Costs (2)                                                         Items                                                        Subtotal
                                                                                                                                                                                                                                     Costs
                                                                                                                                                                                                                                      (1)
                                                                                       ----------------------------------------------                                                                                       --------------------                                            --------------------                                            --------------------                                            -------------------                                                                                      ----------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                                                                                       -------------------------------------------------                                                                                                                                                                                                                                                                                                                                                                                             -------------------------------------------------
Materials and production                                                                                  $  3,080                                                                                                                 827                                                              33                                                                                                                             860                                                                                                                  $  2,220
Marketing and administrative                                                                                 2,438                                                                                                                   9                                                               2                                                                                                                              11                                                                                                                     2,427
Research and development                                                                                     1,749                                                                                                                   7                                                               9                                                                                                                              16                                                                                                                     1,733
Restructuring costs                                                                                            166                                                                                                                                                                                 166                                                                                                                             166                                                                                                                         -
Other (income) expense, net                                                                                     58                                                                                                                  39                                                                                                                                                                                              39                                                                                                                        19
Income Before Taxes                                                                                          2,439                                                                                                                (882 )                                                          (210 )                                                                                                     (1,092 )                                                                                                                   3,531
Income Tax Provision (Benefit)                                                                                 488                                                                                                                (127 )(3)                                                        (45 ) (3)                                                       (88 )(4)                                                       (260 )                                                                                                                     748
Net Income                                                                                                   1,951                                                                                                                (755 )                                                          (165 )                                                            88                                                            (832 )                                                                                                                   2,783
Net Income Attributable to Merck & Co., Inc.                                                                 1,946                                                                                                                (755 )                                                          (165 )                                                            88                                                            (832 )                                                                                                                   2,778
Earnings per Common Share Assuming Dilution                                                               $   0.71                                                                                            (0.27 )                                                         (0.06 )                                                          0.03                                                           (0.30 )                                                                                                                $   1.01  
                                                                                       -------------------- ------ --------------------                                                                                                                                                                                                                                                                                                                                                                                              -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                                                                                       -------------------------------------------------                                                                                                                                                                                                                                                                                                                                                                                             -------------------------------------------------
Tax Rate                                                                                   20.0 %                                                                                                                                                                                                                                                                                                                                                                                                                     21.2 %
                                                                                       -------------------- ------ --------------------                                                                                                                                                                                                                                                                                                                                                                                              -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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

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

(1) Amounts included in materials and production costs primarily reflect $779 million of expenses for the amortization of intangible assets recognized as a result of acquisitions, as well as intangible asset impairment charges of $47 million. Amounts included in marketing and administrative expenses reflect integration, transaction and certain other costs related to business acquisitions and divestitures. Amounts included in research and development expenses reflect changes in the estimated fair value measurement of liabilities for contingent consideration. Amounts included in other (income) expense, net primarily reflect changes in the estimated fair value measurement of liabilities for contingent consideration related to the termination of the Sanofi-Pasteur MSD joint venture.

(2) Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities under the company’s formal restructuring programs.

(3) Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.

(4) Represents a benefit related to the settlement of a state income tax issue.

 
                                                                                                                                                                                                                                     MERCK & CO., INC.
                                                                                                                                                                                                                                  GAAP TO NON-GAAP RECONCILIATION
                                                                                                                                                                                                                                  SIX MONTHS ENDED JUNE 30, 2017
                                                                                                                                                                                                                          (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
                                                                                                                                                                                                                                     (UNAUDITED)
                                                                                                                                                                                                                                     Table 2b
                                                                                                               
                                                                                       -------------------------------------------------                                          ----------------------                                          ----------------------                                          ----------------------                                          ---------------------                                          -------------------------------------------------
                                                                                                             GAAP                                                                     Acquisition and                                                  Restructuring                                                   Certain Other                                                   Adjustment                                                                    Non-GAAP
                                                                                                                                                                                    Divestiture-Related                                                  Costs (2)                                                         Items                                                        Subtotal
                                                                                                                                                                                           Costs
                                                                                                                                                                                            (1)
                                                                                       ----------------------------------------------                                             --------------------                                            --------------------                                            --------------------                                            -------------------                                            ----------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                       -------------------------------------------------                                                                                                                                                                                                                                                                                                         -------------------------------------------------
Materials and production                                                                                  $  6,095                                                                     1,682                                                              96                                                                                                                           1,778                                                                        $  4,317
Marketing and administrative                                                                                 4,849                                                                        29                                                               3                                                                                                                              32                                                                           4,817
Research and development                                                                                     3,545                                                                        18                                                               9                                                                                                                              27                                                                           3,518
Restructuring costs                                                                                            317                                                                                                                                       317                                                                                                                             317                                                                               -
Other (income) expense, net                                                                                    117                                                                        36                                                                                                                              (9 )                                                            27                                                                              90
Income Before Taxes                                                                                          4,442                                                                    (1,765 )                                                          (425 )                                                             9                                                          (2,181 )                                                                         6,623
Income Tax Provision (Benefit)                                                                                 935                                                                      (285 )(3)                                                        (93 )(3)                                                        (85 )(3)                                                       (463 )                                                                         1,398
Net Income                                                                                                   3,507                                                                    (1,480 )                                                          (332 )                                                            94                                                          (1,718 )                                                                         5,225
Net Income Attributable to Merck & Co., Inc.                                                                 3,496                                                                    (1,480 )                                                          (332 )                                                            94                                                          (1,718 )                                                                         5,214
Earnings per Common Share Assuming Dilution                                                               $   1.27                                                  (0.53 )                                                         (0.12 )                                                          0.03                                                           (0.62 )                                                                      $   1.89  
                                                                                       -------------------- ------ --------------------                                                                                                                                                                                                                                                                                                          -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                       -------------------------------------------------                                                                                                                                                                                                                                                                                                         -------------------------------------------------
Tax Rate                                                                                   21.0 %                                                                                                                                                                                                                                                                                                                                 21.1 %
                                                                                       -------------------- ------ --------------------                                                                                                                                                                                                                                                                                                          -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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

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

(1) Amounts included in materials and production costs primarily reflect $1.6 billion of expenses for the amortization of intangible assets recognized as a result of acquisitions, as well as intangible asset impairment charges of $123 million. Amounts included in marketing and administrative expenses reflect integration, transaction and certain other costs related to business acquisitions and divestitures. Amounts included in research and development expenses primarily reflect changes in the estimated fair value measurement of liabilities for contingent consideration. Amounts included in other (income) expense, net primarily reflect changes in the estimated fair value measurement of liabilities for contingent consideration related to the termination of the Sanofi-Pasteur MSD joint venture.

(2) Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities under the company’s formal restructuring programs.

(3) Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments, as well as a benefit of $88 million related to the settlement of a state income tax issue.

                                              
                                                                                                                                                                                                                                     MERCK & CO., INC.
                                                                                                                                                                                                                                     FRANCHISE / KEY PRODUCT SALES
                                                                                                                                                                                                                                     (AMOUNTS IN MILLIONS)
                                                                                                                                                                                                                                     Table 3
                                                                                                                                            
                                                                                     -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------
                                                                                                                                       2017                                                                                                                                                                                                              2016                                                                                                                                                                                          2Q                                                                                                    June YTD
                                                                                     ---------------------------------------------------------------------------------------------------------                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                          ---------------------------------------------------------------                                          ---------------------------------------------------------------
                                                                                              1Q                     2Q                  June YTD                                                          1Q                     2Q                  June YTD                  3Q                     4Q                  Full Year                                                        Nom %                 Ex-Exch                                                         Nom %                 Ex-Exch
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             %                                                                                                        %
                                                                                     -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------
TOTAL SALES (1)                                                                                    $9,434                 $9,930                $19,365                                                         $9,312                 $9,844                $19,156                $10,536                $10,115                $39,807                                                              1                      2                                                              1                      2
                                                                                     -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------
   PHARMACEUTICAL                                                                                   8,185                  8,759                 16,944                                                          8,104                  8,700                 16,804                  9,443                  8,904                 35,151                                                              1                      2                                                              1                      2
      Primary Care and Women’s Health
         Cardiovascular
            Zetia                                                                                     334                                       367                                       701                                                            612                                       702                                     1,314                                       671                                       575                                     2,560                                                            -48                                       -47                                                            -47                                       -46
            Vytorin                                                                                   241                                       182                                       423                                                            277                                       293                                       570                                       273                                       299                                     1,141                                                            -38                                       -37                                                            -26                                       -25
            Liptruzet                                                                                  49                                        63                                       112                                                             23                                        33                                        56                                        39                                        50                                       146                                                             88                                        90                                                             99                                       102
            Adempas                                                                                    84                                        67                                       151                                                             33                                        40                                        72                                        48                                        49                                       169                                                             68                                        69                                                            109                                       110
         Diabetes
            Januvia                                                                                   839                                       948                                     1,787                                                            906                                     1,064                                     1,970                                     1,006                                       932                                     3,908                                                            -11                                       -10                                                             -9                                        -9
            Janumet                                                                                   496                                       563                                     1,059                                                            506                                       569                                     1,075                                       548                                       577                                     2,201                                                             -1                                         0                                                             -2                                        -1
         General Medicine & Women’s Health
            NuvaRing                                                                                  160                                       199                                       359                                                            175                                       200                                       376                                       195                                       207                                       777                                                              0                                         0                                                             -4                                        -4
            Implanon / Nexplanon                                                                      170                                       178                                       349                                                            134                                       164                                       298                                       148                                       160                                       606                                                              9                                         9                                                             17                                        18
            Follistim AQ                                                                               81                                        79                                       160                                                             94                                        73                                       167                                       101                                        87                                       355                                                              9                                        10                                                             -4                                        -3
      Hospital and Specialty
         Hepatitis
            Zepatier                                                                                  378                                       517                                       895                                                             50                                       112                                       161                                       164                                       229                                       555                                                              *                                         *                                                              *                                         *
         HIV
            Isentress / Isentress HD                                                                  305                                       282                                       587                                                            340                                       338                                       678                                       372                                       337                                     1,387                                                            -17                                       -15                                                            -13                                       -13
         Hospital Acute Care
            Bridion                                                                                   148                                       163                                       310                                                             90                                       113                                       204                                       139                                       139                                       482                                                             44                                        44                                                             52                                        53
            Noxafil                                                                                   141                                       155                                       296                                                            145                                       143                                       288                                       147                                       161                                       595                                                              8                                        11                                                              3                                         5
            Invanz                                                                                    136                                       150                                       286                                                            114                                       143                                       257                                       152                                       152                                       561                                                              5                                         5                                                             11                                        11
            Cancidas                                                                                  121                                       112                                       233                                                            133                                       131                                       263                                       142                                       152                                       558                                                            -14                                       -13                                                            -12                                        -9
            Cubicin                                                                                    96                                       103                                       198                                                            292                                       357                                       649                                       320                                       119                                     1,087                                                            -71                                       -71                                                            -69                                       -69
            Primaxin                                                                                   62                                        71                                       133                                                             73                                        81                                       154                                        77                                        66                                       297                                                            -13                                        -9                                                            -14                                       -10
         Immunology
            Remicade                                                                                  229                                       208                                       437                                                            349                                       339                                       688                                       311                                       269                                     1,268                                                            -39                                       -36                                                            -37                                       -34
            Simponi                                                                                   184                                       199                                       383                                                            188                                       199                                       387                                       193                                       186                                       766                                                              0                                         3                                                             -1                                         3
      Oncology
         Keytruda                                                                                     584                                       881                                     1,465                                                            249                                       314                                       563                                       356                                       483                                     1,402                                                            180                                       183                                                            160                                       162
         Emend                                                                                        133                                       143                                       276                                                            126                                       143                                       268                                       137                                       144                                       549                                                              0                                         1                                                              3                                         3
         Temodar                                                                                       66                                        65                                       130                                                             66                                        73                                       139                                        78                                        67                                       283                                                            -12                                       -11                                                             -6                                        -6
      Diversified Brands
         Respiratory
            Singulair                                                                                 186                                       203                                       389                                                            237                                       229                                       465                                       239                                       210                                       915                                                            -11                                       -10                                                            -16                                       -16
            Nasonex                                                                                   139                                        85                                       224                                                            229                                       101                                       331                                        94                                       112                                       537                                                            -16                                       -16                                                            -32                                       -33
            Dulera                                                                                     82                                        69                                       151                                                            113                                       121                                       234                                        97                                       105                                       436                                                            -43                                       -43                                                            -35                                       -36
         Other
            Cozaar / Hyzaar                                                                           112                                       119                                       231                                                            126                                       132                                       258                                       131                                       121                                       511                                                            -10                                        -7                                                            -10                                        -8
            Arcoxia                                                                                   103                                        89                                       192                                                            111                                       117                                       228                                       114                                       108                                       450                                                            -24                                       -24                                                            -16                                       -15
            Fosamax                                                                                    61                                        66                                       127                                                             75                                        73                                       148                                        68                                        68                                       284                                                            -10                                        -9                                                            -14                                       -13
      Vaccines (2)
            Gardasil / Gardasil 9                                                                     532                                       469                                     1,001                                                            378                                       393                                       770                                       860                                       542                                     2,173                                                             19                                        20                                                             30                                        30
            ProQuad / M-M-R II / Varivax                                                              355                                       399                                       754                                                            357                                       383                                       739                                       496                                       405                                     1,640                                                              4                                         5                                                              2                                         3
            RotaTeq                                                                                   224                                       123                                       347                                                            188                                       130                                       318                                       171                                       162                                       652                                                             -5                                        -5                                                              9                                         9
            Pneumovax 23                                                                              163                                       166                                       329                                                            107                                       120                                       228                                       175                                       238                                       641                                                             38                                        38                                                             44                                        45
            Zostavax                                                                                  154                                       160                                       313                                                            125                                       149                                       274                                       190                                       221                                       685                                                              7                                         7                                                             14                                        14
      Other Pharmaceutical (3)                                                                      1,037                                     1,116                                     2,156                                                          1,083                                     1,128                                     2,214                                     1,191                                     1,172                                     4,574                                                             -1                                         0                                                             -3                                        -2
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
   ANIMAL HEALTH                                                                                      939                                       955                                     1,894                                                            829                                       900                                     1,729                                       865                                       884                                     3,478                                                              6                                         7                                                             10                                        10
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
   Other Revenues (4)                                                                                 310                    216                    527                                                            379                    244                    623                    228                    327                  1,178                                                            -11                     -5                                                            -15                     -5
                                                                                     -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

* 200% or greater

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

(1) Only select products are shown.

(2) Vaccine sales in 2017 include sales in the European markets that were previously part of the Sanofi Pasteur MSD (SPMSD) joint venture that was terminated on December 31, 2016. Amounts for 2016 reflect supply sales to SPMSD.

(3) Includes Pharmaceutical products not individually shown above. Other Vaccines sales included in Other Pharmaceutical were $88 million in the first quarter and $87 million in the second quarter of 2017 and $103 million, $91 million, $135 million and $126 million for the first, second, third and fourth quarters of 2016, respectively.

(4) Other Revenues are comprised primarily of alliance revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170728005136r1&sid=cmtx6&distro=nx&

View source version on businesswire.com: http://www.businesswire.com/news/home/20170728005136/en/

SOURCE: Merck"> <Property FormalName="PrimaryTwitterHandle" Value="@Merck

Merck 
Media: 
Tracy Ogden, 908-740-1747 
or 
Claire Gillespie, 267-305-0932 
or 
Investors: 
Teri Loxam, 908-740-1986 
or 
Amy Klug, 908-740-1898


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