Attenuated live varicella virus vaccine(Merck)

RAHWAY, N.J.--( BUSINESS WIRE )--Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the fourth quarter and full year of 2023. “ 2023 was another very strong year for Merck. I am extremely pleased by the progress we’ve made to develop and deliver transformative therapies and vaccines that will help save and improve lives around the world. We reached more than 500 million people with our medicines last year alone, over half of which were donations, including through our program to treat river blindness,” said Robert M. Davis, chairman and chief executive officer, Merck. “ We also made investments of approximately $30 billion in research and development in our ongoing effort to discover, develop and collaborate to propel the next generation of impactful innovations. As we move forward, I’m confident that our strong momentum will continue, underpinned by the unwavering dedication of our talented global team.” Financial Summary $ in millions, except EPS amounts Fourth Quarter Year Ended 2023 2022 Change Change Ex-Exchange Dec. 31, 2023 Dec. 31, 2022 Change Change Ex-Exchange Sales $14,630 $13,830 6% 7% $60,115 $59,283 1% 4% GAAP net (loss) income 1 (1,226) 3,017 N/M N/M 365 14,519 -97% -95% Non-GAAP net income that excludes certain items 1,2* 66 4,129 -98% N/M 3,837 19,005 -80% -75% GAAP EPS (0.48) 1.18 N/M N/M 0.14 5.71 -98% -95% Non-GAAP EPS that excludes certain items 2* 0.03 1.62 -98% N/M 1.51 7.48 -80% -75% *Refer to table on page 9. N/M - Not meaningful Generally Accepted Accounting Principles (GAAP) loss/earnings per share (EPS) assuming dilution was a loss per share of $0.48 for the fourth quarter and EPS of $0.14 for the full year of 2023. Non-GAAP EPS was $0.03 for the fourth quarter and $1.51 for the full year of 2023. GAAP loss per share and non-GAAP EPS in the fourth quarter of 2023 include a charge of $1.69 per share related to the collaboration with Daiichi Sankyo. GAAP and non-GAAP EPS for the full years of 2023 and 2022 include charges of $6.21 and $0.22 per share, respectively, related to certain collaborations, licensing agreements and asset acquisitions. Non-GAAP EPS excludes acquisition- and divestiture-related costs, including pretax intangible asset impairment research and development (R&D) charges of $779 million in the fourth quarter and full year of 2023 related to gefapixant, and $780 million and $1.7 billion in the fourth quarter and full year of 2022, respectively, primarily related to nemtabrutinib. Non-GAAP EPS also excludes restructuring costs, including costs for the recently approved 2024 Restructuring Program, as well as income and losses from investments in equity securities. Fourth-Quarter Sales Performance The following table reflects sales of the company’s top products and significant performance drivers. Fourth Quarter $ in millions 2023 2022 Change Change Ex-Exchange Commentary Total Sales $14,630 $13,830 6% 7% Pharmaceutical 13,141 12,180 8% 8% Increase driven by growth in oncology, vaccines and hospital acute care, partially offset by a decline in virology, due to LAGEVRIO, and diabetes. Excluding LAGEVRIO and impact of foreign exchange, growth of 14%. KEYTRUDA 6,608 5,450 21% 22% Growth driven by increased global uptake in earlier-stage indications, including triple-negative breast cancer and renal cell carcinoma (RCC), and continued strong global demand from metastatic indications. GARDASIL/GARDASIL 9 1,871 1,470 27% 27% Growth due to strong global demand, particularly in China, and public-sector buying patterns in the U.S. JANUVIA/JANUMET 787 913 -14% -13% Decline primarily due to generic competition in several international markets, particularly in Europe, and lower demand in the U.S. PROQUAD, M-M-R II and VARIVAX 545 526 4% 3% Growth largely due to higher pricing in the U.S. BRIDION 429 441 -3% -3% Decline primarily due to generic competition in certain ex-U.S. markets, particularly in Europe, partially offset by higher demand in the U.S. Lynparza* 315 292 8% 8% Growth driven primarily by higher pricing in the U.S. Lenvima* 226 216 5% 5% Growth primarily due to higher demand in the U.S., partially offset by timing of shipments in China. LAGEVRIO 193 825 -77% -76% Decline due to nonrecurrence of sales in the U.K. and lower demand in Japan and Australia. ROTATEQ 185 139 34% 33% Growth primarily due to public-sector buying patterns in the U.S. and timing of shipments in China. VAXNEUVANCE 176 138 28% 26% Growth largely driven by launches in Europe and continued uptake for the pediatric indication in the U.S. Prior-year quarter benefited from inventory stocking in the U.S. in preparation for pediatric launch. Animal Health 1,278 1,230 4% 4% Growth primarily driven by higher demand for Companion Animal products. Livestock 808 814 -1% 0% Decline primarily due to timing of shipments for ruminant products, largely offset by higher pricing across the product portfolio and higher demand for swine products. Companion Animal 470 416 13% 12% Growth primarily due to higher demand and timing of shipments for BRAVECTO line of products, as well as higher pricing. Sales of BRAVECTO were $197 million and $168 million in the current and prior-year quarters, respectively, which represented growth of 18%, or 19% excluding the impact of foreign exchange. Other Revenues** 211 420 -50% -1% Decline primarily due to impact of revenue hedging activities. *Alliance revenue for this product represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs. **Other revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. Full-Year Revenue Performance The following table reflects sales of the company’s top pharmaceutical products, as well as sales of Animal Health products. Year Ended $ in millions Dec. 31, 2023 Dec. 31, 2022 Change Change Ex-Exchange Total Sales $60,115 $59,283 1% 4% Pharmaceutical 53,583 52,005 3% 5% KEYTRUDA 25,011 20,937 19% 21% GARDASIL/GARDASIL 9 8,886 6,897 29% 33% JANUVIA/JANUMET 3,366 4,513 -25% -23% PROQUAD, M-M-R II and VARIVAX 2,368 2,241 6% 6% BRIDION 1,842 1,685 9% 11% LAGEVRIO 1,428 5,684 -75% -74% Lynparza* 1,199 1,116 7% 9% Lenvima* 960 876 10% 11% ROTATEQ 769 783 -2% -1% VAXNEUVANCE 665 170 N/M N/M Animal Health 5,625 5,550 1% 3% Livestock 3,337 3,300 1% 4% Companion Animal 2,288 2,250 2% 3% Other Revenues** 907 1,728 -48% -15% *Alliance revenue for this product represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs. **Other revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. N/M - Not meaningful Full-year 2023 pharmaceutical sales grew 3% to $53.6 billion. Pharmaceutical sales growth was primarily driven by higher sales in oncology, particularly KEYTRUDA, higher sales of vaccines, reflecting strong growth of combined sales of GARDASIL/GARDASIL 9 and VAXNEUVANCE, as well as growth in hospital acute care products, including PREVYMIS and BRIDION. Pharmaceutical sales growth in 2023 was partially offset by lower sales of the COVID-19 medication LAGEVRIO, as well as lower sales of JANUVIA and JANUMET, primarily reflecting generic competition in many ex-U.S. markets and lower demand in the U.S., and lower sales of PNEUMOVAX 23 as the market continues to shift toward newer adult pneumococcal conjugate vaccines. Pharmaceutical sales growth for the full year of 2023 was 14% excluding LAGEVRIO and the unfavorable impact of foreign exchange. Full-year 2023 Animal Health sales grew 1% to $5.6 billion. Excluding the unfavorable impact of foreign exchange, Animal Health sales grew 3%, primarily due to higher pricing. Full-year sales growth was also driven by higher demand for livestock products, led by poultry and swine products, partially offset by lower demand for ruminant products. Sales of BRAVECTO were $1.1 billion in 2023, which represented growth of 4%, or 5% excluding the impact of foreign exchange, primarily reflecting higher pricing. Fourth-Quarter and Full-Year Expense, EPS and Related Information The table below presents selected expense information. $ in millions GAAP Acquisition- and Divestiture- Related Costs 3 Restructuring Costs (Income) Loss From Investments in Equity Securities Non- GAAP 2 Fourth Quarter 2023 Cost of sales $3,911 $454 $117 $- $3,340 Selling, general and administrative 2,804 24 29 - 2,751 Research and development 9,628 790 - - 8,838 Restructuring costs 255 - 255 - - Other (income) expense, net 78 (35) - (61) 174 Fourth Quarter 2022 Cost of sales $3,881 $482 $38 $- $3,361 Selling, general and administrative 2,687 39 20 - 2,628 Research and development 3,775 740 - - 3,035 Restructuring costs 49 - 49 - - Other (income) expense, net (75) (69) - 80 (86) $ in millions GAAP Acquisition- and Divestiture- Related Costs 3 Restructuring Costs (Income) Loss From Investments in Equity Securities Certain Other Items Non- GAAP 2 Year Ended Dec. 31, 2023 Cost of sales $16,126 $2,018 $211 $- $- $13,897 Selling, general and administrative 10,504 86 122 - - 10,296 Research and development 30,531 819 1 - - 29,711 Restructuring costs 599 - 599 - - - Other (income) expense, net 466 (47) - (279) 573 219 Year Ended Dec. 31, 2022 Cost of sales $17,411 $2,059 $205 $- $- $15,147 Selling, general and administrative 10,042 176 94 - - 9,772 Research and development 13,548 1,676 30 - - 11,842 Restructuring costs 337 - 337 - - - Other (income) expense, net 1,501 (207) - 1,348 - 360 GAAP Expense, EPS and Related Information Gross margin was 73.3% for the fourth quarter of 2023 compared with 71.9% for the fourth quarter of 2022. The increase was primarily due to the favorable impacts of lower LAGEVRIO sales, which have a low gross margin, lower manufacturing facilities costs and product mix, partially offset by the unfavorable impacts of foreign exchange and higher restructuring costs. Gross margin was 73.2% for the full year of 2023 compared with 70.6% for the full year of 2022. The increase was primarily due to the favorable impacts of lower LAGEVRIO sales, product mix, lower manufacturing facilities costs, and lower revenue from third-party manufacturing arrangements, partially offset by the unfavorable impact of foreign exchange. Selling, general and administrative (SG&A) expenses were $2.8 billion in the fourth quarter of 2023, an increase of 4% compared with the fourth quarter of 2022. The increase was primarily due to higher administrative costs, including higher compensation and benefit costs, partially offset by lower promotional spending. Full-year 2023 SG&A expenses were $10.5 billion, an increase of 5% compared with the full year of 2022. The increase was primarily due to higher administrative costs, including higher compensation and benefit costs, and higher promotional spending, partially offset by the favorable impact of foreign exchange and lower acquisition- and divestiture-related costs. R&D expenses were $9.6 billion in the fourth quarter of 2023 compared with $3.8 billion in the fourth quarter of 2022. R&D expenses were $30.5 billion for the full year of 2023 compared with $13.5 billion for the full year of 2022. The increase in the fourth quarter and full year of 2023 reflects a $5.5 billion charge for the collaboration with Daiichi Sankyo, and higher development costs due to spending on clinical programs, including newly acquired programs, as well as higher compensation and benefit costs (reflecting in part increased headcount). The increase in R&D expenses for the full year was also due to charges of $11.4 billion in the aggregate for the acquisitions of Prometheus Biosciences, Inc. (Prometheus) and Imago BioSciences, Inc. (Imago). The increase in R&D expenses for the full year was partially offset by lower intangible asset impairment charges in 2023 and charges of $690 million in the aggregate in 2022 for collaboration and licensing agreements with Moderna, Inc. (Moderna), Orna Therapeutics (Orna) and Orion Corporation (Orion). Other (income) expense, net, was $78 million of expense in the fourth quarter of 2023 compared with $75 million of income in the fourth quarter of 2022, primarily due to higher exchange losses and higher net interest expense, partially offset by net gains from investments in equity securities for the fourth quarter of 2023 compared with net losses from investments in equity securities for the fourth quarter of 2022, and lower pension settlement costs. Other (income) expense, net, was $466 million of expense in the full year of 2023 compared with $1.5 billion of expense in the full year of 2022, primarily due to net gains from investments in equity securities in 2023 compared with net losses from investments in equity securities in 2022, and lower pension settlement costs, partially offset by a $572.5 million charge in 2023 related to settlements with certain plaintiffs in the Zetia antitrust litigation. The effective tax rate was 40.1% for the fourth quarter of 2023 compared with 14.1% in the fourth quarter of 2022. The effective tax rate for the fourth quarter of 2023 includes a 29.2 percentage point impact resulting from the charge for the Daiichi Sankyo collaboration. The effective tax rate was 80.0% for the full year of 2023 compared with 11.7% for the full year of 2022. The full-year 2023 effective tax rate reflects an aggregate 65.6 percentage point unfavorable impact, resulting from charges for asset acquisitions (for which no tax benefits were recognized) as well as the charge for the Daiichi Sankyo collaboration. GAAP loss per share was $0.48 for the fourth quarter of 2023 compared with EPS of $1.18 for the fourth quarter of 2022, primarily driven by the charge in 2023 related to the collaboration with Daiichi Sankyo, the unfavorable impact of foreign exchange and higher restructuring costs, partially offset by a beneficial impact from the tax rate and operational strength in the business. GAAP EPS was $0.14 for the full year of 2023 compared with EPS of $5.71 for the full year of 2022. The EPS decline in 2023 was primarily due to higher charges for certain business development transactions, the unfavorable impact of foreign exchange and the tax rate, as well as a charge related to settlements with certain plaintiffs in the Zetia antitrust litigation, partially offset by the beneficial impacts of operational strength in the business, better performance from equity investments and lower intangible asset impairment charges. Non-GAAP Expense, EPS and Related Information Non-GAAP gross margin was 77.2% for the fourth quarter of 2023 compared with 75.7% for the fourth quarter of 2022. Non-GAAP gross margin was 76.9% for the full year of 2023 compared with 74.4% for the full year of 2022. The non-GAAP gross margin improvement in the fourth quarter and full year of 2023 was primarily due to the favorable impacts of lower LAGEVRIO sales, which have a low gross margin, product mix, and lower manufacturing facilities costs. The increase in non-GAAP gross margin for the full year was also due to lower revenue from third-party manufacturing arrangements. The non-GAAP gross margin improvement in the fourth quarter and full year of 2023 was partially offset by the unfavorable impact of foreign exchange. Non-GAAP SG&A expenses were $2.8 billion for the fourth quarter of 2023 compared with $2.6 billion for the fourth quarter of 2022. The increase was primarily due to higher administrative costs, including higher compensation and benefit costs, partially offset by lower promotional spending. Full-year 2023 non-GAAP SG&A expenses were $10.3 billion, an increase of 5% compared with the full year of 2022. The increase was primarily due to higher administrative costs, including higher compensation and benefit costs, and higher promotional spending, partially offset by the favorable impact of foreign exchange. Non-GAAP R&D expenses were $8.8 billion in the fourth quarter of 2023 compared with $3.0 billion in the fourth quarter of 2022. Non-GAAP R&D expenses were $29.7 billion for the full year of 2023 compared with $11.8 billion for the full year of 2022. The increase in the fourth quarter and full year of 2023 reflects a $5.5 billion charge for the collaboration with Daiichi Sankyo, and higher development costs due to spending on clinical programs, including newly acquired programs, as well as higher compensation and benefit costs (reflecting in part increased headcount). The increase in non-GAAP R&D expenses for the full year was also due to charges of $11.4 billion in the aggregate for the acquisitions of Prometheus and Imago. The increase in R&D expenses for the full year was partially offset by charges of $690 million in the aggregate in 2022 for collaboration and licensing agreements with Moderna, Orna and Orion. Non-GAAP other (income) expense, net, was $174 million of expense in the fourth quarter of 2023 compared with $86 million of income in the fourth quarter of 2022, primarily due to higher exchange losses and higher net interest expense, partially offset by lower pension settlement costs. Non-GAAP other (income) expense, net, was $219 million of expense in the full year of 2023 compared with $360 million of expense in the full year of 2022, primarily due to lower pension settlement costs. The non-GAAP effective tax rate was 114.2% for the fourth quarter of 2023 compared with 15.6% in the fourth quarter of 2022. The non-GAAP effective tax rate for the fourth quarter of 2023 includes a 101.1 percentage point unfavorable impact resulting from the charge for the Daiichi Sankyo collaboration. The non-GAAP effective tax rate was 35.8% for the full year of 2023 compared with 14.2% for the full year of 2022. The full-year 2023 non-GAAP effective tax rate reflects an aggregate 21.2 percentage point unfavorable impact, resulting from charges for asset acquisitions (for which no benefits were recognized) as well as the charge for the Daiichi Sankyo collaboration. Non-GAAP EPS was $0.03 for the fourth quarter of 2023 compared with $1.62 for the fourth quarter of 2022. The non-GAAP EPS decline in the fourth quarter was primarily due to the charge in 2023 related to the collaboration with Daiichi Sankyo and the unfavorable impact of foreign exchange, partially offset by a beneficial impact from the tax rate and operational strength in the business. Non-GAAP EPS was $1.51 for the full year of 2023 compared with $7.48 for the full year of 2022. The non-GAAP EPS decline for the full year was primarily due to higher charges for certain business development transactions, the unfavorable impact of foreign exchange and the tax rate, partially offset by operational strength in the business. A reconciliation of GAAP to non-GAAP net (loss) income and (loss) earnings per share is provided in the table that follows. Fourth Quarter Year Ended $ in millions, except EPS amounts 2023 2022 Dec. 31, 2023 Dec. 31, 2022 EPS GAAP EPS $(0.48) $1.18 $0.14 $5.71 Difference 0.51 0.44 1.37 1.77 Non-GAAP EPS that excludes items listed below 2 $0.03 $1.62 $1.51 $7.48 Net (Loss) Income GAAP net (loss) income 1 $(1,226) $3,017 $365 $14,519 Difference 1,292 1,112 3,472 4,486 Non-GAAP net income that excludes items listed below 1,2 $66 $4,129 $3,837 $19,005 Excluded Items: Acquisition- and divestiture-related costs 3 $1,233 $1,192 $2,876 $3,704 Restructuring costs 401 107 933 666 (Income) loss from investments in equity securities (61) 80 (279) 1,348 Charge for Zetia antitrust litigation settlements - - 573 - Increase to net loss/decrease to net income before taxes 1,573 1,379 4,103 5,718 Estimated income tax (benefit) expense (281) (267) (631) (1,232) Increase to net loss/decrease to net income $1,292 $1,112 $3,472 $4,486 2024 Restructuring Program Merck recently approved a new restructuring program (2024 Restructuring Program) intended to continue the optimization of the company’s Human Health global manufacturing network as the future pipeline shifts to new modalities, and also to optimize the Animal Health global manufacturing network to improve supply reliability and increase efficiency. The company recorded charges in its GAAP results of $190 million related to the 2024 Restructuring Program for the fourth quarter and full year of 2023. Pipeline and Portfolio Highlights In the fourth quarter, Merck continued to make significant progress advancing its broad portfolio and pipeline across key therapeutic areas, representing continued momentum toward addressing patient needs. In oncology, Merck received multiple U.S. Food and Drug Administration (FDA) approvals, including KEYTRUDA plus Padcev for the first-line treatment of adult patients with locally advanced or metastatic urothelial cancer and WELIREG for the treatment of certain patients with previously treated advanced RCC, among other approvals. The FDA also accepted and granted Priority Review to Merck and Daiichi Sankyo’s Biologics License Application (BLA) for patritumab deruxtecan for the treatment of certain patients with previously treated locally advanced or metastatic EGFR-mutated non-small cell lung cancer (NSCLC). The FDA set a Prescription Drug User Fee Act (PDUFA), or target action, date of June 26, 2024. In addition, Merck showed meaningful progress in its robust oncology pipeline, initiating Phase 3 trials for four investigational medicines, including bomedemstat (LSD1 inhibitor), nemtabrutinib (BTK inhibitor), MK-2870 (anti-TROP2 antibody-drug conjugate) and MK-5684 (CYP11A1 inhibitor). In vaccines, Merck received Priority Review from the FDA for a BLA for V116, the company’s investigational, 21-valent pneumococcal conjugate vaccine specifically designed to protect adults, based on results from multiple Phase 3 trials. The FDA set a PDUFA date of June 17, 2024. If approved, V116 would be the first pneumococcal conjugate vaccine to include serotypes responsible for approximately 83 percent of adult invasive pneumococcal disease in individuals 65 and older, according to U.S. Centers for Disease Control and Prevention data from 2018-2021. In hospital acute care, the European Commission (EC) approved PREVYMIS for prevention of cytomegalovirus (CMV) disease in high-risk adult kidney transplant recipients and extended 200-day dosing in adult hematopoietic stem cell transplant (HSCT) recipients who are at high risk for late CMV infection and disease. Merck continued to augment its pipeline through business development, and in January 2024, entered into a definitive agreement to acquire Harpoon Therapeutics, Inc. (Harpoon), for an approximate total equity value of $680 million, further diversifying its oncology pipeline. Notable recent news releases on Merck’s pipeline and portfolio are provided in the table that follows. Oncology FDA Approved Expanded Indication for KEYTRUDA Plus Padcev as First-Line Treatment for Adult Patients With Locally Advanced or Metastatic Urothelial Cancer, Based on Results From Phase 3 KEYNOTE-A39 Trial (Read Announcement) FDA Approved Merck’s WELIREG as Treatment for Patients With Advanced RCC Following a PD-1 or PD-L1 Inhibitor and a VEGF-TKI, Based on Results From LITESPARK-005 Trial (Read Announcement) FDA Approved Merck’s KEYTRUDA Plus Chemoradiotherapy as Treatment for Patients With FIGO 2014 Stage III-IVA Cervical Cancer, Based on Results From Phase 3 KEYNOTE-A18 Trial (Read Announcement) FDA Approved Merck’s KEYTRUDA Plus Chemotherapy as First-Line Treatment for Locally Advanced Unresectable or Metastatic HER2-Negative Gastric or Gastroesophageal Junction (GEJ) Adenocarcinoma, Based on Results From Phase 3 KEYNOTE-859 Trial (Read Announcement) FDA Approved Merck’s KEYTRUDA Plus Gemcitabine and Cisplatin as Treatment for Patients With Locally Advanced Unresectable or Metastatic Biliary Tract Cancer, Based on Results From Phase 3 KEYNOTE-966 Trial (Read Announcement) EC Approved KEYTRUDA Plus Chemotherapy for New First-Line Indications in Advanced HER2-Negative Gastric or GEJ Adenocarcinoma in Tumors Expressing PD-L1 (CPS ≥1) and Advanced Biliary Tract Cancer, Based on Results From Phase 3 KEYNOTE-859 and KEYNOTE-966 Trials (Read Announcement) FDA Granted Priority Review to Merck and Daiichi Sankyo’s BLA for Patritumab Deruxtecan for the Treatment of Certain Patients With Previously Treated Locally Advanced or Metastatic EGFR-Mutated NSCLC, Based on Results From Phase 2 HERTHENA-Lung01 Trial; FDA Set PDUFA Date of June 26, 2024 (Read announcement) Merck Announced Phase 3 Trial Initiations for Bomedemstat, Nemtabrutinib, MK-2870 and MK-5684, Four Investigational Candidates From Promising Hematology and Oncology Pipeline (Read announcement) Merck and Moderna Initiated INTerpath-002, a Phase 3 Study Evaluating V940 (mRNA-4157) in Combination With KEYTRUDA for Adjuvant Treatment of Patients With Certain Types of Resected NSCLC (Read Announcement) KEYTRUDA Reduced the Risk of Death by 38% Versus Placebo as Adjuvant Therapy for Patients With RCC at an Increased Risk of Recurrence Following Nephrectomy, Based on Results From Phase 3 KEYNOTE-564 Trial (Read Announcement) KEYTRUDA Significantly Improved Disease-Free Survival as Adjuvant Therapy Versus Observation in High-Risk Patients With Localized Muscle-Invasive and Locally Advanced Urothelial Carcinoma After Surgery, Based on Results From Phase 3 AMBASSADOR/KEYNOTE-123 Trial (Read Announcement) Moderna and Merck Announced V940 (mRNA-4157) in Combination With KEYTRUDA Demonstrated Continued Improvement in Recurrence-Free Survival and Distant Metastasis-Free Survival in Patients With High-Risk Stage III/IV Melanoma Following Complete Resection Versus KEYTRUDA at Three Years, Based on Results From Phase 2b Randomized KEYNOTE-942/mRNA-4157-P201 Study (Read Announcement) Vaccines FDA Granted Priority Review to Merck’s New BLA for V116, an Investigational, 21-valent Pneumococcal Conjugate Vaccine Specifically Designed to Protect Adults, Based on Results From Multiple Phase 3 Trials; FDA Set PDUFA Date of June 17, 2024 (Read Announcement) Merck’s V116, an Investigational, 21-valent Pneumococcal Conjugate Vaccine Specifically Designed to Protect Adults, Demonstrated Superior Immunogenicity for 10 of 11 Unique Serotypes Compared to PCV20 in Adults 50 Years of Age and Older, Based on Results From Phase 3 STRIDE-3 Trial (Read Announcement) Full-Year 2024 Financial Outlook The following table summarizes the company’s full-year financial outlook. Full Year 2024 Sales * $62.7 to $64.2 billion Non-GAAP gross margin 2 Approximately 80.5% Non-GAAP operating expenses 2** $25.1 to $26.1 billion Non-GAAP other (income) expense, net 2 Approximately $200 million expense Non-GAAP effective tax rate 2 14.5% to 15.5% Non-GAAP EPS 2*** $8.44 to $8.59 Share count (assuming dilution) Approximately 2.54 billion *The company does not have any non-GAAP adjustments to sales. **Includes approximately $650 million of R&D expense related to the recently announced Harpoon acquisition, which is expected to close in the first half of 2024. Outlook does not assume any additional significant potential business development transactions. ***Includes a one-time charge of approximately $0.26 per share related to the Harpoon acquisition. Merck has not provided a reconciliation of forward-looking non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other (income) expense, net, non-GAAP effective tax rate and non-GAAP EPS to the most directly comparable GAAP measures, given it cannot predict with reasonable certainty the amounts necessary for such a reconciliation, including intangible asset impairment charges, legal settlements, and income and losses from investments in equity securities either owned directly or through ownership interests in investment funds, without unreasonable effort. These items are inherently difficult to forecast and could have a significant impact on the company’s future GAAP results. Merck anticipates full-year 2024 sales to be between $62.7 billion and $64.2 billion, including a negative impact of foreign exchange of approximately 2% at mid-January 2024 exchange rates. The negative impact is primarily due to the devaluation of the Argentine peso, which the company expects will largely be offset by inflation-related price increases, consistent with market practice. The outlook for operating expenses reflects incremental R&D spending expected to be incurred to advance the development of promising programs related to the acquisitions of Prometheus, Imago and Harpoon, as well as the collaborations with Daiichi Sankyo and Kelun-Biotech. Merck’s full-year non-GAAP effective income tax rate is expected to be between 14.5% and 15.5%. Merck expects full-year 2024 non-GAAP EPS to be between $8.44 and $8.59, including a negative impact of foreign exchange of approximately $0.25 per share. In 2023, non-GAAP EPS of $1.51 was negatively impacted by charges of $6.21 per share related to certain acquisitions and collaboration agreements. In early January 2024, Merck announced the acquisition of Harpoon, which is expected to close in the first half of 2024, and result in a non-tax deductible charge of approximately $650 million of R&D expense included in non-GAAP results. The impact of the transaction on expected full-year non-GAAP EPS is approximately $0.26 per share, which is included in the 2024 outlook. Consistent with past practice, the financial outlook does not assume additional significant potential business development transactions. Earnings Conference Call Investors, journalists and the general public may access a live audio webcast of the earnings conference call on Thursday, Feb. 1, at 9 a.m. ET via this weblink . A replay of the webcast, along with the sales and earnings news release, supplemental financial disclosures, prepared remarks and slides highlighting the results, will be available at www.merck.com . All participants may join the call by dialing (800) 779-6561 (U.S. and Canada Toll-Free) or (773) 756-4619 and using the access code 5958465. About Merck At Merck, known as MSD outside of the United States and Canada, we are unified around our purpose: We use the power of leading-edge science to save and improve lives around the world. For more than 130 years, we have brought hope to humanity through the development of important medicines and vaccines. We aspire to be the premier research-intensive biopharmaceutical company in the world – and today, we are at the forefront of research to deliver innovative health solutions that advance the prevention and treatment of diseases in people and animals. We foster a diverse and inclusive global workforce and operate responsibly every day to enable a safe, sustainable and healthy future for all people and communities. For more information, visit www.merck.com and connect with us on X (formerly Twitter ) , Facebook , Instagram , YouTube and LinkedIn . Forward-Looking Statement of Merck & Co., Inc., Rahway, N.J., USA This news release of Merck & Co., Inc., Rahway, 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 candidates that the candidates will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements. Risks and uncertainties include but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of the global outbreak of novel coronavirus disease (COVID-19); the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s Annual Report on Form 10-K for the year ended December 31, 2022, and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site ( www.sec.gov ). Appendix Generic product names are provided below. Pharmaceutical BRIDION (sugammadex) GARDASIL ( Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant ) GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant) JANUMET (sitagliptin and metformin HCl) JANUVIA (sitagliptin) KEYTRUDA (pembrolizumab) LAGEVRIO (molnupiravir) Lenvima (lenvatinib) Lynparza ( olaparib) M-M-R II (Measles, Mumps and Rubella Virus Vaccine Live) PNEUMOVAX 23 (Pneumococcal Vaccine Polyvalent) PREVYMIS ( letermovir ) PROQUAD (Measles, Mumps, Rubella and Varicella Virus Vaccine Live) ROTATEQ (Rotavirus Vaccine, Live, Oral, Pentavalent) VARIVAX (Varicella Virus Vaccine Live) VAXNEUVANCE ( Pneumococcal 15-valent Conjugate Vaccine ) WELIREG ( belzutifan ) Animal Health BRAVECTO (fluralaner) ________________________________ 1 Net (loss) income attributable to Merck & Co., Inc. 2 Merck is providing certain 2023 and 2022 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 because management uses non-GAAP results to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management’s annual compensation is derived in part using a non-GAAP pre-tax income metric. 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 non-GAAP adjustments, 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 of businesses, intangible asset impairment charges and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration. R&D expenses include intangible asset impairment charges of $779 million in both the fourth quarter and full year of 2023 related to gefapixant and $780 million and $1.7 billion in the fourth quarter and full year of 2022, respectively, largely related to nemtabrutinib. Also includes integration, transaction and certain other costs associated with acquisitions and divestitures, as well as amortization of intangible assets related to collaborations and licensing arrangements. MERCK & CO., INC. CONSOLIDATED STATEMENT OF OPERATIONS - GAAP (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 1 GAAP % Change GAAP % Change 4Q23 4Q22 Full Year 2023 Full Year 2022 Sales $ 14,630 $ 13,830 6 % $ 60,115 $ 59,283 1 % Costs, Expenses and Other Cost of sales 3,911 3,881 1 % 16,126 17,411 -7 % Selling, general and administrative 2,804 2,687 4 % 10,504 10,042 5 % Research and development 9,628 3,775 * 30,531 13,548 * Restructuring costs 255 49 * 599 337 78 % Other (income) expense, net 78 (75 ) * 466 1,501 -69 % (Loss) Income Before Taxes (2,046 ) 3,513 * 1,889 16,444 -89 % Income Tax (Benefit) Provision (821 ) 495 1,512 1,918 Net (Loss) Income (1,225 ) 3,018 * 377 14,526 -97 % Less: Net Income Attributable to Noncontrolling Interests 1 1 12 7 Net (Loss) Income Attributable to Merck & Co., Inc. $ (1,226 ) $ 3,017 * $ 365 $ 14,519 -97 % (Loss) Earnings per Common Share Assuming Dilution (1) $ (0.48 ) $ 1.18 * $ 0.14 $ 5.71 -98 % Average Shares Outstanding Assuming Dilution (1) 2,533 2,548 2,547 2,542 Tax Rate 40.1 % 14.1 % 80.0 % 11.7 % * 100% or greater (1) Because the company recorded a net loss in the fourth quarter of 2023, no potential dilutive common shares were used in the computation of loss per common share assuming dilution as the effect would have been anti-dilutive. MERCK & CO., INC. FOURTH QUARTER AND FULL YEAR 2023 GAAP TO NON-GAAP RECONCILIATION (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 2a GAAP Acquisition and Divestiture-Related Costs (1) Restructuring Costs (2) (Income) Loss from Investments in Equity Securities Certain Other Items Adjustment Subtotal Non-GAAP Fourth Quarter Cost of sales $ 3,911 454 117 571 $ 3,340 Selling, general and administrative 2,804 24 29 53 2,751 Research and development 9,628 790 790 8,838 Restructuring costs 255 255 255 – Other (income) expense, net 78 (35 ) (61 ) (96 ) 174 Loss Before Taxes (2,046 ) (1,233 ) (401 ) 61 (1,573 ) (473 ) Income Tax Provision (Benefit) (821 ) (227 ) (4 ) (67 ) (4 ) 13 (4 ) (281 ) (540 ) Net (Loss) Income (1,225 ) (1,006 ) (334 ) 48 (1,292 ) 67 Net (Loss) Income Attributable to Merck & Co., Inc. (1,226 ) (1,006 ) (334 ) 48 (1,292 ) 66 (Loss) Earnings per Common Share Assuming Dilution (5) $ (0.48 ) (0.40 ) (0.13 ) 0.02 (0.51 ) $ 0.03 Tax Rate 40.1 % 114.2 % Full Year Cost of sales $ 16,126 2,018 211 2,229 $ 13,897 Selling, general and administrative 10,504 86 122 208 10,296 Research and development 30,531 819 1 820 29,711 Restructuring costs 599 599 599 – Other (income) expense, net 466 (47 ) (279 ) 573 (3 ) 247 219 Income Before Taxes 1,889 (2,876 ) (933 ) 279 (573 ) (4,103 ) 5,992 Income Tax Provision (Benefit) 1,512 (476 ) (4 ) (155 ) (4 ) 60 (4 ) (60 ) (4 ) (631 ) 2,143 Net Income 377 (2,400 ) (778 ) 219 (513 ) (3,472 ) 3,849 Net Income Attributable to Merck & Co., Inc. 365 (2,400 ) (778 ) 219 (513 ) (3,472 ) 3,837 Earnings per Common Share Assuming Dilution $ 0.14 (0.94 ) (0.31 ) 0.08 (0.20 ) (1.37 ) $ 1.51 Tax Rate 80.0 % 35.8 % Only the line items that are affected by non-GAAP adjustments are shown. Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing non-GAAP information enhances investors’ understanding of the company’s results because management uses non-GAAP measures to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management’s annual compensation is derived in part using a non-GAAP pretax income metric. The non-GAAP information presented 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 cost of sales primarily reflect expenses for the amortization of intangible assets. Amounts included in selling, general and administrative expenses reflect integration, transaction and certain other costs related to acquisitions and divestitures. Amounts included in research and development expenses primarily reflect a $779 million in-process research and development (IPR&D) impairment charge related to gefapixant, which was obtained as part of the 2016 Afferent Pharmaceuticals acquisition, and expenses for the amortization of intangible assets. Amounts included in other (income) expense, net, primarily reflect royalty income related to the prior termination of the Sanofi-Pasteur MSD joint venture. Additionally, other (income) expense, net, for the full year includes a $37 million loss on the sale of a business. (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) Reflects a charge related to settlements with certain plaintiffs in the Zetia antitrust litigation. (4) Represents the estimated tax impacts on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments. (5) Because the company recorded a net loss in the fourth quarter of 2023, no potential dilutive common shares were used in the computation of loss per common share assuming dilution as the effect would have been anti-dilutive. MERCK & CO., INC. FRANCHISE / KEY PRODUCT SALES (AMOUNTS IN MILLIONS) (UNAUDITED) Table 3 2023 2022 4Q Full Year 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year Nom % Ex-Exch % Nom % Ex-Exch % TOTAL SALES (1) $14,487 $15,035 $15,962 $14,630 $60,115 $15,901 $14,593 $14,959 $13,830 $59,283 6 7 1 4 PHARMACEUTICAL 12,721 13,457 14,263 13,141 53,583 14,107 12,756 12,963 12,180 52,005 8 8 3 5 Oncology Keytruda 5,795 6,271 6,338 6,608 25,011 4,809 5,252 5,426 5,450 20,937 21 22 19 21 Alliance Revenue – Lynparza (2) 275 310 299 315 1,199 266 275 284 292 1,116 8 8 7 9 Alliance Revenue – Lenvima (2) 232 242 260 226 960 227 231 202 216 876 5 5 10 11 Welireg 42 50 54 72 218 18 27 38 40 123 79 78 77 77 Alliance Revenue – Reblozyl (3) 43 47 52 70 212 52 33 39 41 166 69 69 28 28 Vaccines (4) Gardasil / Gardasil 9 1,972 2,458 2,585 1,871 8,886 1,460 1,674 2,294 1,470 6,897 27 27 29 33 ProQuad / M-M-R II / Varivax 528 582 713 545 2,368 470 578 668 526 2,241 4 3 6 6 RotaTeq 297 131 156 185 769 216 173 256 139 783 34 33 -2 -1 Vaxneuvance 106 168 214 176 665 5 12 16 138 170 28 26 * * Pneumovax 23 96 92 140 85 412 173 153 131 145 602 -42 -43 -32 -31 Vaqta 40 42 69 29 180 36 35 64 39 173 -24 -25 4 4 Hospital Acute Care Bridion 487 502 424 429 1,842 395 426 423 441 1,685 -3 -3 9 11 Prevymis 129 143 157 175 605 94 103 114 118 428 49 49 41 43 Dificid 65 76 74 87 302 52 66 77 67 263 30 30 15 15 Zerbaxa 50 54 53 61 218 30 46 43 49 169 25 23 29 30 Noxafil 60 55 51 46 213 57 60 62 58 238 -21 -16 -11 -4 Primaxin 80 53 41 39 213 58 64 63 54 239 -28 -28 -11 -6 Cardiovascular Alliance Revenue - Adempas/Verquvo (5) 99 68 92 108 367 72 98 88 82 341 31 31 8 8 Adempas (6) 59 65 65 66 255 61 63 57 57 238 15 11 7 8 Virology Lagevrio 392 203 640 193 1,428 3,247 1,177 436 825 5,684 -77 -76 -75 -74 Isentress / Isentress HD 123 136 119 105 483 158 147 161 167 633 -37 -37 -24 -23 Neuroscience Belsomra 56 63 58 54 231 69 69 62 59 258 -8 -6 -11 -6 Immunology Simponi 180 180 179 171 710 186 181 173 166 706 3 -2 1 - Remicade 51 48 45 43 187 61 53 49 44 207 -1 -2 -9 -8 Diabetes (7) Januvia 551 511 581 547 2,189 779 756 717 561 2,813 -2 -2 -22 -20 Janumet 329 354 255 240 1,177 454 476 417 353 1,700 -32 -32 -31 -29 Other Pharmaceutical (8) 584 553 549 595 2,283 602 528 603 583 2,319 2 2 -2 - ANIMAL HEALTH 1,491 1,456 1,400 1,278 5,625 1,482 1,467 1,371 1,230 5,550 4 4 1 3 Livestock 849 807 874 808 3,337 832 826 829 814 3,300 -1 - 1 4 Companion Animal 642 649 526 470 2,288 650 641 542 416 2,250 13 12 2 3 Other Revenues (9) 275 122 299 211 907 312 370 625 420 1,728 -50 -1 -48 -15 *200% or greater Sum of quarterly amounts may not equal year-to-date amounts due to rounding. (1) Only select products are shown. (2) Alliance Revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs. (3) Alliance Revenue represents royalties and a milestone payment of $20 million received in the first quarter of 2022. (4) Total Vaccines sales were $3,133 million, $3,557 million, $4,002 million and $2,962 million in the first, second, third and fourth quarter of 2023, respectively, and $2,481 million, $2,709 million, $3,552 million and $2,554 million in the first, second, third and fourth quarter of 2022, respectively. (5) Alliance Revenue represents Merck's share of profits from sales in Bayer's marketing territories, which are product sales net of cost of sales and commercialization costs. (6) Net product sales in Merck's marketing territories. (7) Total Diabetes sales were $950 million, $951 million, $924 million and $876 million in the first, second, third and fourth quarter of 2023, respectively, and $1,305 million, $1,300 million, $1,231 million and $1,012 million in the first, second, third and fourth quarter of 2022, respectively. (8) Includes Pharmaceutical products not individually shown above. (9) Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $51 million, $3 million and $65 million in the first, second and third quarter of 2023, respectively, and $114 million, $32 million, $10 million and $10 million in the first, second, third and fourth quarter of 2022, respectively.

Sales Reflect Sustained Growth, Particularly in Oncology and Vaccines Total Worldwide Sales Were $16.0 Billion, an Increase of 7% From Third Quarter 2022; Excluding LAGEVRIO, Growth Was 6%; Excluding LAGEVRIO and the Impact of Foreign Exchange, Growth Was 8% KEYTRUDA Sales Grew 17% to $6.3 Billion; Excluding the Impact of Foreign Exchange, Sales Also Grew 17% GARDASIL/GARDASIL 9 Sales Grew 13% to $2.6 Billion; Excluding the Impact of Foreign Exchange, Sales Grew 16% LAGEVRIO Sales Grew 47% to $640 Million; Excluding the Impact of Foreign Exchange, Sales Grew 51% GAAP EPS Was $1.86; Non-GAAP EPS Was $2.13 Announced Collaboration Agreement With Daiichi Sankyo for Three Clinical-Stage ADC Candidates Received FDA Approval of KEYTRUDA for Perioperative Treatment of Certain Patients With NSCLC in Combination With Chemotherapy, Based on KEYNOTE-671 Trial Obtained FDA Priority Review of Biologics License Application for Sotatercept Presented Compelling Data at ESMO 2023 Congress, Including: Phase 3 KEYNOTE-671 Trial Phase 3 KEYNOTE-A39/EV-302 Trial Conducted in Collaboration With Seagen and Astellas Initiating Phase 3 Trials in 2023 Across Multiple Therapeutic Areas, Including Oncology, Cardiometabolic and Immunology Full-Year 2023 Financial Outlook: Raises and Narrows Expected Worldwide Sales Range To Be Between $59.7 Billion and $60.2 Billion, Including Negative Impact of Foreign Exchange of Approximately 2 Percentage Points; Outlook Includes Approximately $1.3 Billion of LAGEVRIO Sales Now Expects Non-GAAP EPS To Be Between $1.33 and $1.38, Including the Negative Impact of Foreign Exchange of Approximately 6 Percentage Points; Outlook Reflects Negative Impact From Upfront Charge of $5.5 Billion, or $1.70 per Share, Related to the Collaboration Agreement With Daiichi Sankyo RAHWAY, N.J.--(BUSINESS WIRE)-- Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the third quarter of 2023. “Our strong results this quarter reflect our talented team’s commitment to bringing forward important innovation and pursuing breakthroughs for all those who count on us,” said Robert M. Davis, chairman and chief executive officer, Merck. “We continue to push the boundaries of science, making disciplined investments to augment our diverse pipeline and applying our expertise to accelerate potentially transformative treatments to address patient needs – including through our recently announced collaboration with Daiichi Sankyo. I am proud of our progress as we continue to execute at the highest level and work to generate strong and sustainable value, today and well into the future.” Financial Summary $ in millions, except EPS amounts Third Quarter 2023 2022 Change Change Ex- Exchange Sales $15,962 $14,959 7% 9% GAAP net income1 4,745 3,248 46% 56% Non-GAAP net income that excludes certain items1,2* 5,427 4,703 15% 22% GAAP EPS 1.86 1.28 45% 55% Non-GAAP EPS that excludes certain items2* 2.13 1.85 15% 22% *Refer to table on page 6. Generally Accepted Accounting Principles (GAAP) earnings per share (EPS) assuming dilution was $1.86 for the third quarter of 2023. Non-GAAP EPS was $2.13 for the third quarter of 2023. The increases in GAAP and non-GAAP EPS in the third quarter versus the prior year were primarily due to operational strength in the business, as well as $0.22 of charges recorded in 2022 related to collaboration and licensing agreements with Moderna, Inc. (Moderna), Orna Therapeutics (Orna) and Orion Corporation (Orion). The increase in GAAP EPS in the third quarter of 2023 was also driven by the impacts of intangible asset impairment charges recorded in 2022, compared with no such charges recorded in 2023, and lower losses from investments in equity securities in 2023. The increases in both GAAP and non-GAAP EPS in the third quarter were partially offset by the unfavorable impact of foreign exchange. Non-GAAP EPS excludes acquisition- and divestiture-related costs, costs related to restructuring programs, as well as income and losses from investments in equity securities. Year-to-date results can be found in the attached tables. Third-Quarter Sales Performance The following table reflects sales of the company’s top products and significant performance drivers. Third Quarter $ in millions 2023 2022 Change Change Ex-Exchange Commentary Total Sales $15,962 $14,959 7% 9% Pharmaceutical 14,263 12,963 10% 11% Increase driven by growth in oncology, vaccines, and virology due to sales of LAGEVRIO, partially offset by diabetes. Excluding LAGEVRIO, growth of 9%. Excluding LAGEVRIO and unfavorable impact of foreign exchange, growth of 10%. KEYTRUDA 6,338 5,426 17% 17% Growth driven by increased global uptake in earlier-stage indications, including triple-negative breast cancer (TNBC) and renal cell carcinoma (RCC), and continued strong global demand from metastatic indications. GARDASIL / GARDASIL 9 2,585 2,294 13% 16% Growth due to strong demand, particularly in China, and higher pricing in the U.S., partially offset by public-sector buying patterns in the U.S. JANUVIA / JANUMET 835 1,133 -26% -25% Decline primarily due to generic competition in several international markets, particularly in Europe, and lower demand in the U.S. PROQUAD, M-M-R II and VARIVAX 713 668 7% 6% Growth largely due to higher pricing in the U.S. LAGEVRIO 640 436 47% 51% Growth largely attributable to higher demand in Japan, partially offset by lower demand in Australia and nonrecurrence of sales in the U.K. BRIDION 424 423 0% 0% Relatively flat compared with prior year due to higher demand in the U.S., offset by generic competition primarily in Europe. Lynparza* 299 284 5% 6% Growth driven primarily by higher pricing in the U.S. and increased demand in Latin America. Lenvima* 260 202 29% 30% Growth primarily due to higher demand in the U.S. and certain international markets, and timing of shipments in China. VAXNEUVANCE 214 16 ***N/M N/M Growth driven largely by continued uptake in pediatric indication in the U.S. and launches in Europe. Animal Health 1,400 1,371 2% 2% Growth primarily driven by higher pricing in both Livestock and Companion Animal product portfolios. Livestock 874 829 5% 7% Growth primarily due to higher pricing across product portfolio, as well as higher demand for ruminant, poultry and swine products. Companion Animal 526 542 -3% -4% Decline primarily due to lower vet visits in the U.S., partially offset by higher pricing. Sales of BRAVECTO were $235 million and $241 million in the current and prior-year quarters, respectively, which represented a decline of 3%. Other Revenues** 299 625 -52% -18% Decline primarily due to impact of revenue hedging. Excluding unfavorable impact of foreign exchange, decline due to lower revenue from third-party manufacturing arrangements. *Alliance revenue for this product represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs. **Other revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. ***Not meaningful Third-Quarter Expense, EPS and Related Information The table below presents selected expense information. $ in millions GAAP Acquisition- and Divestiture- Related Costs3 Restructuring Costs (Income) Loss From Investments in Equity Securities Non- GAAP2 Third Quarter 2023 Cost of sales $4,264 $552 $33 $- $3,679 Selling, general and administrative 2,519 17 40 - 2,462 Research and development 3,307 10 - - 3,297 Restructuring costs 126 - 126 - - Other (income) expense, net 126 (24) - 17 133 Third Quarter 2022 Cost of sales $3,934 $446 $54 $- $3,434 Selling, general and administrative 2,520 22 26 - 2,472 Research and development 4,399 902 1 - 3,496 Restructuring costs 94 - 94 - - Other (income) expense, net 429 (26) - 350 105 GAAP Expense, EPS and Related Information Gross margin was 73.3% for the third quarter of 2023 compared with 73.7% for the third quarter of 2022. The decrease was primarily due to the unfavorable impact of foreign exchange, higher LAGEVRIO sales, which have a low gross margin, and higher acquisition- and divestiture-related costs. The gross margin decline was partially offset by lower revenue from third-party manufacturing arrangements, lower manufacturing-related costs and the favorable impact of product mix. Selling, general and administrative (SG&A) expenses were $2.5 billion in both the third quarters of 2023 and 2022, primarily reflecting increased promotional spending, offset by lower administrative costs. Research and development (R&D) expenses were $3.3 billion in the third quarter of 2023 compared with $4.4 billion in the third quarter of 2022. The decrease was primarily due to charges recorded in 2022 of $887 million for intangible asset impairments, largely related to nemtabrutinib, and $690 million for collaboration and licensing agreements with Moderna, Orna and Orion. The decrease in R&D expenses was partially offset by higher compensation and benefit costs in 2023, reflecting in part increased headcount, higher investments in discovery research and early drug development and higher clinical development spending. Other (income) expense, net, was $126 million of expense in the third quarter of 2023 compared with $429 million of expense in the third quarter of 2022, primarily due to lower net losses from investments in equity securities. The effective tax rate was 15.5% for the third quarter of 2023 compared with 9.2% in the third quarter of 2022. GAAP EPS was $1.86 for the third quarter of 2023 compared with $1.28 for the third quarter of 2022. Non-GAAP Expense, EPS and Related Information Non-GAAP gross margin was 77.0% for both the third quarters of 2023 and 2022, due to the unfavorable impact of foreign exchange, and higher LAGEVRIO sales, which have a low gross margin, offset by lower revenue from third-party manufacturing arrangements, lower manufacturing-related costs and the favorable impact of product mix. Non-GAAP SG&A expenses were $2.5 billion in both the third quarters of 2023 and 2022, primarily reflecting increased promotional spending, offset by lower administrative costs. Non-GAAP R&D expenses were $3.3 billion in the third quarter of 2023 compared with $3.5 billion in the third quarter of 2022. The decrease was primarily due to charges of $690 million in 2022 related to collaboration and licensing agreements with Moderna, Orna and Orion. The decrease in R&D expenses was partially offset by higher compensation and benefit costs in 2023, reflecting in part increased headcount, higher investments in discovery research and early drug development and higher clinical development spending. Non-GAAP other (income) expense, net, was $133 million of expense in the third quarter of 2023 compared with $105 million of expense in the third quarter of 2022. The non-GAAP effective tax rate was 15.0% for the third quarter of 2023 compared with 13.6% in the third quarter of 2022. Non-GAAP EPS was $2.13 for the third quarter of 2023 compared with $1.85 for the third quarter of 2022. A reconciliation of GAAP to non-GAAP net income and EPS is provided in the table that follows. Third Quarter $ in millions, except EPS amounts 2023 2022 EPS GAAP EPS $1.86 $1.28 Difference 0.27 0.57 Non-GAAP EPS that excludes items listed below2 $2.13 $1.85 Net Income GAAP net income1 $4,745 $3,248 Difference 682 1,455 Non-GAAP net income that excludes items listed below1,2 $5,427 $4,703 Excluded Items: Acquisition- and divestiture-related costs3 $555 $1,344 Restructuring costs 199 175 Loss from investments in equity securities 17 350 Net decrease (increase) in income before taxes 771 1,869 Estimated income tax (benefit) expense (89) (414) Decrease (increase) in net income $682 $1,455 Pipeline and Portfolio Highlights Merck continued to achieve regulatory and clinical milestones across its expansive pipeline and portfolio. The company is initiating Phase 3 trials in 2023 in multiple therapeutic areas, including oncology, cardiometabolic and immunology, and in new modalities. These include investigational individualized neoantigen therapy V940 in combination with KEYTRUDA, antibody-drug conjugate (ADC) MK-2870 and lysine-specific demethylase-1 inhibitor MK-3543 in oncology, oral PCSK9 inhibitor candidate MK-0616 in cardiovascular, and humanized monoclonal antibody MK-7240 in immunology. In oncology, the company received U.S. Food and Drug Administration (FDA) approval of KEYTRUDA for the treatment of certain patients with resectable non-small cell lung cancer (NSCLC) as a neoadjuvant/adjuvant treatment, the company’s eighth approval of KEYTRUDA in earlier-stage cancer. The FDA also granted priority review to two supplemental New Drug Applications (sNDAs): for WELIREG in certain previously treated patients with advanced RCC, and for KEYTRUDA in cervical cancer. Notably, Merck presented compelling new data at the European Society for Medical Oncology (ESMO) Congress 2023 that showcased the company’s progress in earlier stages of cancers, its foundational position in metastatic disease and continued momentum in its diverse oncology pipeline. In cardiovascular disease, Merck received priority review from the FDA for a new Biologics License Application (BLA) for sotatercept, the company’s novel investigational activin signaling inhibitor for the treatment of adults with pulmonary arterial hypertension (PAH) (World Health Organization Group 1), based on clinically meaningful results from the Phase 3 STELLAR trial. The FDA set a Prescription Drug User Fee Act (PDUFA), or target action, date of March 26, 2024. If approved, sotatercept would be the first in its class, bringing a novel approach to address a rare and progressive disease of the pulmonary arteries. Merck’s submission for sotatercept to the Committee for Medicinal Products for Human Use (CHMP) in the European Union (EU) has also been completed. Additionally, Merck entered into a collaboration agreement with Daiichi Sankyo for three potentially first-in-class clinical-stage DXd ADCs for the treatment of multiple solid tumors, both as monotherapy and/or in combination with other treatments. This collaboration with Daiichi Sankyo will further augment and diversify Merck’s oncology pipeline. Notable recent news releases on Merck’s pipeline and portfolio are provided in the table that follows. Oncology FDA Approved KEYTRUDA for Treatment of Patients With Resectable (T≥4 cm or N+) NSCLC in Combination With Chemotherapy as Neoadjuvant Treatment, Then Continued as Single Agent as Adjuvant Treatment After Surgery, Based on Results From Phase 3 KEYNOTE-671 Trial (Read Announcement) FDA Granted Priority Review to Merck’s Application for KEYTRUDA Plus Concurrent Chemoradiotherapy as Treatment for Patients With Newly Diagnosed High-Risk Locally Advanced Cervical Cancer, Based on Results From Phase 3 KEYNOTE-A18 Trial; FDA Set PDUFA Date of Jan. 20, 2024 (Read Announcement) FDA Accepted for Priority Review Merck’s sNDA for WELIREG in Certain Previously Treated Patients With Advanced RCC, Based on Results From Phase 3 LITESPARK-005 Trial; FDA Set PDUFA Date of Jan. 17, 2024 (Read Announcement) European Commission (EC) Approved KEYTRUDA as Adjuvant Treatment for Adults With NSCLC at High Risk of Recurrence Following Complete Resection and Platinum-Based Chemotherapy, Based on Results From Phase 3 KEYNOTE-091 Trial (Read Announcement) EC Approved KEYTRUDA Plus Trastuzumab and Chemotherapy as First-Line Treatment for HER2-Positive Advanced Gastric or Gastroesophageal Junction (GEJ) Adenocarcinoma Expressing PD-L1 (CPS ≥1), Based on Results From Phase 3 KEYNOTE-811 Trial (Read Announcement) EU Granted Positive CHMP Opinion for KEYTRUDA Plus Chemotherapy as First-Line Treatment for HER2-Negative Advanced Gastric or GEJ Adenocarcinoma Expressing PD-L1 (CPS ≥1), Based on Results From Phase 3 KEYNOTE-859 Trial (Read Announcement) Japan Ministry of Health, Labor and Welfare Approved Lynparza Plus Abiraterone and Prednisolone for Treatment of BRCA-Mutated Metastatic Castration-Resistant Prostate Cancer, Based on Results From Phase 3 PROpel Trial (Read Announcement) KEYTRUDA Plus Chemotherapy Before Surgery and Continued as Single Agent After Surgery Reduced Risk of Death by 28% Versus Pre-Operative Chemotherapy in Resectable Stage II, IIIA or IIIB NSCLC, Based on Results From Phase 3 KEYNOTE-671 Trial (Read Announcement) KEYTRUDA Plus Padcev Reduced Risk of Death by More Than Half Versus Chemotherapy in Patients With Previously Untreated Locally Advanced or Metastatic Urothelial Cancer, Based on Results From Phase 3 KEYNOTE-A39/EV-302 Trial (Read Announcement) KEYTRUDA Plus Concurrent Chemoradiotherapy Significantly Improved Progression-Free Survival (PFS) Versus Concurrent Chemoradiotherapy Alone in Newly Diagnosed, High-Risk Locally Advanced Cervical Cancer, Based on Results From Phase 3 KEYNOTE-A18 Trial (Read Announcement) WELIREG Significantly Improved PFS and Objective Response Rates Versus Everolimus in Certain Previously Treated Patients With Advanced RCC, Based on Results From Phase 3 LITESPARK-005 Trial (Read Announcement) KEYTRUDA Plus Chemotherapy Showed Statistically Significant Improvement in Pathological Complete Response Rate as Neoadjuvant Therapy Versus Chemotherapy in High-Risk, Early-Stage ER+/HER2- Breast Cancer, Based on Results From Phase 3 KEYNOTE-756 Trial (Read Announcement) KEYTRUDA Plus Trastuzumab and Chemotherapy Significantly Improved PFS Versus Trastuzumab and Chemotherapy in First-Line HER2-Positive Advanced Gastric or GEJ Adenocarcinoma, Based on Results From Phase 3 KEYNOTE-811 Trial (Read Announcement) KEYTRUDA Significantly Improved Disease-Free Survival in Certain Patients With Muscle-Invasive Urothelial Carcinoma After Surgery, Based on Results From Phase 3 KEYNOTE-123 Trial (Read Announcement) Cardiovascular FDA Accepted for Priority Review a New BLA for Sotatercept, an Activin Signaling Inhibitor to Treat Adults With PAH, Based on Results From Phase 3 STELLAR Trial; FDA Set PDUFA Date of March 26, 2024 (Read Announcement) Merck Presented New Analyses Supporting the Promising Potential of Sotatercept, Its Investigational Medicine for Adults With PAH, Based on Results From Phase 3 STELLAR and SOTERIA Trials (Read Announcement) Merck Initiated Phase 3 Clinical Program for Oral PCSK9 Inhibitor Candidate MK-0616 (Read Announcement) Vaccines Long-Term Follow-up Data on Sustained Immunogenicity and Safety for GARDASIL Published in Pediatrics (Read Announcement) Hospital Acute Care Merck Received Positive EU CHMP Opinion for PREVYMIS for Prevention of CMV Disease in High-Risk Adult Kidney Transplant Recipients and Extended 200-Day Dosing in Adult Hematopoietic Stem Cell Transplant Recipients at Risk for Late CMV Infection and Disease, Based on Results From Phase 3 P002 and P040 Trials (Read Announcement) Sustainability Highlights Merck issued its 2022/2023 Impact Report highlighting the company’s performance across its sustainability efforts, reflecting strong progress toward its commitments to advance access to health and operate responsibly. The report noted how the company reached more than 500 million people around the world with its innovations in 2022 and expanded two of its 2025 Access to Health goals. Full-Year 2023 Financial Outlook The following table summarizes the company’s full-year financial outlook. Full Year 2023 Updated Prior Sales* $59.7 to $60.2 billion $58.6 to $59.6 billion Non-GAAP Gross margin2 Approximately 77% Approximately 77% Non-GAAP Operating expenses2** $39.8 to $40.4 billion $34.0 to $34.6 billion Non-GAAP Other (income) expense, net2 Approximately $200 million Approximately $100 million Non-GAAP Effective tax rate2*** 39.0% to 40.0% 30.5% to 31.5% Non-GAAP EPS2**** $1.33 to $1.38 $2.95 to $3.05 Share count (assuming dilution) 2.55 billion 2.55 billion *Includes approximately $1.3 billion of LAGEVRIO sales. The company does not have any non-GAAP adjustments to sales. **Includes an aggregate $17.1 billion of R&D expenses related to the Prometheus Biosciences, Inc. (Prometheus) and Imago BioSciences, Inc. (Imago) acquisitions, and upfront payments for the license and collaboration agreement with Kelun-Biotech (a holding subsidiary of Sichuan Kelun Pharmaceutical Co., Ltd) and collaboration agreement with Daiichi Sankyo. Outlook does not assume any additional significant potential business development transactions. ***Includes an approximate 24.5 percentage point negative impact related to business development (Imago, Prometheus and Daiichi Sankyo). ****Includes $6.22 of one-time charges related to the Prometheus and Imago acquisitions and upfront payments to Kelun-Biotech and Daiichi Sankyo. Merck has not provided a reconciliation of forward-looking non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other (income) expense, net, non-GAAP effective tax rate and non-GAAP EPS to the most directly comparable GAAP measures, given it cannot predict with reasonable certainty the amounts necessary for such a reconciliation, including intangible asset impairment charges, legal settlements, and income and losses from investments in equity securities either owned directly or through ownership interests in investment funds, without unreasonable effort. These items are inherently difficult to forecast and could have a significant impact on the company’s future GAAP results. Merck continues to experience strong sustained demand for key growth products, particularly in oncology and vaccines. As a result, Merck is raising and narrowing its full-year sales outlook. Merck now expects full-year sales to be between $59.7 billion and $60.2 billion, including a negative impact of foreign exchange of approximately 2 percentage points, at mid-October 2023 exchange rates. This full-year outlook includes approximately $1.3 billion of LAGEVRIO sales. Merck’s full-year non-GAAP effective income tax rate is expected to be between 39.0% and 40.0%, which includes an approximate 24.5 percentage point negative impact related to business development activity. Merck now expects its full-year non-GAAP EPS to be between $1.33 and $1.38, including a negative impact of foreign exchange of approximately 6 percentage points, at mid-October 2023 exchange rates. This revised non-GAAP EPS range reflects the following, which were not previously included in the outlook: Additional strength in the business of approximately $0.15 per share. A pretax charge of $5.5 billion, or $1.70 per share, for the collaboration agreement with Daiichi Sankyo. Estimated expense in the fourth quarter of 2023 of approximately $0.04 per share to advance the ADC assets and finance the transaction with Daiichi Sankyo. A 1%, or approximately $0.05 per share, incremental negative impact of foreign exchange. The non-GAAP EPS range excludes acquisition- and divestiture-related costs, costs related to restructuring programs, income and losses from investments in equity securities, and a previously disclosed charge related to settlements with certain plaintiffs in the Zetia antitrust litigation. Earnings Conference Call Investors, journalists and the general public may access a live audio webcast of the earnings conference call on Thursday, Oct. 26, at 9 a.m. ET via this weblink. A replay of the webcast, along with the sales and earnings news release, supplemental financial disclosures, prepared remarks and slides highlighting the results, will be available at . All participants may join the call by dialing (888) 769-8514 (U.S. and Canada Toll-Free) or (517) 308-9208 and using the access code 8206435. About Merck At Merck, known as MSD outside of the United States and Canada, we are unified around our purpose: We use the power of leading-edge science to save and improve lives around the world. For more than 130 years, we have brought hope to humanity through the development of important medicines and vaccines. We aspire to be the premier research-intensive biopharmaceutical company in the world – and today, we are at the forefront of research to deliver innovative health solutions that advance the prevention and treatment of diseases in people and animals. We foster a diverse and inclusive global workforce and operate responsibly every day to enable a safe, sustainable and healthy future for all people and communities. For more information, visit and connect with us on Twitter, Facebook, Instagram, YouTube and LinkedIn. Forward-Looking Statement of Merck & Co., Inc., Rahway, N.J., USA This news release of Merck & Co., Inc., Rahway, 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 candidates that the candidates will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements. Risks and uncertainties include but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of the global outbreak of novel coronavirus disease (COVID-19); the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s Annual Report on Form 10-K for the year ended December 31, 2022, and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site ( ). Appendix Generic product names are provided below. Pharmaceutical BRIDION (sugammadex) GARDASIL (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant) GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant) JANUMET (sitagliptin and metformin HCl) JANUVIA (sitagliptin) KEYTRUDA (pembrolizumab) LAGEVRIO (molnupiravir) Lenvima (lenvatinib) Lynparza (olaparib) M-M-R II (Measles, Mumps and Rubella Virus Vaccine Live) PREVYMIS (letermovir) PROQUAD (Measles, Mumps, Rubella and Varicella Virus Vaccine Live) VARIVAX (Varicella Virus Vaccine Live) VAXNEUVANCE (Pneumococcal 15-valent Conjugate Vaccine) WELIREG (belzutifan) Animal Health BRAVECTO (fluralaner) ________________________________ 1 Net income attributable to Merck & Co., Inc. 2 Merck is providing certain 2023 and 2022 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 because management uses non-GAAP results to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management’s annual compensation is derived in part using a non-GAAP pretax income metric. 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 non-GAAP adjustments, 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 of businesses, intangible asset impairment charges and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration. R&D expenses in the third quarter of 2022 include intangible asset impairment charges of $887 million largely related to nemtabrutinib. Also includes integration, transaction and certain other costs associated with acquisitions and divestitures, as well as amortization of intangible assets related to collaborations and licensing arrangements. MERCK & CO., INC. CONSOLIDATED STATEMENT OF INCOME - GAAP (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 1 GAAP % Change GAAP % Change 3Q23 3Q22 Sep YTD 2023 Sep YTD 2022 Sales $ 15,962 $ 14,959 7 % $ 45,485 $ 45,453 – Costs, Expenses and Other Cost of sales 4,264 3,934 8 % 12,214 13,530 -10 % Selling, general and administrative 2,519 2,520 – 7,700 7,355 5 % Research and development 3,307 4,399 -25 % 20,904 9,773 * Restructuring costs 126 94 34 % 344 288 19 % Other (income) expense, net 126 429 -71 % 388 1,576 -75 % Income Before Taxes 5,620 3,583 57 % 3,935 12,931 -70 % Taxes on Income 870 330 2,332 1,423 Net Income 4,750 3,253 46 % 1,603 11,508 -86 % Less: Net Income Attributable to Noncontrolling Interests 5 5 12 6 Net Income Attributable to Merck & Co., Inc. $ 4,745 $ 3,248 46 % $ 1,591 $ 11,502 -86 % Earnings per Common Share Assuming Dilution $ 1.86 $ 1.28 45 % $ 0.62 $ 4.53 -86 % Average Shares Outstanding Assuming Dilution 2,546 2,542 2,549 2,540 Tax Rate 15.5 % 9.2 % 59.3 % 11.0 % * 100% or greater MERCK & CO., INC. THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 GAAP TO NON-GAAP RECONCILIATION (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 2a GAAP Acquisition and Divestiture-Related Costs (1) Restructuring Costs (2) (Income) Loss from Investments in Equity Securities Certain Other Items Adjustment Subtotal Non-GAAP Third Quarter Cost of sales $ 4,264 552 33 585 $ 3,679 Selling, general and administrative 2,519 17 40 57 2,462 Research and development 3,307 10 10 3,297 Restructuring costs 126 126 126 – Other (income) expense, net 126 (24 ) 17 (7 ) 133 Income Before Taxes 5,620 (555 ) (199 ) (17 ) (771 ) 6,391 Income Tax Provision (Benefit) 870 (53 ) (4 ) (32 ) (4 ) (4 ) (4 ) (89 ) 959 Net Income 4,750 (502 ) (167 ) (13 ) (682 ) 5,432 Net Income Attributable to Merck & Co., Inc. 4,745 (502 ) (167 ) (13 ) (682 ) 5,427 Earnings per Common Share Assuming Dilution $ 1.86 (0.20 ) (0.07 ) – (0.27 ) $ 2.13 Tax Rate 15.5 % 15.0 % Sep YTD Cost of sales $ 12,214 1,564 94 1,658 $ 10,556 Selling, general and administrative 7,700 62 93 155 7,545 Research and development 20,904 29 1 30 20,874 Restructuring costs 344 344 344 – Other (income) expense, net 388 (12 ) (218 ) 573 (3 ) 343 45 Income Before Taxes 3,935 (1,643 ) (532 ) 218 (573 ) (2,530 ) 6,465 Income Tax Provision (Benefit) 2,332 (249 ) (4 ) (88 ) (4 ) 47 (4 ) (60 ) (4 ) (350 ) 2,682 Net Income 1,603 (1,394 ) (444 ) 171 (513 ) (2,180 ) 3,783 Net Income Attributable to Merck & Co., Inc. 1,591 (1,394 ) (444 ) 171 (513 ) (2,180 ) 3,771 Earnings per Common Share Assuming Dilution $ 0.62 (0.55 ) (0.18 ) 0.07 (0.20 ) (0.86 ) $ 1.48 Tax Rate 59.3 % 41.5 % Only the line items that are affected by non-GAAP adjustments are shown. Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing non-GAAP information enhances investors’ understanding of the company’s results because management uses non-GAAP measures to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, senior management’s annual compensation is derived in part using a non-GAAP pretax income metric. The non-GAAP information presented 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 cost of sales primarily reflect expenses for the amortization of intangible assets. Amounts included in selling, general and administrative expenses reflect integration, transaction and certain other costs related to acquisitions and divestitures. Amounts included in research and development expenses primarily reflect expenses for the amortization of intangible assets. Amounts included in other (income) expense, net, primarily reflect royalty income, partially offset by an increase in the estimated fair value measurement of liabilities for contingent consideration related to the prior termination of the Sanofi-Pasteur MSD joint venture. Additionally, the nine-month period includes a $37 million loss on the sale of a business. (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) Reflects a charge related to settlements with certain plaintiffs in the Zetia antitrust litigation. (4) Represents the estimated tax impacts on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments. MERCK & CO., INC. FRANCHISE / KEY PRODUCT SALES (AMOUNTS IN MILLIONS) (UNAUDITED) Table 3 2023 2022 3Q Sep YTD 1Q 2Q 3Q Sep YTD 1Q 2Q 3Q Sep YTD 4Q Full Year Nom % Ex-Exch % Nom % Ex-Exch % TOTAL SALES (1) $14,487 $15,035 $15,962 $45,485 $15,901 $14,593 $14,959 $45,453 $13,830 $59,283 7 9 - 3 PHARMACEUTICAL 12,721 13,457 14,263 40,442 14,107 12,756 12,963 39,826 12,180 52,005 10 11 2 4 Oncology Keytruda 5,795 6,271 6,338 18,403 4,809 5,252 5,426 15,487 5,450 20,937 17 17 19 21 Alliance Revenue – Lynparza (2) 275 310 299 884 266 275 284 825 292 1,116 5 6 7 10 Alliance Revenue – Lenvima (2) 232 242 260 734 227 231 202 660 216 876 29 30 11 13 Welireg 42 50 54 146 18 27 38 83 40 123 43 43 77 77 Alliance Revenue – Reblozyl (3) 43 47 52 142 52 33 39 124 41 166 35 35 14 14 Vaccines (4) Gardasil / Gardasil 9 1,972 2,458 2,585 7,015 1,460 1,674 2,294 5,428 1,470 6,897 13 16 29 34 ProQuad / M-M-R II / Varivax 528 582 713 1,823 470 578 668 1,716 526 2,241 7 6 6 6 RotaTeq 297 131 156 584 216 173 256 644 139 783 -39 -39 -9 -8 Vaxneuvance 106 168 214 488 5 12 16 32 138 170 * * * * Pneumovax 23 96 92 140 327 173 153 131 457 145 602 6 4 -28 -27 Vaqta 40 42 69 151 36 35 64 134 39 173 8 9 12 13 Hospital Acute Care Bridion 487 502 424 1,413 395 426 423 1,244 441 1,685 - - 14 15 Prevymis 129 143 157 430 94 103 114 310 118 428 38 38 39 41 Dificid 65 76 74 215 52 66 77 196 67 263 -4 -4 10 10 Primaxin 80 53 41 174 58 64 63 185 54 239 -35 -31 -6 - Noxafil 60 55 51 167 57 60 62 180 58 238 -18 -12 -7 -1 Zerbaxa 50 54 53 157 30 46 43 120 49 169 23 22 31 33 Cardiovascular Alliance Revenue - Adempas/Verquvo (5) 99 68 92 259 72 98 88 258 82 341 5 5 - - Adempas (6) 59 65 65 189 61 63 57 181 57 238 15 11 5 7 Virology Lagevrio 392 203 640 1,236 3,247 1,177 436 4,859 825 5,684 47 51 -75 -73 Isentress / Isentress HD 123 136 119 377 158 147 161 466 167 633 -27 -27 -19 -17 Neuroscience Belsomra 56 63 58 176 69 69 62 199 59 258 -6 -4 -11 -6 Immunology Simponi 180 180 179 539 186 181 173 540 166 706 3 -2 - - Remicade 51 48 45 144 61 53 49 163 44 207 -8 -10 -12 -10 Diabetes (7) Januvia 551 511 581 1,642 779 756 717 2,252 561 2,813 -19 -17 -27 -24 Janumet 329 354 255 937 454 476 417 1,347 353 1,700 -39 -38 -30 -28 Other Pharmaceutical (8) 584 553 549 1,690 602 528 603 1,736 583 2,319 -9 -7 -3 - ANIMAL HEALTH 1,491 1,456 1,400 4,347 1,482 1,467 1,371 4,320 1,230 5,550 2 2 1 3 Livestock 849 807 874 2,530 832 826 829 2,486 814 3,300 5 7 2 6 Companion Animal 642 649 526 1,817 650 641 542 1,834 416 2,250 -3 -4 -1 - Other Revenues (9) 275 122 299 696 312 370 625 1,307 420 1,728 -52 -18 -47 -19 *200% or greater Sum of quarterly amounts may not equal year-to-date amounts due to rounding. (1) Only select products are shown. (2) Alliance Revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs. (3) Alliance Revenue represents royalties and a milestone payment of $20 million received in the first quarter of 2022. (4) Total Vaccines sales were $3,133 million, $3,557 million and $4,002 million in the first, second and third quarter of 2023, respectively, and $2,481 million, $2,709 million and $3,552 million in the first, second and third quarter of 2022, respectively. (5) Alliance Revenue represents Merck's share of profits from sales in Bayer's marketing territories, which are product sales net of cost of sales and commercialization costs. (6) Net product sales in Merck's marketing territories. (7) Total Diabetes sales were $950 million, $951 million and $924 million in the first, second and third quarter of 2023, respectively, and $1,305 million, $1,300 million and $1,231 million in the first, second and third quarter of 2022, respectively. (8) Includes Pharmaceutical products not individually shown above. (9) Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $51 million, $3 million and $65 million in the first, second and third quarter of 2023, respectively, and $114 million, $32 million and $10 million in the first, second and third quarter of 2022, respectively. View source version on businesswire.com: Contacts Media Contacts: Robert Josephson (203) 914-2372 robert.josephson@merck.com Michael Levey (215) 872-1462 michael.levey@merck.com Investor Contacts: Peter Dannenbaum (732) 594-1579 peter.dannenbaum@merck.com Steven Graziano (732) 594-1583 steven.graziano@merck.com Source: Merck & Co., Inc. View this news release online at: