Merck Announces Third-Quarter 2015 Financial Results
“Our solid results this quarter demonstrate that our focused strategy, which aims to drive future growth, as well as value for patients, society and shareholders, is working. The evolving market, economic and political dynamics of global health care increasingly underscore that the ability to provide high-value innovation is what will distinguish successful companies going forward,” said Kenneth C. Frazier, chairman and chief executive officer, Merck.
|Financial Summary||Third Quarter|
|$ in millions, except EPS amounts||2015||2014|
Non-GAAP EPS that excludes items listed below1
GAAP Net Income2
Non-GAAP Net Income that excludes items listed below 1,2
Non-GAAP (generally accepted accounting principles) earnings per share (EPS) of $0.96 for the third quarter exclude acquisition- and divestiture-related costs, restructuring costs and certain other items.
A reconciliation of GAAP to non-GAAP net income and EPS is provided in the tables that follow. Year-to-date results can be found in the attached tables.
|$ in millions, except EPS amounts||Third Quarter|
Non-GAAP EPS that excludes items listed below 1
|GAAP net income2||$1,826||$895|
|Non-GAAP net income that excludes items listed below1,2||$2,720||$2,617|
|Decrease (Increase) in Net Income Due to Excluded Items:|
|Acquisition- and divestiture-related costs4||$1,146||$1,659|
|Gain on divestiture of certain migraine clinical development programs||(250)||–-|
|Additional year of health care reform fee||–-||193|
|Gain on divestiture of certain ophthalmic products||–-||(396)|
|Net decrease (increase) in income before taxes||1,080||2,073|
|Income tax (benefit) expense5||(186)||(295)|
|Acquisition- and divestiture-related costs attributable to non-controlling interests||–-||(56)|
|Decrease (increase) in net income||$894||$1,722|
Additional Executive Commentary
“Our late-stage pipeline and ongoing launches create both near- and longer-term opportunities to generate value through innovation aimed at addressing some of the world’s biggest medical needs – cancer, antibiotic resistance, cardiometabolic disease, hepatitis C and Alzheimer’s disease,” said Frazier.
“Our broad, global and balanced portfolio of medicines and vaccines allows us to weather periodic volatility within a particular therapeutic area or region while consistently focusing on the best scientific and medical opportunities,” continued Frazier.
“The Global Human Health business performed well in the third quarter with continued growth in our diabetes, hospital acute care and oncology franchises. We continue to be pleased with the progress of KEYTRUDA, which is a priority launch for the company,” said Adam Schechter, president, Global Human Health, Merck.
“In the third quarter, Merck Research Laboratories achieved multiple milestones in our oncology and infectious disease clinical development programs, priority areas where we believe we can have the most beneficial impact on the lives of patients around the world,” said Dr. Roger M. Perlmutter, president, Merck Research Laboratories. “In particular, the results from KEYNOTE-010, which we announced yesterday, provide unambiguous evidence of the favorable impact that our R&D efforts can have in the treatment of grievous illnesses.”
“The third quarter was another demonstration of our strong execution. We remain committed to delivering a leveraged P&L. We have met and will exceed our annual target of $2.5 billion in net savings versus 2012 by the end of this year,” said Robert Davis, chief financial officer, Merck.
Select Business Highlights
Worldwide sales were $10.1 billion for the third quarter of 2015, a decrease of 5 percent compared with the third quarter of 2014, including a 7 percent negative impact from foreign exchange and a 2 percent net unfavorable impact resulting from the divestiture of the Consumer Care business and select products, partially offset by the acquisition of Cubist Pharmaceuticals, Inc. (Cubist).
The following table reflects sales of the company’s top pharmaceutical products, as well as total sales of Animal Health and Consumer Care products.
|$ in millions||Third Quarter||Change||Change
|JANUVIA / JANUMET||1,576||1,439||10%||17%|
|ZETIA / VYTORIN||936||1,028||-9%||-2%|
|GARDASIL / GARDASIL 9||625||590||6%||7%|
|PROQUAD, M-M-R II and VARIVAX||390||421||-7%||-5%|
*Reflects licensing agreement with Cubist in Japan prior to acquisition by Merck on Jan. 21, 2015
***divested on Oct. 1, 2014