\n| \n \n$ in millions\n<\/p>\n<\/td>\n | \n 2022<\/b><\/p>\n<\/td>\n | \n 2021<\/b><\/p>\n<\/td>\n | \n Change<\/b><\/p>\n<\/td>\n | \n Change
\n
Ex-Exchange<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \nTotal Sales\n<\/p>\n<\/td>\n | \n \n$14,959\n<\/p>\n<\/td>\n | \n \n$13,154\n<\/p>\n<\/td>\n | \n \n14%\n<\/p>\n<\/td>\n | \n \n18%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nPharmaceutical\n<\/p>\n<\/td>\n | \n \n12,963\n<\/p>\n<\/td>\n | \n \n11,496\n<\/p>\n<\/td>\n | \n \n13%\n<\/p>\n<\/td>\n | \n \n19%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nKEYTRUDA\n<\/p>\n<\/td>\n | \n \n5,426\n<\/p>\n<\/td>\n | \n \n4,534\n<\/p>\n<\/td>\n | \n \n20%\n<\/p>\n<\/td>\n | \n \n26%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nGARDASIL \/ GARDASIL 9\n<\/p>\n<\/td>\n | \n \n2,294\n<\/p>\n<\/td>\n | \n \n1,993\n<\/p>\n<\/td>\n | \n \n15%\n<\/p>\n<\/td>\n | \n \n20%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nJANUVIA \/ JANUMET\n<\/p>\n<\/td>\n | \n \n1,133\n<\/p>\n<\/td>\n | \n \n1,339\n<\/p>\n<\/td>\n | \n \n-15%\n<\/p>\n<\/td>\n | \n \n-9%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nPROQUAD, M-M-R II and\n<\/p>\n \nVARIVAX\n<\/p>\n<\/td>\n | \n \n668\n<\/p>\n<\/td>\n | \n \n661\n<\/p>\n<\/td>\n | \n \n1%\n<\/p>\n<\/td>\n | \n \n3%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nLAGEVRIO\n<\/p>\n<\/td>\n | \n \n436\n<\/p>\n<\/td>\n | \n \n0\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nBRIDION\n<\/p>\n \nLynparza*\n<\/p>\n<\/td>\n | \n \n423\n<\/p>\n \n284\n<\/p>\n<\/td>\n | \n \n369\n<\/p>\n \n246\n<\/p>\n<\/td>\n | \n \n15%\n<\/p>\n \n16%\n<\/p>\n<\/td>\n | \n \n22%\n<\/p>\n \n23%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nROTATEQ\n<\/p>\n<\/td>\n | \n \n256\n<\/p>\n<\/td>\n | \n \n227\n<\/p>\n<\/td>\n | \n \n12%\n<\/p>\n<\/td>\n | \n \n16%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nLenvima*\n<\/p>\n<\/td>\n | \n \n202\n<\/p>\n<\/td>\n | \n \n188\n<\/p>\n<\/td>\n | \n \n7%\n<\/p>\n<\/td>\n | \n \n11%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nSIMPONI\n<\/p>\n<\/td>\n | \n \n173\n<\/p>\n<\/td>\n | \n \n203\n<\/p>\n<\/td>\n | \n \n-15%\n<\/p>\n<\/td>\n | \n \n-2%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nAnimal Health\n<\/p>\n<\/td>\n | \n \n1,371\n<\/p>\n<\/td>\n | \n \n1,417\n<\/p>\n<\/td>\n | \n \n-3%\n<\/p>\n<\/td>\n | \n \n4%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nLivestock\n<\/p>\n<\/td>\n | \n \n829\n<\/p>\n<\/td>\n | \n \n864\n<\/p>\n<\/td>\n | \n \n-4%\n<\/p>\n<\/td>\n | \n \n4%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nCompanion Animals\n<\/p>\n<\/td>\n | \n \n542\n<\/p>\n<\/td>\n | \n \n553\n<\/p>\n<\/td>\n | \n \n-2%\n<\/p>\n<\/td>\n | \n \n4%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOther Revenues**\n<\/p>\n<\/td>\n | \n \n625\n<\/p>\n<\/td>\n | \n \n241\n<\/p>\n<\/td>\n | \n \n***\n<\/p>\n<\/td>\n | \n \n41%\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n*Alliance revenue for this product represents Merck\u2019s share of profits, which are product sales net of cost of sales and commercialization costs.\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n**Other revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities.\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n***>100%\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n Pharmaceutical revenue<\/span><\/b><\/p>\n\nThird-quarter pharmaceutical sales increased 13% to $13.0 billion. Pharmaceutical sales growth in the third quarter was 9% excluding LAGEVRIO sales and 15% excluding LAGEVRIO sales and the impact of foreign exchange, primarily driven by oncology, vaccines and hospital acute care products. The COVID-19 pandemic unfavorably affected sales in the third quarter of 2021 by approximately $350 million, which favorably impacted the growth rate in the third quarter of 2022.\n<\/p>\n \nGrowth in oncology was largely driven by higher sales of KEYTRUDA, which rose 20% to $5.4 billion in the quarter. Global sales growth of KEYTRUDA reflects continued strong momentum from metastatic indications including certain types of NSCLC, renal cell carcinoma, head and neck squamous cell carcinoma, triple-negative breast cancer (TNBC) and MSI-H cancers, and increased uptake across recent earlier-stage launches including certain types of neoadjuvant\/adjuvant TNBC in the U.S.\n<\/p>\n \nGrowth in vaccines was primarily driven by higher combined sales of GARDASIL (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant) and GARDASIL 9 vaccines to prevent certain cancers and other diseases caused by HPV. Third-quarter GARDASIL\/GARDASIL 9 sales grew 15% to $2.3 billion, primarily driven by strong demand outside of the U.S., particularly in China, which also benefited from increased supply. Additionally, higher sales in the U.S. reflect public sector buying patterns. Growth in vaccines was partially offset by lower sales of PNEUMOVAX 23 (pneumococcal vaccine polyvalent), a vaccine to help prevent pneumococcal disease, which declined 53% to $131 million primarily reflecting lower U.S. demand as the market continues to shift toward newer adult pneumococcal conjugate vaccines.\n<\/p>\n \nGrowth in hospital acute care reflects higher demand globally for BRIDION (sugammadex) injection 100 mg\/mL, a medicine for the reversal of neuromuscular blockade induced by rocuronium bromide or vecuronium bromide in adults and pediatric patients ages 2 years and older undergoing surgery. Sales increased 15% to $423 million, primarily due to an increase in its share among neuromuscular blockade reversal agents and an increase in surgical procedures. Growth in hospital acute care also reflects higher sales of ZERBAXA (ceftolozane and tazobactam), a combination cephalosporin antibacterial and beta-lactamase inhibitor for the treatment of adults with certain bacterial infections. Sales of $43 million resulted from the phased resupply initiated in the fourth quarter of 2021, which has been completed in 2022.\n<\/p>\n \nPharmaceutical sales growth was partially offset by lower combined sales of JANUVIA (sitagliptin) and JANUMET (sitagliptin and metformin HCI), which declined 15% to $1.1 billion, primarily reflecting lower demand and pricing in certain international markets as a result of generic competition, particularly in Europe, and lower demand in the U.S. The company lost market exclusivity for JANUVIA and JANUMET in China in July and in the EU in September, although JANUMET currently continues to have exclusivity in certain European markets.\n<\/p>\n Animal Health revenue<\/span><\/b><\/p>\n\nAnimal Health sales totaled $1.4 billion for the third quarter of 2022, a decline of 3% compared with the third quarter of 2021. Excluding the unfavorable effect from foreign exchange, Animal Health sales grew 4% primarily reflecting higher pricing. Sales of livestock products also reflect higher demand for poultry products. Sales of companion animal products also reflect higher demand for the BRAVECTO (fluralaner) parasiticide line of products, partially offset by supply constraints for certain vaccines.\n<\/p>\n Third-quarter expense information<\/span><\/b><\/p>\n\nThe tables below present selected expense information.\n<\/p>\n \n\n| \n \n$ in millions\n<\/p>\n Third Quarter 2022<\/b><\/p>\n<\/td>\n | \n GAAP<\/b><\/p>\n<\/td>\n | \n Acquisition-
\n
and
\n
Divestiture-
\n
Related
\n
Costs<\/b>3<\/sup><\/p>\n<\/td>\n\n Restructuring
\n
Costs<\/b><\/p>\n<\/td>\n | \n (Income)
\n
Loss from
\n
Investments
\n
in Equity
\n
Securities<\/b><\/p>\n<\/td>\n | \n Non-
\n
GAAP<\/b>2<\/sup><\/p>\n<\/td>\n<\/tr>\n\n| \n \nCost of sales\n<\/p>\n<\/td>\n | \n \n$3,934\n<\/p>\n<\/td>\n | \n \n$446\n<\/p>\n<\/td>\n | \n \n$54\n<\/p>\n<\/td>\n | \n \n$-\n<\/p>\n<\/td>\n | \n \n$3,434\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nSelling, general and administrative\n<\/p>\n<\/td>\n | \n \n2,520\n<\/p>\n<\/td>\n | \n \n22\n<\/p>\n<\/td>\n | \n \n26\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n \n2,472\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nResearch and development\n<\/p>\n<\/td>\n | \n \n4,399\n<\/p>\n<\/td>\n | \n \n902\n<\/p>\n<\/td>\n | \n \n1\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n \n3,496\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nRestructuring costs\n<\/p>\n<\/td>\n | \n \n94\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n \n94\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOther (income) expense, net\n<\/p>\n<\/td>\n | \n \n429\n<\/p>\n<\/td>\n | \n \n(26)\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n \n350\n<\/p>\n<\/td>\n | \n \n105\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0\n<\/p>\n Third Quarter 2021<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nCost of sales\n<\/p>\n<\/td>\n | \n \n$3,450\n<\/p>\n<\/td>\n | \n \n$346\n<\/p>\n<\/td>\n | \n \n$48\n<\/p>\n<\/td>\n | \n \n$-\n<\/p>\n<\/td>\n | \n \n$3,056\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nSelling, general and administrative\n<\/p>\n<\/td>\n | \n \n2,336\n<\/p>\n<\/td>\n | \n \n61\n<\/p>\n<\/td>\n | \n \n5\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n \n2,270\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nResearch and development\n<\/p>\n<\/td>\n | \n \n2,445\n<\/p>\n<\/td>\n | \n \n48\n<\/p>\n<\/td>\n | \n \n8\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n \n2,389\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nRestructuring costs\n<\/p>\n<\/td>\n | \n \n107\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n \n107\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nOther (income) expense, net\n<\/p>\n<\/td>\n | \n \n(450)\n<\/p>\n<\/td>\n | \n \n(10)\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | \n \n(684)\n<\/p>\n<\/td>\n | \n \n244\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n GAAP expense, EPS and related information<\/span><\/b><\/p>\n\nGross margin was 73.7% for the third quarter of 2022 compared to 73.8% for the third quarter of 2021. The decrease primarily reflects the impacts of higher revenue from third-party manufacturing arrangements and sales of LAGEVRIO, both of which have lower gross margins, as well as higher acquisition- and divestiture-related costs. The gross margin decline was largely offset by the favorable effects of product mix and foreign exchange.\n<\/p>\n \nSelling, general and administrative (SG&A) expenses were $2.5 billion in the third quarter of 2022, an increase of 8% compared to the third quarter of 2021. The increase primarily reflects higher administrative costs, including compensation and benefit costs, as well as higher promotional spending, partially offset by the favorable impact of foreign exchange.\n<\/p>\n \nResearch and development (R&D) expenses were $4.4 billion in the third quarter of 2022 compared to $2.4 billion in the third quarter of 2021. The increase primarily reflects $887 million of intangible asset impairment charges related to the ArQule, Inc. acquisition, charges related to collaboration and licensing agreements with Moderna, Orna and Orion and higher clinical development spending.\n<\/p>\n \nOther (income) expense, net, was $429 million of expense in the third quarter of 2022 compared to $450 million of income in the third quarter of 2021, primarily due to net unrealized losses from investments in equity securities in the third quarter of 2022, compared to net unrealized income from investments in equity securities in the third quarter of 2021. Other (income) expense, net, in the third quarter of 2022 also reflects lower pension costs compared to the third quarter of 2021.\n<\/p>\n \nThe effective income tax rate was 9.2% for the third quarter of 2022 compared to 13.2% in the third quarter of 2021.\n<\/p>\n \nGAAP EPS was $1.28 for the third quarter of 2022 compared to $1.80 for the third quarter of 2021.\n<\/p>\n Non-GAAP expense, EPS and related information<\/span><\/b><\/p>\n\nNon-GAAP gross margin was 77.0% for the third quarter of 2022 compared to 76.8% for the third quarter of 2021. The increase in non-GAAP gross margin primarily reflects the favorable effects of product mix and foreign exchange, largely offset by the impacts of higher revenue from third-party manufacturing arrangements and sales of LAGEVRIO, both of which have lower gross margins.\n<\/p>\n \nNon-GAAP SG&A expenses were $2.5 billion in the third quarter of 2022, an increase of 9% compared to the third quarter of 2021. The increase primarily reflects higher administrative costs, including compensation and benefit costs, as well as higher promotional spending, partially offset by the favorable impact of foreign exchange.\n<\/p>\n \nNon-GAAP R&D expenses were $3.5 billion in the third quarter of 2022 compared to $2.4 billion in the third quarter of 2021. The increase primarily reflects charges related to collaboration and licensing agreements with Moderna, Orna and Orion and higher clinical development spending.\n<\/p>\n \nNon-GAAP other (income) expense, net, was $105 million of expense in the third quarter of 2022 compared to $244 million of expense in the third quarter of 2021, reflecting lower pension costs.\n<\/p>\n \nThe non-GAAP effective income tax rate was 13.6% for the third quarter of 2022 compared to 12.8% in the third quarter of 2021.\n<\/p>\n \nNon-GAAP EPS was $1.85 for the third quarter of 2022 compared to $1.78 for the third quarter of 2021.\n<\/p>\n \nA reconciliation of GAAP to non-GAAP net income and EPS is provided in the table that follows.\n<\/p>\n \n\n| <\/p>\n \n\u00a0\n<\/p>\n<\/td>\n | \n Third Quarter<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n$ in millions, except EPS amounts\n<\/p>\n<\/td>\n | \n 2022<\/b><\/p>\n<\/td>\n | \n 2021<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n EPS<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nGAAP EPS\n<\/p>\n<\/td>\n | \n \n$1.28\n<\/p>\n<\/td>\n | \n \n$1.80\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nDifference\n<\/p>\n<\/td>\n | \n \n0.57\n<\/p>\n<\/td>\n | \n \n(0.02)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNon-GAAP EPS that excludes items listed below2<\/sup><\/p>\n<\/td>\n| \n \n$1.85\n<\/p>\n<\/td>\n | \n \n$1.78\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n Net Income<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nGAAP net income1<\/sup><\/p>\n<\/td>\n| \n \n$3,248\n<\/p>\n<\/td>\n | \n \n$4,567\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nDifference\n<\/p>\n<\/td>\n | \n \n1,455\n<\/p>\n<\/td>\n | \n \n(42)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNon-GAAP net income that excludes items listed below1,2<\/sup><\/p>\n<\/td>\n| \n \n$4,703\n<\/p>\n<\/td>\n | \n \n$4,525\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n Decrease (Increase) in Net Income Due to Excluded Items:<\/b><\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nAcquisition- and divestiture-related costs3<\/sup><\/p>\n<\/td>\n| \n \n$1,344\n<\/p>\n<\/td>\n | \n \n$445\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nRestructuring costs\n<\/p>\n<\/td>\n | \n \n175\n<\/p>\n<\/td>\n | \n \n168\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nLoss (income) from investments in equity securities\n<\/p>\n<\/td>\n | \n \n350\n<\/p>\n<\/td>\n | \n \n(684)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNet decrease (increase) in income before taxes\n<\/p>\n<\/td>\n | \n \n1,869\n<\/p>\n<\/td>\n | \n \n(71)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nEstimated income tax (benefit) expense\n<\/p>\n<\/td>\n | \n \n(414)\n<\/p>\n<\/td>\n | \n \n29\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nDecrease (increase) in net income\n<\/p>\n<\/td>\n | \n \n$1,455\n<\/p>\n<\/td>\n | \n \n$(42)\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n Financial outlook<\/span><\/b><\/p>\n\nBeginning in 2022, Merck no longer excludes expenses for upfront and milestone payments related to collaboration and licensing agreements, or charges related to pre-approval assets obtained in transactions accounted for as asset acquisitions from its non-GAAP results. Historically, the company excluded these charges to the extent they were considered by the company to be significant to the results of a particular period. These changes were made to align with views expressed by the U.S. Securities and Exchange Commission. Prior periods have been recast to reflect this change. For 2021, non-GAAP results have been recast to include $1.7 billion of incremental R&D expense, resulting in revised full-year 2021 EPS of $5.37.\n<\/p>\n \nFull-year 2022 GAAP and non-GAAP results include $690 million of incremental R&D expense, recorded in the third quarter of 2022, for collaboration and licensing agreements with Moderna, Orna and Orion which negatively impacts expected full-year EPS by $0.22.\n<\/p>\n \nAs an on-going practice, the financial outlook will not include significant potential business development transactions.\n<\/p>\n \nMerck continues to experience strong global momentum across its key pillars of growth, particularly in oncology and vaccines. As a result, Merck is raising and narrowing its full-year outlook for sales and non-GAAP EPS, despite a negative impact from foreign exchange.\n<\/p>\n \nAt mid-October 2022 exchange rates, Merck expects sales growth of 20% to 21% in 2022, with full-year sales estimated to be between $58.5 billion and $59.0 billion, including a negative impact from foreign exchange of approximately 4%, including a less than 1% incremental negative impact from prior sales outlook. Excluding LAGEVRIO, Merck expects sales growth of approximately 12% for full-year 2022.\n<\/p>\n \nMerck expects its full-year non-GAAP effective income tax rate to be approximately 14%.\n<\/p>\n \nMerck is lowering its expected full-year 2022 GAAP EPS to be between $5.68 and $5.73.\n<\/p>\n \nMerck is raising and narrowing its expected full-year 2022 non-GAAP EPS to be between $7.32 and $7.37, including a negative impact from foreign exchange of approximately 4% at mid-October exchange rates. Operational strength of approximately $0.20 is partially offset by the following negative impacts, which were not reflected previously in the outlook:\n<\/p>\n \n- \nAn option payment to Moderna of $250 million\n<\/li>\n
- \nA less than 1% incremental impact from foreign exchange\n<\/li>\n<\/ul>\n
\nThe non-GAAP range excludes acquisition- and divestiture-related costs and costs related to restructuring programs as well as income and losses from investments in equity securities.\n<\/p>\n \nThe company is narrowing its expected full year sales range of LAGEVRIO to be between $5.2 billion and $5.4 billion. Merck shares profits equally with its partner, Ridgeback, which is reflected in cost of sales.\n<\/p>\n \nThe following table summarizes the company\u2019s full-year 2022 financial outlook.\n<\/p>\n \n\n | \n\n GAAP<\/b><\/p>\n<\/td>\n | \n Non-GAAP2<\/sup><\/b><\/p>\n<\/td>\n | <\/tr>\n\n| \n \nSales\n<\/p>\n<\/td>\n | \n \n$58.5 to $59.0 billion\n<\/p>\n<\/td>\n | \n \n$58.5 to $59.0. billion*\n<\/p>\n<\/td>\n | | <\/tr>\n \n| \n \nOperating expenses\n<\/p>\n<\/td>\n | \n \n$22.5 to $22.9 billion\n<\/p>\n<\/td>\n | \n \n$21.3 to $21.7 billion\n<\/p>\n<\/td>\n | | <\/tr>\n \n| \n \nEffective tax rate\n<\/p>\n<\/td>\n | \n \nApproximately 11%\n<\/p>\n<\/td>\n | \n \nApproximately 14%\n<\/p>\n<\/td>\n | | <\/tr>\n \n| \n \nEPS**\n<\/p>\n<\/td>\n | \n \n$5.68 to $5.73\n<\/p>\n<\/td>\n | \n \n$7.32 to $7.37\n<\/p>\n<\/td>\n | | <\/tr>\n \n| \n \n*The company does not have any non-GAAP adjustments to sales.\n<\/p>\n \n**EPS outlook for 2022 assumes a share count (assuming dilution) of approximately 2.54 billion shares.\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n \nA reconciliation of anticipated full-year 2022 GAAP EPS to non-GAAP EPS and the items excluded from non-GAAP EPS are provided in the table below.\n<\/p>\n \n\n| <\/p>\n \n$ in millions, except EPS amounts\n<\/p>\n<\/td>\n | \n Full-Year 2022<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n \n\u00a0\n<\/p>\n \nGAAP EPS\n<\/p>\n<\/td>\n | \n \n$5.68 to $5.73\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nDifference\n<\/p>\n<\/td>\n | \n \n$1.64\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNon-GAAP EPS that excludes items listed below2<\/sup><\/p>\n<\/td>\n| \n \n$7.32 to $7.37\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \n\u00a0\n<\/p>\n<\/td>\n | \n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nAcquisition- and divestiture-related costs\n<\/p>\n \nRestructuring costs\n<\/p>\n \n(Income) loss from investments in equity securities\n<\/p>\n<\/td>\n | \n \n$3,400\n<\/p>\n \n600\n<\/p>\n \n1,350\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nNet decrease (increase) in income before taxes\n<\/p>\n<\/td>\n | \n \n5,350\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nEstimated income tax (benefit) expense\n<\/p>\n<\/td>\n | \n \n(1,175)\n<\/p>\n<\/td>\n<\/tr>\n | \n| \n \nDecrease (increase) in net income\n<\/p>\n<\/td>\n | \n \n$4,175\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n Earnings conference call<\/span><\/b><\/p>\n\nInvestors, journalists and the general public may access a live audio webcast of the call Thursday, Oct. 27, at 8:00 a.m. ET via this weblink<\/a>. A replay of the webcast, along with the sales and earnings news release, supplemental financial disclosures and slides highlighting the results, will be available at www.merck.com<\/a>.\n<\/p>\n\nParticipants may join the call by dialing (877) 692-8955 (USA Toll-Free) or (243) 720-6979 (USA Caller Paid). If you are calling from other countries, visit this weblink<\/a>. All dial-in participants can use the access code 9646315. Journalists who wish to ask questions are requested to contact a member of Merck\u2019s Media Relations team.\n<\/p>\nAbout Merck<\/b><\/p>\n \nAt 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 \u2013 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<\/a> and connect with us on Twitter<\/a>, Facebook<\/a>, Instagram<\/a>, YouTube<\/a> and LinkedIn<\/a>.\n<\/p>\nForward-Looking Statement of Merck & Co., Inc., Rahway, N.J., USA<\/b><\/p>\n \nThis news release of Merck & Co., Inc., Rahway, N.J., USA (the \u201ccompany\u201d) includes \u201cforward-looking statements\u201d 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\u2019s 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.\n<\/p>\n \nRisks 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\u2019s 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\u2019s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and\/or regulatory actions.\n<\/p>\n \nThe 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\u2019s Annual Report on Form 10-K for the year ended December 31, 2021 and the company\u2019s other filings with the Securities and Exchange Commission (SEC) available at the SEC\u2019s Internet site (www.sec.gov<\/a>).\n<\/p>\n \n\n| \n 1<\/sup> Net income from continuing operations attributable to Merck & Co., Inc.\n<\/p>\n<\/td>\n<\/tr>\n\n| \n 2<\/sup> Merck is providing certain 2022 and 2021 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\u2019 understanding of the company\u2019s 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\u2019s 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. Non-GAAP results for 2021 have been recast to conform to presentation changes implemented in 2022.\n<\/p>\n<\/td>\n<\/tr>\n\n| \n 3<\/sup> 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 liabilities for contingent consideration. Also includes integration, transaction and certain other costs related to acquisitions and divestitures.\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\nMERCK & CO., INC.
\n
CONSOLIDATED STATEMENT OF INCOME – GAAP
\n
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
\n
(UNAUDITED)
\n
Table 1<\/b><\/p>\n \nOn June 2, 2021, Merck completed the spin-off of products from its women\u2019s health, biosimilars and established brands businesses into a new, independent, publicly traded company named Organon & Co. (Organon). The historical results of the businesses that were contributed to Organon in the spin-off are excluded from sales and expenses and reflected as discontinued operations in the company\u2019s Consolidated Statement of Income provided below.\n<\/p>\n \n\n\u00a0<\/td>\n<\/tr>\n<\/table>\n\n\n | \n | \nGAAP<\/b><\/td>\n | | \n% Change<\/b><\/td>\n | | \nGAAP<\/b><\/td>\n | | \n% Change<\/b><\/td>\n<\/tr>\n\n | \n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n | \n | \n\n 3Q22<\/b><\/p>\n<\/td>\n | \n 3Q21<\/b><\/p>\n<\/td>\n | | \n | \nSep YTD 2022<\/b><\/td>\n | Sep YTD 2021<\/b><\/td>\n | | <\/tr>\n \n | \n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n| Sales<\/td>\n | | \n\n \n$ 14,959\n<\/p>\n<\/td>\n | \n \n$ 13,154\n<\/p>\n<\/td>\n | | \n\n \n14%\n<\/p>\n<\/td>\n | | \n\n \n$ 45,453\n<\/p>\n<\/td>\n | \n \n$ 35,183\n<\/p>\n<\/td>\n | | \n\n \n29%\n<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n | \n | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| Costs, Expenses and Other<\/td>\n | | \n | \n | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| Cost of sales<\/td>\n | | \n\n \n3,934\n<\/p>\n<\/td>\n | \n \n3,450\n<\/p>\n<\/td>\n | | \n\n \n14%\n<\/p>\n<\/td>\n | | \n\n \n13,530\n<\/p>\n<\/td>\n | \n \n9,752\n<\/p>\n<\/td>\n | | \n\n \n39%\n<\/p>\n<\/td>\n<\/tr>\n | \n| Selling, general and administrative<\/td>\n | | \n\n \n2,520\n<\/p>\n<\/td>\n | \n \n2,336\n<\/p>\n<\/td>\n | | \n\n \n8%\n<\/p>\n<\/td>\n | | \n\n \n7,355\n<\/p>\n<\/td>\n | \n \n6,804\n<\/p>\n<\/td>\n | | \n\n \n8%\n<\/p>\n<\/td>\n<\/tr>\n | \n| Research and development<\/td>\n | | \n\n \n4,399\n<\/p>\n<\/td>\n | \n \n2,445\n<\/p>\n<\/td>\n | | \n\n \n80%\n<\/p>\n<\/td>\n | | \n\n \n9,773\n<\/p>\n<\/td>\n | \n \n9,177\n<\/p>\n<\/td>\n | | \n\n \n6%\n<\/p>\n<\/td>\n<\/tr>\n | \n| Restructuring costs<\/td>\n | | \n\n \n94\n<\/p>\n<\/td>\n | \n \n107\n<\/p>\n<\/td>\n | | \n\n \n-12%\n<\/p>\n<\/td>\n | | \n\n \n288\n<\/p>\n<\/td>\n | \n \n487\n<\/p>\n<\/td>\n | | \n\n \n-41%\n<\/p>\n<\/td>\n<\/tr>\n | \n| Other (income) expense, net<\/td>\n | | \n\n \n429\n<\/p>\n<\/td>\n | \n \n(450)\n<\/p>\n<\/td>\n | | \n\n \n*\n<\/p>\n<\/td>\n | | \n\n \n1,576\n<\/p>\n<\/td>\n | \n \n(1,007)\n<\/p>\n<\/td>\n | | \n\n \n*\n<\/p>\n<\/td>\n<\/tr>\n | \n| Income from Continuing Operations Before Taxes<\/td>\n | | \n\n \n3,583\n<\/p>\n<\/td>\n | \n \n5,266\n<\/p>\n<\/td>\n | | \n\n \n-32%\n<\/p>\n<\/td>\n | | \n\n \n12,931\n<\/p>\n<\/td>\n | \n \n9,970\n<\/p>\n<\/td>\n | | \n\n \n30%\n<\/p>\n<\/td>\n<\/tr>\n | \n| Income Tax Provision<\/td>\n | | \n\n \n330\n<\/p>\n<\/td>\n | \n \n695\n<\/p>\n<\/td>\n | | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n\n \n1,423\n<\/p>\n<\/td>\n | \n \n1,436\n<\/p>\n<\/td>\n | | \n\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| Net Income from Continuing Operations<\/td>\n | | \n\n \n3,253\n<\/p>\n<\/td>\n | \n \n4,571\n<\/p>\n<\/td>\n | | \n\n \n-29%\n<\/p>\n<\/td>\n | | \n\n \n11,508\n<\/p>\n<\/td>\n | \n \n8,534\n<\/p>\n<\/td>\n | | \n\n \n35%\n<\/p>\n<\/td>\n<\/tr>\n | \n| Less: Net Income Attributable to Noncontrolling Interests<\/td>\n | | \n\n \n5\n<\/p>\n<\/td>\n | \n \n4\n<\/p>\n<\/td>\n | | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n\n \n6\n<\/p>\n<\/td>\n | \n \n9\n<\/p>\n<\/td>\n | | \n\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| Net Income from Continuing Operations Attributable to Merck & Co., Inc.<\/td>\n | | \n\n \n3,248\n<\/p>\n<\/td>\n | \n \n4,567\n<\/p>\n<\/td>\n | | \n\n \n-29%\n<\/p>\n<\/td>\n | | \n\n \n11,502\n<\/p>\n<\/td>\n | \n \n8,525\n<\/p>\n<\/td>\n | | \n\n \n35%\n<\/p>\n<\/td>\n<\/tr>\n | \n| Income from Discontinued Operations, Net of Taxes and Amounts Attributable to Noncontrolling Interests<\/td>\n | | \n\n \n–\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | | \n\n \n0%\n<\/p>\n<\/td>\n | | \n\n \n–\n<\/p>\n<\/td>\n | \n \n766\n<\/p>\n<\/td>\n | | \n\n \n*\n<\/p>\n<\/td>\n<\/tr>\n | \n| Net Income Attributable to Merck & Co., Inc.<\/td>\n | | \n\n \n$ 3,248\n<\/p>\n<\/td>\n | \n \n$ 4,567\n<\/p>\n<\/td>\n | | \n\n \n-29%\n<\/p>\n<\/td>\n | | \n\n \n$ 11,502\n<\/p>\n<\/td>\n | \n \n$ 9,291\n<\/p>\n<\/td>\n | | \n\n \n24%\n<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n | \n | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| Basic Earnings per Common Share Attributable to Merck & Co., Inc. Common Shareholders:<\/td>\n | | \n | \n | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| Income from Continuing Operations<\/td>\n | | \n\n \n$ 1.28\n<\/p>\n<\/td>\n | \n \n$ 1.81\n<\/p>\n<\/td>\n | | \n\n \n-29%\n<\/p>\n<\/td>\n | | \n\n \n$ 4.55\n<\/p>\n<\/td>\n | \n \n$ 3.37\n<\/p>\n<\/td>\n | | \n\n \n35%\n<\/p>\n<\/td>\n<\/tr>\n | \n| Income from Discontinued Operations<\/td>\n | | \n\n \n–\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | | \n\n \n0%\n<\/p>\n<\/td>\n | | \n\n \n–\n<\/p>\n<\/td>\n | \n \n0.30\n<\/p>\n<\/td>\n | | \n\n \n*\n<\/p>\n<\/td>\n<\/tr>\n | \n| Net Income<\/td>\n | | \n\n \n$ 1.28\n<\/p>\n<\/td>\n | \n \n$ 1.81\n<\/p>\n<\/td>\n | | \n\n \n-29%\n<\/p>\n<\/td>\n | | \n\n \n$ 4.55\n<\/p>\n<\/td>\n | \n \n$ 3.67\n<\/p>\n<\/td>\n | | \n\n \n24%\n<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n | \n | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| Earnings per Common Share Assuming Dilution Attributable to Merck & Co., Inc. Common Shareholders:<\/td>\n | | \n | \n | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n | | \n | \n | \n | \n\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n | \n| Income from Continuing Operations<\/td>\n | | \n\n \n$ 1.28\n<\/p>\n<\/td>\n | \n \n$ 1.80\n<\/p>\n<\/td>\n | | \n\n \n-29%\n<\/p>\n<\/td>\n | | \n\n \n$ 4.53\n<\/p>\n<\/td>\n | \n \n$ 3.36\n<\/p>\n<\/td>\n | | \n\n \n35%\n<\/p>\n<\/td>\n<\/tr>\n | \n| Income from Discontinued Operations<\/td>\n | | \n\n \n–\n<\/p>\n<\/td>\n | \n \n–\n<\/p>\n<\/td>\n | | \n\n \n0%\n<\/p>\n<\/td>\n | | \n\n \n–\n<\/p>\n<\/td>\n | \n \n0.30\n<\/p>\n<\/td>\n | | \n\n \n*\n<\/p>\n<\/td>\n<\/tr>\n | \n| Net Income<\/td>\n | | \n\n \n$ 1.28\n<\/p>\n<\/td>\n | \n \n$ 1.80\n<\/p>\n<\/td>\n | | \n\n \n-29%\n<\/p>\n<\/td>\n | | \n\n \n$ 4.53\n<\/p>\n<\/td>\n | \n \n$ 3.66\n<\/p>\n<\/td>\n | | \n\n \n24%\n<\/p>\n<\/td>\n<\/tr>\n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n| Average Shares Outstanding<\/td>\n | | \n\n \n2,533\n<\/p>\n<\/td>\n | \n \n2,530\n<\/p>\n<\/td>\n | | \n | \n | \n\n \n2,531\n<\/p>\n<\/td>\n | \n \n2,531\n<\/p>\n<\/td>\n | | \n | <\/tr>\n \n| Average Shares Outstanding Assuming Dilution<\/td>\n | | \n\n \n2,542\n<\/p>\n<\/td>\n | \n \n2,536\n<\/p>\n<\/td>\n | | \n | \n | \n\n \n2,540\n<\/p>\n<\/td>\n | \n \n2,539\n<\/p>\n<\/td>\n | | \n | <\/tr>\n \n| Tax Rate from Continuing Operations<\/td>\n | | \n\n \n9.2%\n<\/p>\n<\/td>\n | \n \n13.2%\n<\/p>\n<\/td>\n | | \n | \n | \n\n \n11.0%\n<\/p>\n<\/td>\n | \n \n14.4%\n<\/p>\n<\/td>\n | | \n | <\/tr>\n \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n| * 100% or greater<\/td>\n | | \n | \n | \n | \n | \n | \n | \n | \n | \n | <\/tr>\n<\/table>\n\n\nMERCK & CO., INC.<\/b><\/td>\n<\/tr>\n\nTHIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2022 GAAP TO NON-GAAP RECONCILIATION – CONTINUING OPERATIONS<\/b><\/td>\n<\/tr>\n\n(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)<\/b><\/td>\n<\/tr>\n\n(UNAUDITED)<\/b><\/td>\n<\/tr>\n\nTable 2a<\/b><\/td>\n<\/tr>\n\n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n | \n\u00a0<\/td>\n<\/tr>\n | \n | \n | \nGAAP<\/b><\/td>\n | | \nAcquisition and Divestiture-
Related Costs (1)<\/sup><\/b><\/td>\n | \nRestructuring
Costs (2)<\/sup><\/b><\/td>\n | | | | | | | | | | | | | | | | | | | | | | | | | | | | |