Merck Statement on Venezuelan Currency Devaluation

Merck Confirms 2013 Full-Year Guidance and Provides Guidance on First Quarter

Merck, known as MSD outside the United States and Canada, said today that it has completed a preliminary assessment of the impact of the Venezuelan government’s intention to devalue its currency effective Feb. 13, 2013.

As a result of the devaluation, the company will incur a one-time, after-tax loss due to exchange of approximately $0.05 per share in the first quarter of 2013 related to the remeasurement of the local balance sheet at the date of the devaluation. Also, the company expects the impact of the devaluation on ongoing operations to be approximately $0.02 per share spread over the balance of 2013.

Since Jan. 1, 2010, Venezuela has been designated hyperinflationary and, as a result, local foreign operations are remeasured in U.S. dollars with the impact recorded in income. On Feb. 8, 2013, the Venezuelan government declared its intention to devalue its currency (bolívar fuerte). The official exchange rate is expected to move from 4.30 VEF/$ to 6.30 VEF/$.

The effects of the devaluation do not change the company’s full year 2013 GAAP (generally accepted accounting principles) or full year non-GAAP EPS (earnings per share) guidance ranges.

The company is providing guidance about its expectations for the first quarter of 2013, which includes the impact of the devaluation in the quarter. Merck expects first-quarter non-GAAP EPS to be between $0.76 and $0.78, and the GAAP EPS range to be $0.37 to $0.42. A reconciliation of anticipated first-quarter 2013 EPS as reported in accordance with GAAP to non-GAAP EPS that excludes certain items is provided in the table below.

$ in millions, except EPS amounts

First Quarter 2013

GAAP EPS

$0.37 to 0.42

Difference1

0.39 to 0.36

Non-GAAP EPS that excludes items listed below 2

$0.76 to $0,78

Acquisition-related costs3

$1,280 to $1,200

Restructuring costs

175 to 125

Net decrease (increase) in income before taxes

1,455 to 1,325

Estimated income tax (benefit) expense

(255) to (225)

Decrease (increase) in net income

$1,200 to $1,100

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

2 Merck is providing certain 2013 non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s performance. This information should be considered in addition to, but not in lieu of, information prepared in accordance with GAAP.

3 Includes expenses for the amortization of intangible assets and amortization of purchase accounting adjustments to inventories recognized as a result of mergers and acquisitions, as well as intangible asset impairment charges. Also includes integration and other costs associated with mergers and acquisitions.

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