/Merck Announces Third-Quarter 2012 Financial Results

NEWS

Merck Announces Third-Quarter 2012 Financial Results

Merck

2012/10/26

2012 Third-Quarter Non-GAAP EPS Increased to $0.95, Excluding Certain Items; GAAP EPS of $0.56
Worldwide Sales of $11.5 Billion, a Decrease of 4 Percent; Comparable to Third-Quarter 2011 Sales, Excluding the Unfavorable Impact of Foreign Exchange
Double-Digit Global Sales Growth for JANUVIA, JANUMET, GARDASIL, VICTRELIS, ZOSTAVAX and ISENTRESS; Offset by the Decline in SINGULAIR Sales Following Patent Expiry in the United States
Anticipates Multiple New Product Submissions in 2012-2013, Including Suvorexant and Odanacatib
Narrows 2012 Full-Year Non-GAAP EPS Target to $3.78 to $3.82, Excluding Certain Items; GAAP EPS Range of $2.08 to $2.24

Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the third quarter of 2012.

$ in millions, except EPS amounts

Third Quarter 2012

Third Quarter 2011

Sales

$11,488

$12,022

GAAP EPS

0.56

0.55

Non-GAAP EPS that excludes items listed below1

0.95

0.94

GAAP Net Income2

1,729

1,692

Non-GAAP Net Income that excludes items listed below1,2

2,932

2,908

Non-GAAP (generally accepted accounting principles) earnings per share (EPS) for the third quarter of $0.95 exclude acquisition-related costs and restructuring costs.

A reconciliation of GAAP to non-GAAP net income and EPS is provided in the tables below. Year-to-date results can be found in the attached tables.

Third Quarter 2012

Third Quarter 2011

$ in millions, except EPS amounts

Net Income****2

EPS

Net Income****2

EPS

GAAP

$1,729

$0.56

$1,692

$0.55

Difference

1,203

0.393

1,216

0.393

Non-GAAP that excludes items listed below1

$2,932

$0.95

$2,908

$0.94

$ in millions

Third Quarter 2012

Third Quarter 2011

Acquisition-related costs4

$1,340

$1,363

Restructuring costs

163

277

Other5

–

(137)

Net decrease (increase) in income before taxes

1,503

Estimated income tax (benefit) expense

(300)

(287)

Decrease (increase) in net income

$1,203

$1,216

“Our strong global sales this quarter offset the impact of the SINGULAIR patent expiry in the U.S.,” said Kenneth C. Frazier, chairman and chief executive officer of Merck. “We will continue to drive value for our customers and shareholders through Merck’s four-part strategy of executing on our core business, expanding geographically in high-growth markets, extending our complementary businesses and excelling at managing our costs while investing for growth. With our robust pipeline, we remain on target to submit multiple new products for marketing approval between now and the end of 2013, including suvorexant for insomnia, odanacatib for osteoporosis and TREDAPTIVE for multiple lipid parameters.”

Select Revenue Highlights

Worldwide sales were $11.5 billion for the third quarter of 2012, a decrease of 4 percent. Excluding the unfavorable impact of foreign exchange, sales were comparable with the third quarter of 2011. Strong growth of key products offset the negative impact of the August 2012 loss of market exclusivity for SINGULAIR (montelukast sodium) in the United States.

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 2012

Third Quarter 2011

Change

Total Sales

$11,488

$12,022

-4%

Pharmaceutical

9,875

10,354

-5%

JANUVIA

975

846

15%

ZETIA

645

614

SINGULAIR

602

1,336

-55%

GARDASIL

581

445

31%

REMICADE

490

561

-13%

VYTORIN

423

469

-10%

JANUMET

405

350

16%

ISENTRESS

399

343

16%

PROQUAD, M-M-R II and VARIVAX

396

391

COZAAR/HYZAAR

295

404

-27%

Animal Health

815

826

-1%

Consumer Care

451

421

Other Revenues

347

421

-17%

Pharmaceutical Revenue Performance

Third-quarter pharmaceutical sales declined 5 percent to $9.9 billion, including a 5 percent negative impact due to foreign exchange. Strong sales growth for GARDASIL [Human Papillomavirus Quadrivalent (Types 6, 11, 16 and 18) Vaccine, Recombinant], JANUVIA (sitagliptin), VICTRELIS (boceprevir), ZOSTAVAX (zoster vaccine live), ISENTRESS (raltegravir), and JANUMET (sitagliptin/metformin hydrochloride) offset the expected declines in sales of SINGULAIR, COZAAR (losartan potassium) and HYZAAR (losartan potassium and hydrochlorothiazide).

Sales from emerging markets accounted for approximately 20 percent of pharmaceutical sales in the third quarter. Sales growth in the emerging markets is being driven by primary care and women’s health, vaccines, hospital and specialty, and diversified brands. China continues to be a key driver with 19 percent growth for the third quarter, including a 1 percent benefit from foreign exchange.

Worldwide sales of the combined diabetes franchise of JANUVIA/JANUMET, medicines that help lower blood sugar levels in adults with type 2 diabetes, grew 15 percent to $1.4 billion in the third quarter of 2012 primarily driven by growth in the United States and Japan.

Sales of ZETIA (ezetimibe) and VYTORIN (ezetimibe/simvastatin), medicines for lowering LDL cholesterol, declined 1 percent to $1.1 billion in the third quarter driven by lower sales of VYTORIN, partially offset by growth of ZETIA in the United States.

Worldwide sales of SINGULAIR, a once-a-day oral medicine for the chronic treatment of asthma and the relief of symptoms of allergic rhinitis, declined $734 million, or 55 percent, to $602 million in the third quarter of 2012. The patent for SINGULAIR expired in the United States on Aug. 3, 2012 and will expire in major European markets in February 2013. The company is experiencing a significant and rapid reduction in sales in the United States and expects a similar decline in Europe following patent expiry there. SINGULAIR will retain marketing exclusivity in Japan until 2016.

Sales recorded by Merck for GARDASIL, a vaccine to help prevent certain diseases caused by four types of human papillomavirus (HPV), increased 31 percent to $581 million for the quarter driven by greater uptake in males in the United States and favorable performance in the emerging markets.

Combined sales of REMICADE (infliximab) and SIMPONI (golimumab), treatments for inflammatory diseases, declined 9 percent to $576 million for the third quarter of 2012. The combined sales grew 4 percent excluding foreign exchange.

ISENTRESS, an HIV integrase inhibitor for use in combination with other antiretroviral agents for the treatment of HIV-1 infection, grew 16 percent to $399 million in the third quarter driven by strong growth in the United States and the emerging markets.

Global sales of Merck’s antihypertensive medicines COZAAR and HYZAAR were down 27 percent to $295 million in the third quarter of 2012 due to the loss of market exclusivity in the United States and major European markets in 2010.

Sales of ZOSTAVAX, a vaccine for the prevention of herpes zoster, grew 87 percent to $202 million in the quarter. Growth this quarter was due to a positive response to supply availability and increased promotional efforts in the United States.

Sales of VICTRELIS, the company’s oral hepatitis C virus NS3/4A protease inhibitor, grew to $149 million in the quarter versus $31 million last year as the product continues to launch. VICTRELIS is approved in 64 countries and has launched in 31 of those markets.

Animal Health Revenue Performance

Animal Health sales totaled $815 million for the third quarter of 2012, a 1 percent decrease compared with the third quarter of 2011, which includes an 8 percent negative impact due to foreign exchange. Excluding the negative impact of foreign exchange, performance was driven by the cattle, poultry and companion animal segments. The Animal Health division launched the ACTIVYL line of products in the United States, which is an important addition to the companion animal product line.

Consumer Care Revenue Performance

Third-quarter global sales of Consumer Care were $451 million, an increase of 7 percent compared to the third quarter of 2011, including a 3 percent negative impact due to foreign exchange. The increase was primarily driven by the DR. SCHOLL’S footcare line and COPPERTONE suncare line.

Other Revenue Performance

Other revenues – primarily comprised of alliance revenue, miscellaneous corporate revenues and third-party manufacturing sales – declined 17 percent to $347 million. The change was driven largely by lower revenue from AstraZeneca LP (AZLP) recorded by Merck, which declined 15 percent to $255 million, as well as by lower third-party manufacturing sales.

Third-Quarter Expense and Other Information

The costs detailed below totaled $9.2 billion on a GAAP basis during the third quarter of 2012 and include $1.5 billion of acquisition-related costs and restructuring costs.

$ in millions

Included in expenses for the period

Third Quarter 2012

GAAP

Acquisition- Related Costs****4

Restructuring Costs

Non-GAAP****1

Materials and production

$4,137

$1,232

$60

$2,845

Marketing and administrative

3,063

2,970

Research and development

1,918

(32)

1,910

Restructuring costs

110

–-

110

–

Third Quarter 2011

Materials and production

$4,352

$1,284

$99

$2,969

Marketing and administrative

3,340

3,252

Research and development

1,954

1,904

Restructuring costs

119

–

119

–

The gross margin was 64.0 percent for the third quarter of 2012 and 63.8 percent for the third quarter of 2011, reflecting 11.2 and 11.5 percentage point unfavorable impacts, respectively, from the acquisition-related costs and restructuring costs noted above.

Marketing and administrative expenses, on a non-GAAP basis, were $3.0 billion in the third quarter of 2012, a decrease from $3.3 billion in the third quarter of 2011. The decrease was primarily due to foreign exchange and productivity measures.

Research and development (R&D) expenses, on a non-GAAP basis, were $1.9 billion in the third quarter of 2012, which is in line with the third quarter of 2011.

Equity income from affiliates was $158 million for the third quarter of 2012, which primarily reflects the performance of AZLP and Sanofi Pasteur MSD.

Other (income) expense, net was $200 million of expense in the third quarter of 2012, compared to $66 million of expense in the third quarter of 2011. The third quarter of 2011 reflects a $136 million gain on the divestiture of the company’s interest in the Johnson & Johnson°Merck Consumer Pharmaceuticals Company joint venture.

The GAAP effective tax rate of 20.5 percent for the third quarter of 2012 reflects the impact of acquisition-related costs and restructuring costs. The non-GAAP effective tax rate, which excludes these items, was 20.3 percent for the quarter. Both the GAAP and non-GAAP effective tax rates reflect the favorable impacts of a settlement with a foreign tax authority and the realization of foreign tax credits.

Key Developments

The company noted the following developments:

In October, entered into an exclusive worldwide licensing agreement for AiCuris’ late-stage antiviral candidate for the treatment and prevention of human cytomegalovirus infection in transplant recipients;
Completed a study of sugammadex, a neuromuscular blocker reversal agent, to assess bleeding risk when co-administered with anticoagulants in a surgical setting. The company remains on track to resubmit sugammadex to the FDA this year;
Announced results from a Phase II trial for odanacatib, an investigational cathepsin K inhibitor in development for the treatment of osteoporosis in post-menopausal women. In that Phase II trial, odanacatib significantly increased bone mineral density over a two-year period in patients previously treated with alendronate;
Presented Phase IIb data for MK-3102, the company’s investigational once-weekly DPP-4 inhibitor in development for the treatment of type 2 diabetes. MK-3102 significantly lowered blood sugar in this 12-week study compared with placebo, with an incidence of symptomatic hypoglycemia that was similar to placebo, in patients with type 2 diabetes. The company has initiated the Phase III clinical program;
Presented new clinical data for suvorexant that showed patients who had been taking suvorexant for 12 months and were then switched to placebo for two months saw their insomnia return, but clinically meaningful withdrawal symptoms and rebound insomnia did not emerge;
Announced plans to file applications for vorapaxar, an investigational anti-thrombotic medicine, in the United States and Europe in 2013. The company will seek an indication for the prevention of cardiovascular events in patients with a history of heart attack and no history of transient ischemic attack or stroke.

Financial Targets

Merck narrows the range of full-year 2012 non-GAAP EPS to be between $3.78 and $3.82 and the 2012 GAAP EPS range to be $2.08 to $2.24. The 2012 non-GAAP range excludes acquisition-related costs and costs related to restructuring programs.

Merck continues to expect full-year 2012 revenues to be at or near 2011 levels on a constant currency basis. At current exchange rates, sales would be affected unfavorably by approximately 1 percent for the fourth quarter and more than 2 percent for the full year.

In addition, the company expects full-year 2012 non-GAAP R&D expenses to be higher than the 2011 level. The company continues to expect the full-year 2012 non-GAAP tax rate to be approximately 25 percent.

A reconciliation of anticipated 2012 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

Full-Year 2012

GAAP EPS

$2.08 to $2.24

Difference3

1.70 to 1.58

Non-GAAP EPS that excludes items listed below

$3.78 to $3.82

Acquisition-related costs4

$5,300 to $5,100

Restructuring costs

1,100 to 800

Net decrease (increase) in income before taxes

6,400 to 5,900

Estimated income tax (benefit) expense

(1,160) to (1,050)

Decrease (increase) in net income

$5,240 to $4,850

Total Employees

As of Sept. 30, 2012, Merck had approximately 84,000 employees worldwide.

Earnings Conference Call

Investors are invited to a live audio webcast of Merck’s third-quarter earnings conference call today at 8 a.m. EDT by visiting Merck’s Internet site, www.merck.com/investors/events-and-presentations/home.html. Institutional investors and analysts can participate in the call by dialing (706) 758-9927 or (877) 381-5782. Journalists are invited to monitor the call by dialing (706) 758-9928 or (800) 399-7917. A replay of the call will be available starting at 11 a.m. EDT today for approximately one week. To listen to the replay, dial (404) 537-3406 or (855) 859-2056 and enter ID No. 30586503.

About Merck

Today’s Merck is a global healthcare leader working to help the world be well. Merck is known as MSD outside the United States and Canada. Through our prescription medicines, vaccines, biologic therapies, and consumer care and animal health products, we work with customers and operate in more than 140 countries to deliver innovative health solutions. We also demonstrate our commitment to increasing access to healthcare through far-reaching policies, programs and partnerships. For more information, visit www.merck.com and connect with us on Twitter, Facebook and YouTube.

MERCK & CO., INC. CONSOLIDATED STATEMENT OF OPERATIONS – GAAP (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 1

GAAP

% Change

GAAP

% Change

3Q12

3Q11

Sep YTD 2012

Sep YTD 2011

Sales

11,488

12,022

-4%

35,530

35,753

-1%

Costs, Expenses and Other

Materials and production (1)

4,137

4,352

-5%

12,286

12,695

-3%

Marketing and administrative (1)

3,063

3,340

-8%

9,386

10,029

-6%

Research and development (1)

1,918

1,954

-2%

5,944

6,048

-2%

Restructuring costs (2)

110

119

-8%

473

773

-39%

Equity income from affiliates (3)

(158

)

(161

)

-2%

(410

)

(354

)

16%

Other (income) expense, net (1)(4)

200

446

809

-45%

Income Before Taxes

2,218

2,352

-6%

7,405

5,753

29%

Income Tax Provision

455

628

2,055

904

Net Income

1,763

1,724

5,350

4,849

10%

Less: Net Income Attributable to Noncontrolling Interests

Net Income Attributable to Merck & Co., Inc.

1,729

1,692

5,261

4,760

11%

Earnings per Common Share Assuming Dilution (5)

0.56

0.55

1.71

1.53

12%

Average Shares Outstanding Assuming Dilution

3,079

3,091

3,077

3,102

Tax Rate (6)

20.5

26.7

27.8

15.7

*100% or greater

(1) Amounts include the impact of acquisition-related costs and restructuring costs. See accompanying tables for details.

(2) Represents separation and other related costs associated with restructuring activities under the company’s formal restructuring programs.

(3) Primarily reflects equity income from the AstraZeneca LP and Sanofi Pasteur MSD partnerships.

(4) Other (income) expense, net in the third quarter and first nine months of 2011 includes a $136 million gain on the divestiture of the company’s interest in the Johnson & JohnsonºMerck Consumer Pharmaceuticals Company joint venture. In addition, other (income) expense, net in the first nine months of 2011 includes a charge of $500 million related to the resolution of the arbitration proceeding with Johnson & Johnson and a $127 million gain on the sale of certain manufacturing facilities and related assets.

(5) The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. Net income attributable to Merck & Co., Inc. common shareholders used to calculate earnings per common share assuming dilution was $1,729 million and $1,689 million for the third quarter of 2012 and 2011, respectively, and was $5,257 million and $4,748 million for the first nine months of 2012 and 2011, respectively.

(6) The GAAP effective tax rates for the third quarter and first nine months of 2012 were 20.5% and 27.8%, respectively. Excluding the impact of the non-GAAP reconciling items detailed in the accompanying tables, the effective tax rates were 20.3% and 23.8% for the third quarter and first nine months of 2012, respectively. Both the GAAP and non-GAAP effective tax rates for the third quarter and first nine months of 2012 reflect the favorable impacts of a settlement with a foreign tax authority and the realization of foreign tax credits. The GAAP effective tax rates for the third quarter and first nine months of 2011 were 26.7% and 15.7%, respectively. Excluding the impact of the non-GAAP reconciling items detailed in the accompanying tables, the effective tax rates were 23.7% and 24.5% for the third quarter and first nine months of 2011, respectively.

MERCK & CO., INC. CONSOLIDATED STATEMENT OF OPERATIONS GAAP TO NON-GAAP RECONCILIATION THIRD QUARTER 2012 (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 2a

GAAP

Acquisition- Related Costs (1)

Restructuring Costs (2)

Adjustment Subtotal

Non-GAAP

Sales

11,488

–

11,488

Costs, Expenses and Other

Materials and production

4,137

1,232

1,292

2,845

Marketing and administrative

3,063

2,970

Research and development

1,918

(32

)

1,910

Restructuring costs

110

110

–

Equity income from affiliates

(158

)

–

(158

)

Other (income) expense, net

200

–

200

Income Before Taxes

2,218

(1,340

)

(163

)

(1,503

)

3,721

Taxes on Income

455

(300

)

(3)

755

Net Income

1,763

(1,203

)

2,966

Less: Net Income Attributable to Noncontrolling Interests

–

Net Income Attributable to Merck & Co., Inc.

1,729

(1,203

)

2,932

Earnings per Common Share Assuming Dilution

0.56

0.95

(4)

Average Shares Outstanding Assuming Dilution

3,079

3,079

Tax Rate

20.5

20.3

Merck is providing 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.

(1) Amounts included in materials and production costs reflect expenses for the amortization of intangible assets recognized as a result of mergers and acquisitions. Amounts included in marketing and administrative expenses reflect merger integration costs. Amounts included in research and development expenses represent in-process research and development (“IPR&D”) impairment charges.

(2) Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to actions under the company’s formal restructuring programs. In the third quarter of 2012, the company recorded an adjustment to accelerated depreciation costs included in research and development expenses revising previously recorded amounts for certain facilities.

(3) Represents the estimated tax impact on the reconciling items.

(4) The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. Net income attributable to Merck & Co., Inc. common shareholders used to calculate non-GAAP earnings per common share assuming dilution was $2,932 million for the third quarter of 2012.

MERCK & CO., INC. CONSOLIDATED STATEMENT OF OPERATIONS GAAP TO NON-GAAP RECONCILIATION NINE MONTHS ENDED SEPTEMBER 30, 2012 (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 2b

GAAP

Acquisition- Related Costs (1)

Restructuring Costs(2)

Adjustment Subtotal

Non-GAAP

Sales

35,530

–

35,530

Costs, Expenses and Other

Materials and production

12,286

3,687

148

3,835

8,451

Marketing and administrative

9,386

183

253

9,133

Research and development

5,944

176

230

5,714

Restructuring costs

473

473

–

Equity income from affiliates

(410

)

–

(410

)

Other (income) expense, net

446

–

446

Income Before Taxes

7,405

(4,046

)

(745

)

(4,791

)

12,196

Taxes on Income

2,055

(848

)

(3)

2,903

Net Income

5,350

(3,943

)

9,293

Less: Net Income Attributable to Noncontrolling Interests

–

Net Income Attributable to Merck & Co., Inc.

5,261

(3,943

)

9,204

Earnings per Common Share Assuming Dilution

1.71

2.99

(4)

Average Shares Outstanding Assuming Dilution

3,077

3,077

Tax Rate

27.8

23.8

(3) Represents the estimated tax impact on the reconciling items.

MERCK & CO., INC. FRANCHISE / KEY PRODUCT SALES (AMOUNTS IN MILLIONS) Table 3

2012

2011

% Change 3Q

% Change Sep YTD

Sep YTD

Full Year

TOTAL SALES (1)

$11,731

$12,311

$11,488

$35,530

$11,580

$12,151

$12,022

$35,753

$12,294

$48,047

-4

-1

PHARMACEUTICAL

10,082

10,560

9,875

30,517

9,820

10,360

10,354

30,534

10,755

41,289

-5

—

Primary Care and Women’s Health

Cardiovascular

Zetia

614

632

645

1,891

582

592

614

1,788

640

2,428

Vytorin

444

445

423

1,312

480

459

469

1,407

475

1,882

-10

-7

Diabetes & Obesity

Januvia

919

1,058

975

2,952

739

779

846

2,364

960

3,324

Janumet

392

411

405

1,207

305

321

350

977

386

1,363

Respiratory

Singulair

1,340

1,431

602

3,373

1,328

1,354

1,336

4,018

1,461

5,479

-55

-16

Nasonex

375

293

292

960

373

323

266

962

325

1,286

—

Clarinex

134

140

337

155

209

128

492

129

621

-50

-32

Asmanex

141

149

206

—

-6

Dulera

140

Women’s Health & Endocrine

Fosamax

184

186

152

522

208

221

215

644

211

855

-29

-19

NuvaRing

146

157

156

459

142

154

159

455

168

623

-2

Follistim AQ

116

125

111

352

133

143

129

404

126

530

-14

-13

Implanon

254

220

294

Cerazette

202

199

268

-14

Other

Maxalt

156

154

166

476

173

131

156

460

178

639

Arcoxia

112

117

109

338

114

100

108

321

110

431

Avelox

146

106

227

322

-50

-35

Hospital and Specialty

Immunology

Remicade

519

518

490

1,527

753

842

561

2,156

511

2,667

-13

-29

Simponi

236

203

264

Infectious Disease

Isentress

337

398

399

1,133

292

337

343

972

387

1,359

PegIntron

162

183

165

510

166

154

163

482

175

657

Cancidas

145

166

163

474

158

168

150

476

164

640

—

Victrelis

111

126

149

387

140

Invanz

101

110

118

329

103

107

296

110

406

Primaxin

104

109

301

136

124

397

119

515

-12

-24

Noxafil

191

171

230

Oncology

Temodar

237

225

227

688

248

234

223

704

230

935

-2

Emend

102

145

111

358

120

305

114

419

Other

Cosopt / Trusopt

124

105

102

331

114

122

124

360

117

477

-18

-8

Bridion

186

141

201

Integrilin

160

172

230

-9

-7

Diversified Brands

Cozaar / Hyzaar

336

337

295

969

426

406

404

1,236

427

1,663

-27

-22

Propecia

108

100

104

312

106

112

330

117

447

-7

-5

Zocor

103

285

127

107

110

345

111

456

-22

-17

Claritin Rx

181

120

240

314

-14

-25

Remeron

175

181

241

-19

-3

Proscar

160

171

223

-6

Vasotec / Vaseretic

144

173

231

-27

-17

Vaccines

Gardasil

284

324

581

1,189

214

277

445

935

274

1,209

ProQuad, M-M-R II and Varivax

255

316

396

967

244

291

391

927

276

1,202

RotaTeq

142

150

433

125

148

184

457

195

651

-19

-5

Zostavax

148

202

426

122

108

254

332

Pneumovax

112

101

160

372

133

276

222

498

Other Pharmaceutical (2)

1,013

985

1,023

3,031

892

1,064

1,015

2,975

1,064

4,038

ANIMAL HEALTH

821

865

815

2,501

758

802

826

2,385

868

3,253

-1

CONSUMER CARE

554

552

451

1,557

517

541

421

1,479

361

1,840

Claritin OTC

169

145

118

432

167

134

118

419

511

—

Other Revenues (3)

274

333

347

955

486

448

421

1,355

310

1,666

-17

-30

Astra

186

223

255

664

322

306

299

928

256

1,184

-15

-28

100% or greater

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

(1) Only select products are shown.

(2) Includes Pharmaceutical products not individually shown above. Other Vaccines sales included in Other Pharmaceutical were $60 million, $75 million, and $116 million for the first, second, and third quarters of 2012, respectively. Other Vaccines sales included in Other Pharmaceutical were $54 million, $67 million, $100 million and $62 million for the first, second, third and fourth quarters of 2011, respectively.

(3) Other revenues are primarily comprised of alliance revenue, miscellaneous corporate revenues and third party manufacturing sales.

Merck Media Contacts: Ron Rogers, 908-423-6449 Steve Cragle, 908-423-3461 or Investor Contacts: Carol Ferguson, 908-423-4465 Justin Holko, 908-423-5088

Summary

2012 Third-Quarter Non-GAAP EPS Increased to 0.95,ExcludingCertainItems;GAAPEPSof0.56 Worldwide Sales of 11.5Billion,aDecreaseof4Percent;ComparabletoThird−Quarter2011Sales,ExcludingtheUnfavorableImpactofForeignExchangeDouble−DigitGlobalSalesGrowthforJANUVIA,JANUMET,GARDASIL,VICTRELIS,ZOSTAVAXandISENTRESS;OffsetbytheDeclineinSINGULAIRSalesFollowingPatentExpiryintheUnitedStatesAnticipatesMultipleNewProductSubmissionsin2012−2013,IncludingSuvorexantandOdanacatibNarrows2012Full−YearNon−GAAPEPSTargetto3.78 to 3.82,ExcludingCertainItems;GAAPEPSRangeof2.08 to 2.24Merck(NYSE:MRK),knownasMSDoutsidetheUnitedStatesandCanada,todayannouncedfinancialresultsforthethirdquarterof2012. in millions, except EPS amounts Third Quarter 2012 Third Quarter 2011 Sales 11,48812,022 GAAP EPS 0.56 0.55 Non-GAAP EPS that excludes items listed below1 0.95 0.94 GAAP Net Income2 1,729