10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File No. 1-6571

Merck & Co., Inc.

(Exact name of registrant as specified in its charter)

New Jersey	22-1918501
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)
126 East Lincoln Avenue
Rahway	New Jersey	07065
(Address of principal executive offices) (zip code)

(Registrant’s telephone number, including area code) (908) 740-4000

	Not Applicable
(Former name, former address and former fiscal year, if changed since last report.)

Securities Registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($0.50 par value)	MRK	New York Stock Exchange
0.500% Notes due 2024	MRK 24	New York Stock Exchange
1.875% Notes due 2026	MRK/26	New York Stock Exchange
2.500% Notes due 2034	MRK/34	New York Stock Exchange
1.375% Notes due 2036	MRK 36A	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒   No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

The number of shares of common stock outstanding as of the close of business on July 31, 2023: 2,537,521,169

Table of Contents

		Page No.
PART I	FINANCIAL INFORMATION	3
Item 1.	Financial Statements	3
	Condensed Consolidated Statement of Operations	3
	Condensed Consolidated Statement of Comprehensive (Loss) Income	3
	Condensed Consolidated Balance Sheet	4
	Condensed Consolidated Statement of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	42
Item 4.	Controls and Procedures	42
	Cautionary Factors That May Affect Future Results	42
PART II	OTHER INFORMATION	43
Item 1.	Legal Proceedings	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 5.	Other Information	43
Item 6.	Exhibits	44
	Signatures	45

Part I - Financial Information

Item 1. Financial Statements

MERCK & CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited, $ in millions except per share amounts)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Sales	$	15,035	$	14,593	$	29,522	$	30,494
Costs, Expenses and Other
Cost of sales	4,024		4,216		7,951		9,596
Selling, general and administrative	2,702		2,512		5,182		4,834
Research and development	13,321		2,798		17,597		5,374
Restructuring costs	151		142		218		194
Other (income) expense, net	172		438		259		1,148
	20,370		10,106		31,207		21,146
(Loss) Income Before Taxes	(5,335)		4,487		(1,685)		9,348
Income Tax Provision	637		538		1,462		1,092
Net (Loss) Income	(5,972)		3,949		(3,147)		8,256
Less: Net Income Attributable to Noncontrolling Interests	3		5		7		2
Net (Loss) Income Attributable to Merck & Co., Inc.	$	(5,975)	$	3,944	$	(3,154)	$	8,254
Basic (Loss) Earnings per Common Share Attributable to Merck & Co., Inc. Common Shareholders	$	(2.35)	$	1.56	$	(1.24)	$	3.26
(Loss) Earnings per Common Share Assuming Dilution Attributable to Merck & Co., Inc. Common Shareholders	$	(2.35)	$	1.55	$	(1.24)	$	3.25

MERCK & CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME

(Unaudited, $ in millions)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net (Loss) Income Attributable to Merck & Co., Inc.	$	(5,975)	$	3,944	$	(3,154)	$	8,254
Other Comprehensive (Loss) Income Net of Taxes:
Net unrealized gain on derivatives, net of reclassifications	145		183		12		246
Benefit plan net (loss) gain and prior service (cost) credit, net of amortization	(25)		246		(75)		278
Cumulative translation adjustment	(137)		(387)		(69)		(422)
	(17)		42		(132)		102
Comprehensive (Loss) Income Attributable to Merck & Co., Inc.	$	(5,992)	$	3,986	$	(3,286)	$	8,356

 The accompanying notes are an integral part of these condensed consolidated financial statements.

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MERCK & CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited, $ in millions except per share amounts)

	June 30, 2023		December 31, 2022
Assets
Current Assets
Cash and cash equivalents	$	5,660	$	12,694
Short-term investments	718		498
Accounts receivable (net of allowance for doubtful accounts of $86 in 2023  and $72 in 2022)	11,030		9,450
Inventories (excludes inventories of $3,220 in 2023 and $2,938 in 2022 classified in Other assets - see Note 7)	5,930		5,911
Other current assets	6,639		7,169
Total current assets	29,977		35,722
Investments	1,214		1,015
Property, Plant and Equipment, at cost, net of accumulated depreciation of $18,432 in 2023 and $17,985 in 2022	22,231		21,422
Goodwill	21,195		21,204
Other Intangibles, Net	19,665		20,269
Other Assets	10,187		9,528
	$	104,469	$	109,160
Liabilities and Equity
Current Liabilities
Loans payable and current portion of long-term debt	$	2,839	$	1,946
Trade accounts payable	3,442		4,264
Accrued and other current liabilities	13,747		14,159
Income taxes payable	1,489		1,986
Dividends payable	1,877		1,884
Total current liabilities	23,394		24,239
Long-Term Debt	34,072		28,745
Deferred Income Taxes	996		1,795
Other Noncurrent Liabilities	7,265		8,323
Merck & Co., Inc. Stockholders’ Equity
Common stock, $0.50 par value Authorized - 6,500,000,000 shares Issued - 3,577,103,522 shares in 2023 and 2022	1,788		1,788
Other paid-in capital	44,219		44,379
Retained earnings	54,198		61,081
Accumulated other comprehensive loss	(4,900)		(4,768)
	95,305		102,480
Less treasury stock, at cost: 1,037,678,033 shares in 2023 and 1,039,269,638 shares in 2022	56,612		56,489
Total Merck & Co., Inc. stockholders’ equity	38,693		45,991
Noncontrolling Interests	49		67
Total equity	38,742		46,058
	$	104,469	$	109,160

The accompanying notes are an integral part of this condensed consolidated financial statement.

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MERCK & CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited, $ in millions)

	Six Months Ended June 30,
	2023		2022
Cash Flows from Operating Activities
Net (loss) income	$	(3,147)	$	8,256
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Amortization	1,020		1,163
Depreciation	874		895
(Income) loss from investments in equity securities, net	(274)		991
Charge for the acquisition of Prometheus Biosciences, Inc.	10,217		—
Charge for the acquisition of Imago BioSciences, Inc.	1,192		—
Deferred income taxes	(632)		(600)
Share-based compensation	314		257
Other	5		799
Net changes in assets and liabilities	(4,526)		(2,698)
Net Cash Provided by Operating Activities	5,043		9,063
Cash Flows from Investing Activities
Capital expenditures	(1,972)		(2,113)
Purchases of securities and other investments	(587)		(705)
Proceeds from sales of securities and other investments	785		374
Acquisition of Prometheus Biosciences, Inc., net of cash acquired	(10,705)		—
Acquisition of Imago BioSciences, Inc., net of cash acquired	(1,327)		—
Other	4		194
Net Cash Used in Investing Activities	(13,802)		(2,250)
Cash Flows from Financing Activities
Net change in short-term borrowings	1,937		—
Proceeds from issuance of debt	5,946		—
Payments on debt	(1,751)		(1,250)
Purchases of treasury stock	(487)		—
Dividends paid to stockholders	(3,738)		(3,515)
Proceeds from exercise of stock options	112		109
Other	(315)		(207)
Net Cash Provided by (Used in) Financing Activities	1,704		(4,863)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash	(6)		(364)
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash	(7,061)		1,586
Cash, Cash Equivalents and Restricted Cash at Beginning of Year (includes restricted cash of $79 and $71 at January 1, 2023 and 2022, respectively, included in Other current assets)	12,773		8,167
Cash, Cash Equivalents and Restricted Cash at End of Period (includes restricted cash of $52 and $78 at June 30, 2023 and 2022, respectively, included in Other current assets)	$	5,712	$	9,753

The accompanying notes are an integral part of this condensed consolidated financial statement.

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Notes to Condensed Consolidated Financial Statements (unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Merck & Co., Inc. (Merck or the Company) have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by accounting principles generally accepted in the United States (U.S.) (GAAP) for complete consolidated financial statements are not included herein. These interim statements should be read in conjunction with the audited financial statements and notes thereto included in Merck’s Form 10-K filed on February 24, 2023.

The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. In the Company’s opinion, all adjustments necessary for a fair statement of these interim statements have been included and are of a normal and recurring nature. Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

Recently Adopted Accounting Standards

In October 2021, the FASB issued amended guidance that requires acquiring entities to recognize and measure contract assets and liabilities in a business combination in accordance with existing revenue recognition guidance. The Company adopted the guidance effective January 1, 2023. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements for prior acquisitions; however, the impact in future periods will be dependent upon the contract assets and contract liabilities acquired in future business combinations.

In June 2022, the FASB issued guidance related to the fair value measurement of an equity security subject to contractual restrictions that prohibit the sale of the equity security. The new guidance also introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. The Company adopted the guidance effective July 1, 2023. There was no impact to the Company’s consolidated financial statements upon adoption.

2.    Acquisitions, Research Collaborations and Licensing Agreements

The Company continues to pursue acquisitions and the establishment of external alliances such as research collaborations and licensing agreements to complement its internal research capabilities. These arrangements often include upfront payments, as well as expense reimbursements or payments to the third party, and milestone, royalty or profit share arrangements, contingent upon the occurrence of certain future events linked to the success of the asset in development. The Company also reviews its marketed products and pipeline to examine candidates which may provide more value through out-licensing and, as part of its portfolio assessment process, may also divest certain assets. Pro forma financial information for acquired businesses is not presented if the historical financial results of the acquired entity are not significant when compared with the Company’s financial results.

In June 2023, Merck acquired Prometheus Biosciences, Inc. (Prometheus), a clinical-stage biotechnology company pioneering a precision medicine approach for the discovery, development, and commercialization of novel therapeutic and companion diagnostic products for the treatment of immune-mediated diseases. Total consideration paid of $11.0 billion included $1.2 billion of costs to settle share-based equity awards (including $700 million to settle unvested equity awards). Prometheus’ lead candidate, MK-7240 (formerly PRA023), is a humanized monoclonal antibody directed to tumor necrosis factor-like ligand 1A, a target associated with both intestinal inflammation and fibrosis. MK-7240 is being developed for the treatment of immune-mediated diseases including ulcerative colitis, Crohn’s disease, and other autoimmune conditions. The transaction was accounted for as an acquisition of an asset since MK-7240 accounted for substantially all of the fair value of the gross assets acquired (excluding cash and deferred income taxes). Merck recorded net assets of $877 million, including cash of $368 million, investments of $296 million, deferred tax assets of $218 million and other net liabilities of $5 million, as well as Research and development expenses of $10.2 billion in the second quarter and first six months of 2023 related to the transaction. There are no future contingent payments associated with the acquisition.

In February 2023, Merck and Kelun-Biotech (a holding subsidiary of Sichuan Kelun Pharmaceutical Co., Ltd.) closed a license and collaboration agreement expanding their relationship in which Merck gained exclusive rights for the research, development, manufacture and commercialization of up to seven investigational preclinical antibody drug conjugates (ADCs) for the treatment of cancer. Kelun-Biotech retained the right to research, develop, manufacture and commercialize certain licensed and option ADCs for Chinese mainland, Hong Kong and Macau. Merck made an upfront payment of $175 million, which was recorded in Research and development expenses in the first six months of 2023. In addition, Kelun-Biotech is eligible to receive future contingent development-related payments aggregating up to $1.0 billion, $2.8 billion in regulatory milestones, and $5.5 billion in sales-based milestones if Kelun-Biotech does not retain Chinese mainland, Hong Kong and Macau rights for the option ADCs and all candidates achieve regulatory approval. In addition, Kelun-Biotech is eligible to receive tiered royalties ranging from a mid-single-digit rate to a low-double-digit rate on future net sales for any commercialized ADC product. Also, in connection with the agreement, Merck invested $100 million in Kelun-Biotech’s Series B preferred shares in January 2023.

In January 2023, Merck acquired Imago BioSciences, Inc. (Imago), a clinical stage biopharmaceutical company developing new medicines for the treatment of myeloproliferative neoplasms and other bone marrow diseases, for $1.35 billion (including payments to settle share-based equity awards) and also incurred approximately $60 million of transaction costs. Imago’s lead candidate bomedemstat, MK-3543 (formerly IMG-7289), is an investigational orally available lysine-specific demethylase 1 inhibitor currently being evaluated in multiple Phase 2 clinical trials for the treatment of essential

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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

thrombocythemia, myelofibrosis, and polycythemia vera, in addition to other indications. The transaction was accounted for as an acquisition of an asset since bomedemstat represented substantially all of the fair value of the gross assets acquired (excluding cash and deferred income taxes). Merck recorded net assets of $219 million, as well as Research and development expenses of $1.2 billion in the first six months of 2023 related to the transaction. There are no future contingent payments associated with the acquisition.

In May 2022, in connection with an existing arrangement, Merck exercised its option to obtain an exclusive license outside of Chinese mainland, Hong Kong, Macau and Taiwan for the development, manufacture and commercialization of Kelun-Biotech’s trophoblast antigen 2 (TROP2)-targeting ADC programs, including its lead compound, SKB-264 (MK-2870), which is currently in Phase 2 clinical development. Under the terms of the agreement, Merck and Kelun-Biotech will collaborate on certain early clinical development plans, including evaluating the potential of MK-2870 as a monotherapy and in combination with Keytruda for advanced solid tumors. Upon option exercise, Merck made a payment of $30 million, which was recorded in Research and development expenses in the second quarter and first six months of 2022, and agreed to make additional payments of $30 million upon completion of specified project activities and $25 million upon technology transfer. Merck also agreed to make quarterly payments in 2022 and 2023 aggregating up to $111 million to fund Kelun-Biotech’s ongoing research and development activities, of which $81 million has been paid through June 2023. In addition, Kelun-Biotech is eligible to receive future contingent milestone payments (which include all program compounds) aggregating up to $90 million in developmental milestones, $290 million in first commercial sale milestones, and $780 million in sales-based milestones. The agreement also provides for Merck to pay tiered royalties ranging from a mid-single-digit rate to a low-double-digit rate on future net sales.

3.    Collaborative Arrangements

Merck has entered into collaborative arrangements that provide the Company with varying rights to develop, produce and market products together with its collaborative partners. Both parties in these arrangements are active participants and exposed to significant risks and rewards dependent on the commercial success of the activities of the collaboration. Merck’s more significant collaborative arrangements are discussed below.

AstraZeneca PLC

In 2017, Merck and AstraZeneca PLC (AstraZeneca) entered into a global strategic oncology collaboration to co-develop and co-commercialize AstraZeneca’s Lynparza (olaparib) for multiple cancer types. Independently, Merck and AstraZeneca will develop and commercialize Lynparza in combinations with their respective PD-1 and PD-L1 medicines, Keytruda (pembrolizumab) and Imfinzi. The companies are also jointly developing and commercializing AstraZeneca’s Koselugo (selumetinib) for multiple indications. Under the terms of the agreement, AstraZeneca and Merck will share the development and commercialization costs for Lynparza and Koselugo monotherapy and non-PD-L1/PD-1 combination therapy opportunities.

Profits from Lynparza and Koselugo product sales generated through monotherapies or combination therapies are shared equally. AstraZeneca is the principal on Lynparza and Koselugo sales transactions. Merck records its share of Lynparza and Koselugo product sales, net of cost of sales and commercialization costs, as alliance revenue and its share of development costs associated with the collaboration as part of Research and development expenses. Reimbursements received from AstraZeneca for research and development expenses are recognized as reductions to Research and development costs.

As part of the agreement, Merck made an upfront payment to AstraZeneca and also made payments over a multi-year period for certain license options. In addition, the agreement provides for contingent payments from Merck to AstraZeneca related to the successful achievement of sales-based and regulatory milestones.

In the first quarter of 2022, Merck determined it was probable that sales of Lynparza in the future would trigger a $600 million sales-based milestone payment from Merck to AstraZeneca. Accordingly, Merck recorded a $600 million liability (which remained accrued at June 30, 2023) and a corresponding increase to the intangible asset related to Lynparza. Merck also recognized $250 million of cumulative amortization catch-up expense related to the recognition of this milestone in the first six months of 2022. Additionally, in the first six months of 2022, Merck made a sales-based milestone payment to AstraZeneca (which had been previously accrued for) of $400 million. Potential future sales-based milestone payments of $2.1 billion have not yet been accrued as they are not deemed by the Company to be probable at this time. In the first quarter of 2023, Merck made a regulatory milestone payment to AstraZeneca of $105 million (which had been previously accrued for). In the second quarter of 2023, Lynparza received a regulatory approval triggering a future milestone payment of up to $245 million from Merck to AstraZeneca. In 2022, Lynparza received regulatory approvals triggering capitalized milestone payments of $250 million from Merck to AstraZeneca (of which $175 million was paid in the first six months of 2022). Potential future regulatory milestone payments of $850 million remain under the agreement.

The intangible asset balance related to Lynparza (which includes capitalized sales-based and regulatory milestone payments) was $1.7 billion at June 30, 2023 and is included in Other Intangibles, Net. The amount is being amortized over its estimated useful life through 2028 as supported by projected future cash flows, subject to impairment testing.

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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Summarized financial information related to this collaboration is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Alliance revenue - Lynparza	$	310	$	275	$	585	$	541
Alliance revenue - Koselugo	25		24		48		33
Total alliance revenue	$	335	$	299	$	633	$	574
Cost of sales (1)	78		62		148		361
Selling, general and administrative	51		46		98		90
Research and development	22		25		43		51
($ in millions)					June 30, 2023		December 31, 2022
Receivables from AstraZeneca included in Other current assets					$	332	$	303
Payables to AstraZeneca included in Accrued and other current liabilities (2)					260		123
Payables to AstraZeneca included in Other Noncurrent Liabilities (2)					600		600

(1)    Represents amortization of capitalized milestone payments. Amount in the first six months of 2022 includes $250 million of cumulative amortization catch-up expense as noted above.

(2)    Includes accrued milestone payments.

Eisai Co., Ltd.

In 2018, Merck and Eisai Co., Ltd. (Eisai) announced a strategic collaboration for the worldwide co-development and co-commercialization of Lenvima (lenvatinib), an orally available tyrosine kinase inhibitor discovered by Eisai. Under the agreement, Merck and Eisai will develop and commercialize Lenvima jointly, both as monotherapy and in combination with Keytruda. Eisai records Lenvima product sales globally (Eisai is the principal on Lenvima sales transactions) and Merck and Eisai share applicable profits equally. Merck records its share of Lenvima product sales, net of cost of sales and commercialization costs, as alliance revenue. Expenses incurred during co-development are shared by the two companies in accordance with the collaboration agreement and reflected in Research and development expenses. Certain expenses incurred solely by Merck or Eisai are not shareable under the collaboration agreement, including costs incurred in excess of agreed upon caps and costs related to certain combination studies of Keytruda and Lenvima.

Under the agreement, Merck made an upfront payment to Eisai and also made payments over a multi-year period for certain option rights. In addition, the agreement provides for contingent payments from Merck to Eisai related to the successful achievement of sales-based and regulatory milestones.

In the first quarter of 2023, Merck determined it was probable that sales of Lenvima in the future would trigger a $125 million sales-based milestone payment from Merck to Eisai. Accordingly, Merck recorded a $125 million liability and a corresponding increase to the intangible asset related to Lenvima. Merck also recognized $72 million of cumulative amortization catch-up expense related to the recognition of this milestone in the first six months of 2023. The Company made this sales-based milestone payment to Eisai in the second quarter of 2023. In the first six months of 2022, Merck made sales-based milestone payments to Eisai (which had been previously accrued for) aggregating $600 million. Potential future sales-based milestone payments of $2.4 billion have not yet been accrued as they are not deemed by the Company to be probable at this time. In 2022, Lenvima received regulatory approvals triggering capitalized milestone payments of $50 million from Merck to Eisai (of which $25 million was paid in the first six months of 2022). There are no regulatory milestone payments remaining under the agreement.

The intangible asset balance related to Lenvima (which includes capitalized sales-based and regulatory milestone payments) was $756 million at June 30, 2023 and is included in Other Intangibles, Net. The amount is being amortized over its estimated useful life through 2026 as supported by projected future cash flows, subject to impairment testing.

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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Summarized financial information related to this collaboration is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Alliance revenue - Lenvima	$	242	$	231	$	474	$	459
Cost of sales (1)	57		53		183		106
Selling, general and administrative	48		42		99		73
Research and development	17		47		56		104
($ in millions)					June 30, 2023		December 31, 2022
Receivables from Eisai included in Other current assets					$	242	$	214

(1)    Represents amortization of capitalized milestone payments. Amount in the first six months of 2023 includes $72 million of cumulative amortization catch-up expense as noted above.

Bayer AG

In 2014, the Company entered into a worldwide clinical development collaboration with Bayer AG (Bayer) to market and develop soluble guanylate cyclase (sGC) modulators including Bayer’s Adempas (riociguat). The two companies have implemented a joint development and commercialization strategy. The collaboration also includes development of Bayer’s Verquvo (vericiguat), which was approved in the U.S., the European Union (EU) and Japan in 2021, and has since been approved in several other markets. Under the agreement, Bayer commercializes Adempas in the Americas, while Merck commercializes in the rest of the world. For Verquvo, Merck commercializes in the U.S. and Bayer commercializes in the rest of the world. Both companies share in development costs and profits on sales. Merck records sales of Adempas and Verquvo in its marketing territories, as well as alliance revenue. Alliance revenue represents Merck’s share of profits from sales of Adempas and Verquvo in Bayer’s marketing territories, which are product sales net of cost of sales and commercialization costs. Cost of sales includes Bayer’s share of profits from sales in Merck’s marketing territories.

In addition, the agreement provided for contingent payments from Merck to Bayer related to the successful achievement of sales-based milestones. In the first six months of 2022, Merck made the final $400 million sales-based milestone payment under this collaboration to Bayer.

The intangible asset balances related to Adempas (which includes the acquired intangible asset balance, as well as capitalized sales-based milestone payments attributed to Adempas) and Verquvo (which reflects the portion of the final sales-based milestone payment that was attributed to Verquvo) were $586 million and $55 million, respectively, at June 30, 2023 and are included in Other Intangibles, Net. The assets are being amortized over their estimated useful lives (through 2027 for Adempas and through 2031 for Verquvo) as supported by projected future cash flows, subject to impairment testing.

Summarized financial information related to this collaboration is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Alliance revenue - Adempas/Verquvo	$	68	$	98	$	167	$	170
Net sales of Adempas recorded by Merck	65		63		125		124
Net sales of Verquvo recorded by Merck	9		6		16		9
Total sales	$	142	$	167	$	308	$	303
Cost of sales (1)	56		54		113		103
Selling, general and administrative	34		42		67		65
Research and development	25		17		50		34
($ in millions)					June 30, 2023		December 31, 2022
Receivables from Bayer included in Other current assets					$	144	$	143
Payables to Bayer included in Accrued and other current liabilities					82		80

(1)    Includes amortization of intangible assets.

Ridgeback Biotherapeutics LP

In 2020, Merck and Ridgeback Biotherapeutics LP (Ridgeback), a closely held biotechnology company, entered into a collaboration agreement to develop Lagevrio (molnupiravir), an investigational orally available antiviral candidate for the treatment of patients with COVID-19. Merck gained exclusive worldwide rights to develop and commercialize Lagevrio and related molecules. Following initial authorizations in certain markets in the fourth quarter of 2021, Lagevrio has since received multiple additional authorizations worldwide.

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Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Under the terms of the agreement, Ridgeback received an upfront payment and is eligible to receive future contingent payments dependent upon the achievement of certain developmental and regulatory approval milestones. The agreement also provides for Merck to reimburse Ridgeback for a portion of certain third-party contingent milestone payments and royalties on net sales, which is part of the profit-sharing calculation. Merck is the principal on sales transactions, recognizing sales and related costs, with profit-sharing amounts recorded within Cost of sales. Profits from the collaboration are split equally between the partners. Reimbursements from Ridgeback for its share of research and development costs (deducted from Ridgeback’s share of profits) are reflected as decreases to Research and development expenses.

Summarized financial information related to this collaboration is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Net sales of Lagevrio recorded by Merck	$	203	$	1,177	$	595	$	4,424
Cost of sales (1)(2)	193		615		414		2,341
Selling, general and administrative (2)	24		34		51		69
Research and development (2)	10		30		26		56
($ in millions)					June 30, 2023		December 31, 2022
Receivables from Ridgeback included in Other current assets (3)					$	51	$	—
Payables to Ridgeback included in Accrued and other current liabilities (4)					30		348

(1)    Includes royalty expense, amortization of capitalized milestone payments and inventory reserves.

(2)    Expenses include an allocation for overhead charges.

(3)    Includes partner advances.

(4)    Includes accrued royalties. Amount at December 31, 2022 also includes an accrued milestone payment.

Bristol-Myers Squibb Company

Reblozyl (luspatercept-aamt) is a first-in-class erythroid maturation recombinant fusion protein that is being commercialized through a global collaboration with Bristol-Myers Squibb Company (BMS). Reblozyl is approved in the U.S., Europe and certain other markets for the treatment of anemia in certain rare blood disorders and is also being evaluated for additional indications for hematology therapies. BMS is the principal on sales transactions for Reblozyl; however, Merck co-promotes Reblozyl (and will co-promote all future products approved under this collaboration) in North America, which is reimbursed by BMS. Merck receives a 20% sales royalty from BMS which could increase to a maximum of 24% based on sales levels. This royalty will be reduced by 50% upon the earlier of patent expiry or generic entry on an indication-by-indication basis in each market. Additionally, Merck is eligible to receive future contingent sales-based milestone payments of up to $80 million. Alliance revenue related to this collaboration (recorded within Sales) consists of royalties and, for the first six months of 2022, also includes the receipt of a regulatory approval milestone payment of $20 million. Merck recorded alliance revenue related to this collaboration of $47 million and $90 million in the second quarter and first six months of 2023, respectively, compared with $33 million and $86 million in the second quarter and first six months of 2022, respectively.

4. Spin-Off of Organon & Co.

On June 2, 2021, Merck completed the spin-off of Organon through a distribution of Organon’s publicly traded stock to Company shareholders. In connection with the spin-off, Merck and Organon entered into a separation and distribution agreement and also entered into various other agreements to effect the spin-off and provide a framework for the relationship between Merck and Organon after the spin-off, including a transition services agreement (TSA), manufacturing and supply agreements (MSAs), trademark license agreements, intellectual property license agreements, an employee matters agreement, a tax matters agreement and certain other commercial agreements. Under the TSA, Merck is providing Organon various services and, similarly, Organon is providing Merck various services. A majority of the services provided under the TSA terminated within 25 months following the spin-off; a majority of the remaining services will terminate within 35 months following the spin-off. Merck and Organon also entered into a series of interim operating agreements pursuant to which in various jurisdictions where Merck held licenses, permits and other rights in connection with marketing, import and/or distribution of Organon products prior to the separation, Merck is continuing to market, import and distribute such products until such time as the relevant licenses and permits are transferred to Organon. Under such interim operating agreements and in accordance with the separation and distribution agreement, Merck is continuing operations in the affected markets on behalf of Organon, with Organon receiving all of the economic benefits and burdens of such activities. Additionally, Merck and Organon entered into a number of MSAs pursuant to which Merck is (a) manufacturing and supplying certain active pharmaceutical ingredients for Organon, (b) manufacturing and supplying certain formulated pharmaceutical products for Organon, and (c) packaging and labeling certain finished pharmaceutical products for Organon. Similarly, Organon and Merck entered into a number of MSAs pursuant to which Organon is (a) manufacturing and supplying certain formulated pharmaceutical products for Merck, and (b) packaging and labeling certain finished pharmaceutical products for Merck. The terms of the MSAs range in initial duration from four years to ten years.

- 10 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

The amounts included in the condensed consolidated statement of operations for the above MSAs include sales of $96 million and $95 million and related cost of sales of $101 million and $103 million for the second quarter of 2023 and 2022, respectively, and sales of $191 million and $194 million and related cost of sales of $208 million and $208 million for the first six months of 2023 and 2022, respectively. Amounts included in the condensed consolidated statement of operations for the TSAs were immaterial for the three and six months ended June 30, 2023 and June 30, 2022.

The amounts due from Organon under all of the above agreements were $539 million and $511 million at June 30, 2023 and December 31, 2022, respectively, and are reflected in Other current assets. The amounts due to Organon under these agreements were $351 million and $345 million at June 30, 2023 and December 31, 2022, respectively, and are included in Accrued and other current liabilities.

5.    Restructuring

In 2019, Merck approved a global restructuring program (Restructuring Program) as part of a worldwide initiative focused on optimizing the Company’s manufacturing and supply network, as well as reducing its global real estate footprint. The actions contemplated under the Restructuring Program are expected to be substantially completed by the end of 2023, with the cumulative pretax costs to be incurred by the Company to implement the program estimated to be approximately $3.9 billion. The Company estimates that approximately 70% of the cumulative pretax costs will result in cash outlays, primarily related to employee separation expense and facility shut-down costs. Approximately 30% of the cumulative pretax costs will be non-cash, relating primarily to the accelerated depreciation of facilities to be closed or divested.

The Company recorded total pretax costs of $236 million and $258 million in the second quarter of 2023 and 2022, respectively, and $333 million and $384 million for the first six months of 2023 and 2022, respectively, related to restructuring program activities. Since inception of the Restructuring Program through June 30, 2023, Merck has recorded total pretax accumulated costs of approximately $3.7 billion. For the full year of 2023, the Company expects to record charges of approximately $550 million related to the Restructuring Program. For segment reporting, restructuring charges are unallocated expenses.

The following tables summarize the charges related to restructuring program activities by type of cost:

	Three Months Ended June 30, 2023								Six Months Ended June 30, 2023
($ in millions)	Separation Costs		Accelerated Depreciation		Other		Total		Separation Costs		Accelerated Depreciation		Other		Total
Cost of sales	$	—	$	22	$	10	$	32	$	—	$	43	$	18	$	61
Selling, general and administrative	—		—		52		52		—		—		53		53
Research and development	—		—		1		1		—		—		1		1
Restructuring costs	110		—		41		151		151		—		67		218
	$	110	$	22	$	104	$	236	$	151	$	43	$	139	$	333

	Three Months Ended June 30, 2022								Six Months Ended June 30, 2022
($ in millions)	Separation Costs		Accelerated Depreciation		Other		Total		Separation Costs		Accelerated Depreciation		Other		Total
Cost of sales	$	—	$	17	$	50	$	67	$	—	$	35	$	78	$	113
Selling, general and administrative	—		8		19		27		—		12		36		48
Research and development	—		22		—		22		—		29		—		29
Restructuring costs	106		—		36		142		132		—		62		194
	$	106	$	47	$	105	$	258	$	132	$	76	$	176	$	384

Separation costs are associated with actual headcount reductions, as well as involuntary headcount reductions which were probable and could be reasonably estimated.

Accelerated depreciation costs primarily relate to manufacturing, research and administrative facilities and equipment to be sold or closed as part of the program. Accelerated depreciation costs represent the difference between the depreciation expense to be recognized over the revised useful life of the asset, based upon the anticipated date the site will be closed or divested or the equipment disposed of, and depreciation expense as determined utilizing the useful life prior to the restructuring actions. All the sites have and will continue to operate up through the respective closure dates and, since future undiscounted cash flows are sufficient to recover the respective book values, Merck is recording accelerated depreciation over the revised useful life of the site assets. Anticipated site closure dates, particularly related to manufacturing locations, have been and may continue to be adjusted to reflect changes resulting from regulatory or other factors.

Other activity in 2023 and 2022 includes asset abandonment, facility shut-down and other related costs, as well as pretax gains and losses resulting from the sales of facilities and related assets. Additionally, other activity includes certain employee-related costs associated with pension and other postretirement benefit plans (see Note 11) and share-based compensation.

- 11 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

The following table summarizes the charges and spending relating to restructuring program activities for the six months ended June 30, 2023:

($ in millions)	Separation Costs		Accelerated Depreciation		Other		Total
Restructuring reserves January 1, 2023	$	479	$	—	$	34	$	513
Expenses	151		43		139		333
(Payments) receipts, net	(84)		—		(74)		(158)
Non-cash activity	—		(43)		(68)		(111)
Restructuring reserves June 30, 2023 (1)	$	546	$	—	$	31	$	577

(1)The remaining cash outlays are expected to be largely completed by the end of 2025.

6.    Financial Instruments

Derivative Instruments and Hedging Activities

The Company manages the impact of foreign exchange rate movements and interest rate movements on its earnings, cash flows and fair values of assets and liabilities through operational means and through the use of various financial instruments, including derivative instruments.

A significant portion of the Company’s revenues and earnings in foreign affiliates is exposed to changes in foreign exchange rates. The objectives of and accounting related to the Company’s foreign currency risk management program, as well as its interest rate risk management activities are discussed below.

Foreign Currency Risk Management

The Company has established revenue hedging, balance sheet risk management and net investment hedging programs to protect against volatility of future foreign currency cash flows and changes in fair value caused by changes in foreign exchange rates.

The objective of the revenue hedging program is to reduce the variability caused by changes in foreign exchange rates that would affect the U.S. dollar value of future cash flows derived from foreign currency denominated sales, primarily the euro, Japanese yen and Chinese renminbi. To achieve this objective, the Company will hedge a portion of its forecasted foreign currency denominated third-party and intercompany distributor entity sales (forecasted sales) that are expected to occur over its planning cycle, typically no more than two years into the future. The Company will layer in hedges over time, increasing the portion of forecasted sales hedged as it gets closer to the expected date of the forecasted sales. The portion of forecasted sales hedged is based on assessments of cost-benefit profiles that consider natural offsetting exposures, revenue and exchange rate volatilities and correlations, and the cost of hedging instruments. The Company manages its anticipated transaction exposure principally with purchased local currency put options, forward contracts, and purchased collar options.

The fair values of these derivative contracts are recorded as either assets (gain positions) or liabilities (loss positions) in the Condensed Consolidated Balance Sheet. Changes in the fair value of derivative contracts are recorded each period in either current earnings or Other comprehensive income (OCI), depending on whether the derivative is designated as part of a hedge transaction and, if so, the type of hedge transaction. For derivatives that are designated as cash flow hedges, the unrealized gains or losses on these contracts are recorded in Accumulated Other Comprehensive Loss (AOCL) and reclassified into Sales when the hedged anticipated revenue is recognized. For those derivatives which are not designated as cash flow hedges, but serve as economic hedges of forecasted sales, unrealized gains or losses are recorded in Sales each period. The cash flows from both designated and non-designated contracts are reported as operating activities in the Condensed Consolidated Statement of Cash Flows. The Company does not enter into derivatives for trading or speculative purposes.

The Company manages operating activities and net asset positions at each local subsidiary in order to mitigate the effects of exchange on monetary assets and liabilities. Monetary assets and liabilities denominated in a currency other than the functional currency of a given subsidiary are remeasured at spot rates in effect on the balance sheet date with the effects of changes in spot rates reported in Other (income) expense, net. The Company also uses a balance sheet risk management program to mitigate the exposure of such assets and liabilities from the effects of volatility in foreign exchange. Merck principally utilizes forward exchange contracts to offset the effects of exchange in developed country currencies, primarily the euro, Japanese yen, British pound, Canadian dollar, Australian dollar and Swiss franc. For exposures in developing country currencies, including the Chinese renminbi, the Company will enter into forward contracts to offset the effects of exchange on exposures when it is deemed economical to do so based on a cost-benefit analysis that considers the magnitude of the exposure, the volatility of the exchange rate and the cost of the hedging instrument. The forward contracts are not designated as hedges and are marked to market through Other (income) expense, net. Accordingly, fair value changes in the forward contracts help mitigate the changes in the value of the remeasured assets and liabilities attributable to changes in foreign currency exchange rates, except to the extent of the spot-forward differences. These differences are not significant due to the short-term nature of the contracts, which typically have average maturities at inception of less than six months. The cash flows from these contracts are reported as operating activities in the Condensed Consolidated Statement of Cash Flows.

The Company also uses forward exchange contracts to hedge a portion of its net investment in foreign operations against movements in exchange rates. The forward contracts are designated as hedges of the net investment in a foreign operation. The unrealized gains or losses on these contracts are recorded in foreign currency translation adjustment within OCI

- 12 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

and remain in AOCL until either the sale or complete or substantially complete liquidation of the subsidiary. The Company excludes certain portions of the change in fair value of its derivative instruments from the assessment of hedge effectiveness (excluded components). Changes in fair value of the excluded components are recognized in OCI. The Company recognizes in earnings the initial value of the excluded components on a straight-line basis over the life of the derivative instrument, rather than using the mark-to-market approach. The cash flows from these contracts are reported as investing activities in the Condensed Consolidated Statement of Cash Flows.

Foreign exchange risk is also managed through the use of foreign currency debt. The Company’s senior unsecured euro-denominated notes have been designated as, and are effective as, economic hedges of the net investment in a foreign operation. Accordingly, foreign currency transaction gains or losses due to spot rate fluctuations on the euro-denominated debt instruments are included in foreign currency translation adjustment within OCI.

The effects of the Company’s net investment hedges on OCI and the Condensed Consolidated Statement of Operations are shown below:

	Amount of Pretax (Gain) Loss Recognized in Other Comprehensive Income (1)								Amount of Pretax (Gain) Loss Recognized in Other (income) expense, net for Amounts Excluded from Effectiveness Testing
	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022		2023		2022		2023		2022
Net Investment Hedging Relationships
Foreign exchange contracts	$	—	$	(31)	$	1	$	(46)	$	—	$	(1)	$	1	$	(2)
Euro-denominated notes	21		(128)		73		(181)		—		—		—		—

(1)    No amounts were reclassified from AOCL into income related to the sale of a subsidiary.

Interest Rate Risk Management

The Company may use interest rate swap contracts on certain investing and borrowing transactions to manage its net exposure to interest rate changes and to reduce its overall cost of borrowing. The Company does not use leveraged swaps and, in general, does not leverage any of its investment activities that would put principal at risk. The Company is not currently a party to any interest rate swaps.

Presented in the table below is the fair value of derivatives on a gross basis segregated between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments:

		June 30, 2023						December 31, 2022
		Fair Value of Derivative				U.S. Dollar Notional		Fair Value of Derivative				U.S. Dollar Notional
($ in millions)		Asset		Liability				Asset		Liability
Derivatives Designated as Hedging Instruments	Balance Sheet Caption
Foreign exchange contracts	Other current assets	$	200	$	—	$	5,976	$	220	$	—	$	4,824
Foreign exchange contracts	Other Assets	43		—		1,750		27		—		1,609
Foreign exchange contracts	Accrued and other current liabilities	—		62		2,245		—		101		2,691
Foreign exchange contracts	Other Noncurrent Liabilities	—		1		328		—		1		91
		$	243	$	63	$	10,299	$	247	$	102	$	9,215
Derivatives Not Designated as Hedging Instruments	Balance Sheet Caption
Foreign exchange contracts	Other current assets	$	222	$	—	$	8,838	$	186	$	—	$	8,540
Foreign exchange contracts	Accrued and other current liabilities	—		181		10,112		—		307		10,926
		$	222	$	181	$	18,950	$	186	$	307	$	19,466
		$	465	$	244	$	29,249	$	433	$	409	$	28,681

As noted above, the Company records its derivatives on a gross basis in the Condensed Consolidated Balance Sheet. The Company has master netting agreements with several of its financial institution counterparties (see Concentrations of Credit Risk below). The following table provides information on the Company’s derivative positions subject to these master netting arrangements as if they were presented on a net basis, allowing for the right of offset by counterparty and cash collateral exchanged per the master agreements and related credit support annexes:

	June 30, 2023				December 31, 2022
($ in millions)	Asset		Liability		Asset		Liability
Gross amounts recognized in the condensed consolidated balance sheet	$	465	$	244	$	433	$	409
Gross amounts subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet	(180)		(180)		(220)		(220)
Cash collateral received/posted	(102)		—		(66)		(19)
Net amounts	$	183	$	64	$	147	$	170

- 13 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

The table below provides information regarding the location and amount of pretax gains and losses of derivatives designated in fair value or cash flow hedging relationships:

	Three Months Ended June 30,												Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022
Financial Statement Caption in which Effects of Fair Value or Cash Flow Hedges are Recorded	Sales				Other (income) expense, net (1)				Other comprehensive income (loss)				Sales				Other (income) expense, net (1)				Other comprehensive income (loss)
	$	15,035	$	14,593	$	172	$	438	$	(17)	$	42	$	29,522	$	30,494	$	259	$	1,148	$	(132)	$	102
(Gain) loss on fair value hedging relationships:
Interest rate swap contracts
Hedged items	—		—		—		(4)		—		—		—		—		—		(14)		—		—
Derivatives designated as hedging instruments	—		—		—		1		—		—		—		—		—		4		—		—
Impact of cash flow hedging relationships:
Foreign exchange contracts
Amount of gain recognized in OCI on derivatives	—		—		—		—		194		403		—		—		—		—		128		551
Increase in Sales as a result of AOCL reclassifications	24		172		—		—		(24)		(172)		125		239		—		—		(125)		(239)
Interest rate contracts
Amount of gain recognized in Other (income) expense, net on derivatives	—		—		—		—		—		—		—		—		(1)		(1)		—		—
Amount of gain (loss) recognized in OCI on derivatives	—		—		—		—		13		—		—		—		—		—		13		(1)

(1)    Interest expense is a component of Other (income) expense, net.

The table below provides information regarding the income statement effects of derivatives not designated as hedging instruments:

		Amount of Derivative Pretax (Gain) Loss Recognized in Income
		Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)		2023		2022		2023		2022
Derivatives Not Designated as Hedging Instruments	Income Statement Caption
Foreign exchange contracts (1)	Other (income) expense, net	$	(41)	$	(64)	$	(28)	$	(36)
Foreign exchange contracts (2)	Sales	(5)		(36)		(3)		(38)

(1)    These derivative contracts primarily mitigate changes in the value of remeasured foreign currency denominated monetary assets and liabilities attributable to changes in foreign currency exchange rates.

(2)    These derivative contracts serve as economic hedges of forecasted transactions.

At June 30, 2023, the Company estimates $83 million of pretax net unrealized gains on derivatives maturing within the next 12 months that hedge foreign currency denominated sales over that same period will be reclassified from AOCL to Sales. The amount ultimately reclassified to Sales may differ as foreign exchange rates change. Realized gains and losses are ultimately determined by actual exchange rates at maturity.

- 14 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Investments in Debt and Equity Securities

Information on investments in debt and equity securities is as follows:

	June 30, 2023								December 31, 2022
	Amortized Cost		Gross Unrealized				Fair Value		Amortized Cost		Gross Unrealized				Fair Value
($ in millions)			Gains		Losses						Gains		Losses
Commercial paper	$	561	$	—	$	—	$	561	$	498	$	—	$	—	$	498
U.S. government and agency securities	256		—		—		256		68		—		—		68
Corporate notes and bonds	4		—		—		4		3		—		—		3
Total debt securities	$	821	$	—	$	—	$	821	$	569	$	—	$	—	$	569
Publicly traded equity securities (1)							1,520								1,284
Total debt and publicly traded equity securities							$	2,341							$	1,853

(1)    Unrealized net losses (gains) of $71 million and $(267) million were recorded in Other (income) expense, net in the second quarter and first six months of 2023, respectively, on equity securities still held at June 30, 2023. Unrealized net (gains) losses of $(25) million and $194 million were recorded in Other (income) expense, net in the second quarter and first six months of 2022, respectively, on equity securities still held at June 30, 2022.

At June 30, 2023 and June 30, 2022, the Company also had $949 million and $671 million, respectively, of equity investments without readily determinable fair values included in Other Assets. The Company records unrealized gains on these equity investments based on favorable observable price changes from transactions involving similar investments of the same investee and records unrealized losses based on unfavorable observable price changes, which are included in Other (income) expense, net. During the first six months of 2023, the Company recorded unrealized gains of $3 million and unrealized losses of $23 million related to certain of these equity investments still held at June 30, 2023. During the first six months of 2022, the Company recorded unrealized gains of $20 million and unrealized losses of $1 million related to certain of these investments still held at June 30, 2022. Cumulative unrealized gains and cumulative unrealized losses based on observable price changes for investments in equity investments without readily determinable fair values still held at June 30, 2023 were $287 million and $42 million, respectively.

At June 30, 2023 and June 30, 2022, the Company also had $622 million and $805 million, respectively, recorded in Other Assets for equity securities held through ownership interests in investment funds. (Gains) losses recorded in Other (income) expense, net relating to these investment funds were $105 million and $302 million for the second quarter of 2023 and 2022, respectively, and were $(27) million and $811 million for the first six months of 2023 and 2022, respectively.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses a fair value hierarchy which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. There are three levels of inputs used to measure fair value with Level 1 having the highest priority and Level 3 having the lowest:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities;

Level 3 - Unobservable inputs that are supported by little or no market activity. Level 3 assets or liabilities are those whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques with significant unobservable inputs, as well as assets or liabilities for which the determination of fair value requires significant judgment or estimation.

If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

- 15 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:

	Fair Value Measurements Using								Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
($ in millions)	June 30, 2023								December 31, 2022
Assets
Investments
Commercial paper	$	—	$	561	$	—	$	561	$	—	$	498	$	—	$	498
U.S. government and agency securities	—		187		—		187		—		—		—		—
Publicly traded equity securities	1,184		—		—		1,184		1,015		—		—		1,015
	1,184		748		—		1,932		1,015		498		—		1,513
Other assets (1)
U.S. government and agency securities	69		—		—		69		68		—		—		68
Corporate notes and bonds	4		—		—		4		3		—		—		3
Publicly traded equity securities	336		—		—		336		269		—		—		269
	409		—		—		409		340		—		—		340
Derivative assets (2)
Forward exchange contracts	—		316		—		316		—		218		—		218
Purchased currency options	—		149		—		149		—		215		—		215
	—		465		—		465		—		433		—		433
Total assets	$	1,593	$	1,213	$	—	$	2,806	$	1,355	$	931	$	—	$	2,286
Liabilities
Other liabilities
Contingent consideration	$	—	$	—	$	349	$	349	$	—	$	—	$	456	$	456
Derivative liabilities (2)
Forward exchange contracts	—		235		—		235		—		402		—		402
Written currency options	—		9		—		9		—		7		—		7
	—		244		—		244		—		409		—		409
Total liabilities	$	—	$	244	$	349	$	593	$	—	$	409	$	456	$	865

(1)    Investments included in other assets are restricted as to use, including for the payment of benefits under employee benefit plans.

(2)    The fair value determination of derivatives includes the impact of the credit risk of counterparties to the derivatives and the Company’s own credit risk, the effects of which were not significant.

As of June 30, 2023 and December 31, 2022, Cash and cash equivalents included $4.9 billion and $11.3 billion of cash equivalents, respectively (which would be considered Level 2 in the fair value hierarchy).

Contingent Consideration

Summarized information about the changes in the fair value of liabilities for contingent consideration associated with business combinations is as follows:

($ in millions)	2023		2022
Fair value January 1	$	456	$	777
Changes in estimated fair value (1)	10		(114)
Payments	(117)		(119)
Other	—		(2)
Fair value June 30 (2)	$	349	$	542

(1)    Recorded in Cost of sales, Research and development expenses, and Other (income) expense, net. Includes cumulative translation adjustments.

(2)    At June 30, 2023, $262 million of the liabilities relate to the termination of the Sanofi Pasteur MSD joint venture in 2016. As part of the termination, Merck recorded a liability for contingent future royalty payments of 11.5% on net sales of all Merck products that were previously sold by the joint venture through December 31, 2024. The fair value of this liability is determined utilizing the estimated amount and timing of projected cash flows using a risk-adjusted discount rate to present value the cash flows. Balance at June 30, 2023 includes $130 million recorded as a current liability for amounts expected to be paid within the next 12 months.

The payments of contingent consideration in both periods relate to the Sanofi Pasteur MSD liabilities described above.

- 16 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Other Fair Value Measurements

Some of the Company’s financial instruments, such as cash and cash equivalents, receivables and payables, are reflected in the balance sheet at carrying value, which approximates fair value due to their short-term nature.

The estimated fair value of loans payable and long-term debt (including current portion) at June 30, 2023, was $34.0 billion compared with a carrying value of $36.9 billion and at December 31, 2022, was $26.7 billion compared with a carrying value of $30.7 billion. Fair value was estimated using recent observable market prices and would be considered Level 2 in the fair value hierarchy.

Concentrations of Credit Risk

On an ongoing basis, the Company monitors concentrations of credit risk associated with corporate and government issuers of securities and financial institutions with which it conducts business. Credit exposure limits are established to limit a concentration with any single issuer or institution. Cash and investments are placed in instruments that meet high credit quality standards as specified in the Company’s investment policy guidelines.

The majority of the Company’s accounts receivable arise from product sales in the U.S., Europe and China and are primarily due from drug wholesalers and retailers, hospitals and government agencies. The Company monitors the financial performance and creditworthiness of its customers so that it can properly assess and respond to changes in their credit profile. The Company also continues to monitor global economic conditions, including the volatility associated with international sovereign economies, and associated impacts on the financial markets and its business.

The Company has accounts receivable factoring agreements with financial institutions in certain countries to sell accounts receivable. The Company factored $2.9 billion and $2.5 billion of accounts receivable as of June 30, 2023 and December 31, 2022, respectively, under these factoring arrangements, which reduced outstanding accounts receivable. The cash received from the financial institutions is reported within operating activities in the Condensed Consolidated Statement of Cash Flows. In certain of these factoring arrangements, for ease of administration, the Company will collect customer payments related to the factored receivables, which it then remits to the financial institutions. As of June 30, 2023 and December 31, 2022, the Company had collected $44 million and $67 million, respectively, on behalf of the financial institutions, which is reflected as restricted cash in Other current assets and the related obligation to remit the cash within Accrued and other current liabilities. The Company remitted the cash to the financial institutions in July 2023 and January 2023, respectively. The net cash flows related to these collections are reported as financing activities in the Condensed Consolidated Statement of Cash Flows. The cost of factoring such accounts receivable was de minimis.

Derivative financial instruments are executed under International Swaps and Derivatives Association master agreements. The master agreements with several of the Company’s financial institution counterparties also include credit support annexes. These annexes contain provisions that require collateral to be exchanged depending on the value of the derivative assets and liabilities, the Company’s credit rating, and the credit rating of the counterparty. Cash collateral received by the Company from various counterparties was $102 million and $66 million at June 30, 2023 and December 31, 2022, respectively. The obligation to return such collateral is recorded in Accrued and other current liabilities. Cash collateral advanced by the Company to various counterparties was $19 million at December 31, 2022.

7.    Inventories

Inventories consisted of:

($ in millions)	June 30, 2023		December 31, 2022
Finished goods	$	1,841	$	1,841
Raw materials and work in process	7,453		7,063
Supplies	269		238
Total	9,563		9,142
Decrease to LIFO cost	(413)		(293)
	$	9,150	$	8,849
Recognized as:
Inventories	$	5,930	$	5,911
Other Assets	3,220		2,938

Amounts recognized as Other Assets are comprised almost entirely of raw materials and work in process inventories. At June 30, 2023 and December 31, 2022, these amounts included $2.6 billion and $2.4 billion, respectively, of inventories not expected to be sold within one year. In addition, these amounts included $663 million and $516 million at June 30, 2023 and December 31, 2022, respectively, of inventories produced in preparation for product launches.

- 17 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

8. Long-Term Debt

In May 2023, the Company issued $6.0 billion principal amount of senior unsecured notes consisting of $500 million of 4.05% notes due 2028, $750 million of 4.30% notes due 2030, $1.5 billion of 4.50% notes due 2033, $750 million of 4.90% notes due 2044, $1.5 billion of 5.00% notes due 2053, and $1.0 billion of 5.15% notes due 2063.

The Company used a portion of the $5.9 billion net proceeds from this offering to fund a portion of the cash consideration paid for the acquisition of Prometheus and related fees and expenses, and used the remaining net proceeds for general corporate purposes including to repay commercial paper borrowings and other indebtedness with upcoming maturities.

9.    Contingencies

The Company is involved in various claims and legal proceedings of a nature considered normal to its business, including product liability, intellectual property, and commercial litigation, as well as certain additional matters including governmental and environmental matters. In the opinion of the Company, it is unlikely that the resolution of these matters will be material to the Company’s financial condition, results of operations or cash flows.

Given the nature of the litigation discussed below and the complexities involved in these matters, the Company is unable to reasonably estimate a possible loss or range of possible loss for such matters until the Company knows, among other factors, (i) what claims, if any, will survive dispositive motion practice, (ii) the extent of the claims, including the size of any potential class, particularly when damages are not specified or are indeterminate, (iii) how the discovery process will affect the litigation, (iv) the settlement posture of the other parties to the litigation and (v) any other factors that may have a material effect on the litigation.

The Company records accruals for contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available. For product liability claims, a portion of the overall accrual is actuarially determined and considers such factors as past experience, number of claims reported and estimates of claims incurred but not yet reported. Individually significant contingent losses are accrued when probable and reasonably estimable. Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable.

The Company’s decision to obtain insurance coverage is dependent on market conditions, including cost and availability, existing at the time such decisions are made. The Company has evaluated its risks and has determined that the cost of obtaining product liability insurance outweighs the likely benefits of the coverage that is available and, as such, has no insurance for most product liabilities.

Product Liability Litigation

Gardasil/Gardasil 9

Merck is a defendant in product liability lawsuits in the U.S. involving Gardasil (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant) and Gardasil 9 (Human Papillomavirus 9-valent Vaccine, Recombinant). As of June 30, 2023, approximately 95 cases were filed and pending against Merck in either federal or state court. In these actions, plaintiffs allege, among other things, that they suffered various personal injuries after vaccination with Gardasil or Gardasil 9, with postural orthostatic tachycardia syndrome as a predominate alleged injury. In August 2022, the Judicial Panel on Multidistrict Litigation ordered that Gardasil/Gardasil 9 product liability cases pending in federal courts nationwide be transferred to Judge Robert J. Conrad in the Western District of North Carolina for coordinated pre-trial proceedings. There are fewer than 15 product liability cases pending outside the U.S.

Governmental Proceedings

Inflation Reduction Act

On June 6, 2023, Merck filed a complaint in the U.S. District Court for the District of Columbia against the U.S. government regarding the Inflation Reduction Act’s “Drug Price Negotiation Program” for Medicare (the Program). This litigation seeks relief from the Program by challenging its constitutionality as violative of the First and Fifth Amendments to the U.S. Constitution.

Other Governmental Proceedings

As previously disclosed, from time to time, the Company’s subsidiaries in China receive inquiries regarding their operations from various Chinese governmental agencies. Some of these inquiries may be related to matters involving other multinational pharmaceutical companies, as well as Chinese entities doing business with such companies. The Company’s policy is to cooperate with these authorities and to provide responses as appropriate.

As previously disclosed, from time to time, the Company receives inquiries and is the subject of preliminary investigation activities from competition and other governmental authorities in markets outside the U.S. These authorities may include regulators, administrative authorities, and law enforcement and other similar officials, and these preliminary investigation activities may include site visits, formal or informal requests or demands for documents or materials, inquiries or interviews and similar matters. Certain of these preliminary inquiries or activities may lead to the commencement of formal proceedings. Should those proceedings be determined adversely to the Company, monetary fines and/or remedial undertakings may be required.

- 18 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Commercial and Other Litigation

Zetia Antitrust Litigation

As previously disclosed, Merck, Merck Sharp & Dohme, LLC. (MSD), Schering Corporation, Schering-Plough Corporation, and MSP Singapore Company LLC (collectively, the Merck Defendants) were defendants in a number of lawsuits filed in 2018 on behalf of direct and indirect purchasers of Zetia alleging violations of federal and state antitrust laws, as well as other state statutory and common law causes of action. The cases were consolidated in a federal multidistrict litigation (the Zetia MDL) before Judge Rebecca Beach Smith in the Eastern District of Virginia.

In 2020 and 2021, United Healthcare Services, Inc., Humana Inc., Centene Corporation and others, and Kaiser Foundation Health Plan, Inc. (collectively, the Insurer Plaintiffs), each filed a lawsuit in a jurisdiction outside of the Eastern District of Virginia against the Merck Defendants and others, making similar allegations as those made in the Zetia MDL, as well as additional allegations about Vytorin. These cases have been transferred to the Eastern District of Virginia to proceed with the Zetia MDL and remain pending.

In February 2022, the Insurer Plaintiffs filed amended complaints. In March 2022, the Merck Defendants, jointly with other defendants, moved to dismiss certain aspects of the Insurer Plaintiffs’ complaints, including any claims for Vytorin damages. That motion to dismiss the Vytorin-related claims is still pending.

As previously disclosed, in April 2023, the Merck Defendants reached settlements with the direct purchaser and retailer plaintiffs and a proposed settlement, subject to court approval, with the indirect purchaser class. Under these agreements, Merck agreed to pay $572.5 million to resolve the direct purchaser, retailer, and indirect purchaser plaintiffs’ claims, which was recorded as an expense in the Company’s first quarter 2023 financial results. On June 6, 2023, the court granted preliminary approval of the indirect purchaser class settlement and scheduled a fairness hearing for September 21, 2023.

Qui Tam Litigation

As previously disclosed, in June 2012, the U.S. District Court for the Eastern District of Pennsylvania unsealed a complaint that had been filed against the Company under the federal False Claims Act by two former employees alleging, among other things, that the Company defrauded the U.S. government by falsifying data in connection with a clinical study conducted on the mumps component of the Company’s M-M-R II vaccine. The complaint alleges the fraud took place between 1999 and 2001. The U.S. government had the right to participate in and take over the prosecution of this lawsuit but notified the court that it declined to exercise that right. The two former employees are pursuing the lawsuit without the involvement of the U.S. government. In addition, as previously disclosed, two putative class action lawsuits on behalf of direct purchasers of the M-M-R II vaccine, which charge that the Company misrepresented the efficacy of the M-M-R II vaccine in violation of federal antitrust laws and various state consumer protection laws, are pending in the Eastern District of Pennsylvania. In September 2014, the court denied Merck’s motion to dismiss the False Claims Act suit and granted in part and denied in part its motion to dismiss the then-pending antitrust suit. As a result, both the False Claims Act suit and the antitrust suits proceeded into discovery, which is complete, and the parties filed and briefed cross-motions for summary judgment. On July 27, 2023, in the False Claims Act case, the court denied relators’ motion for summary judgment, granted two of the Company’s motions for summary judgment, and denied the Company’s remaining motions for summary judgment as moot. The court entered judgment in favor of the Company and dismissed relators’ amended complaint in full with prejudice. Relators can appeal that decision. In the antitrust case, the court granted the Company’s motion for summary judgment as to plaintiffs’ state law claims and denied the motion as to plaintiffs’ antitrust claim. Plaintiffs’ antitrust claim will proceed in litigation.

Patent Litigation

From time to time, generic manufacturers of pharmaceutical products file abbreviated New Drug Applications (NDAs) with the U.S. Food and Drug Administration (FDA) seeking to market generic forms of the Company’s products prior to the expiration of relevant patents owned by the Company. To protect its patent rights, the Company may file patent infringement lawsuits against such generic companies. Similar lawsuits defending the Company’s patent rights may exist in other countries. The Company intends to vigorously defend its patents, which it believes are valid, against infringement by companies attempting to market products prior to the expiration of such patents. As with any litigation, there can be no assurance of the outcomes, which, if adverse, could result in significantly shortened periods of exclusivity for these products and, with respect to products acquired through acquisitions accounted for as business combinations, potentially significant intangible asset impairment charges.

Bridion — As previously disclosed, between January and November 2020, the Company received multiple Paragraph IV Certification Letters under the Hatch-Waxman Act notifying the Company that generic drug companies have filed applications to the FDA seeking pre-patent expiry approval to sell generic versions of Bridion (sugammadex) Injection. In March, April and December 2020, the Company filed patent infringement lawsuits in the U.S. District Courts for the District of New Jersey and the Northern District of West Virginia against those generic companies. All actions in the District of New Jersey were consolidated. The West Virginia case was jointly dismissed with prejudice on August 8, 2022 in favor of proceeding in New Jersey. The remaining defendants in the New Jersey action stipulated to infringement of the asserted claims and withdrew all remaining claims and defenses other than a defense seeking to shorten the patent term extension (PTE) of the sugammadex patent to December 2022. The U.S. District Court for the District of New Jersey held a one-day trial on December 19, 2022 on this remaining PTE calculation defense and held closing arguments on February 3, 2023.

- 19 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

While the New Jersey action was pending, the Company settled with five generic companies providing that these generic companies can bring their generic versions of Bridion to the market in January 2026 (which may be delayed by any applicable pediatric exclusivity) or earlier under certain circumstances. The Company agreed to stay the lawsuit filed against two generic companies, which in exchange agreed to be bound by a judgment on the merits of the consolidated action in the District of New Jersey. One of the generic companies in the consolidated action requested dismissal of the action against it and the Company did not oppose this request, which was subsequently granted by the court. The Company does not expect this company to bring its generic version of Bridion to the market before January 2026 or later, depending on any applicable pediatric exclusivity.

On June 13, 2023, the U.S. District Court for the District of New Jersey ruled in Merck’s favor. The court held that Merck’s calculation of PTE for the sugammadex patent covering the compound is not invalid and that the U.S. Patent & Trademark Office correctly granted a full 5-year extension. This ruling affirms and validates Merck’s U.S. patent protection for Bridion through at least January 2026. On June 29, 2023, the U.S. District Court for the District of New Jersey issued a final judgment prohibiting the FDA from approving any of the pending or tentatively approved generic applications until January 27, 2026, except for any subsequent agreements between Defendants and Merck or further order by the court.

Januvia, Janumet, Janumet XR — As previously disclosed, the FDA granted pediatric exclusivity with respect to Januvia (sitagliptin), Janumet (sitagliptin/metformin HCI), and Janumet XR (sitagliptin and metformin HCl extended-release), which provides a further six months of exclusivity in the U.S. beyond the expiration of all patents listed in the FDA’s Orange Book. Adding this exclusivity to the term of the key patent protection extended exclusivity on these products to January 2023. However, Januvia, Janumet, and Janumet XR contain sitagliptin phosphate monohydrate and the Company has another patent covering certain phosphate salt and polymorphic forms of sitagliptin that expires in May 2027, including pediatric exclusivity (2027 salt/polymorph patent). In 2019, Par Pharmaceutical filed suit against the Company in the U.S. District Court for the District of New Jersey, seeking a declaratory judgment of invalidity of the 2027 salt/polymorph patent. In response, the Company filed a patent infringement lawsuit in the U.S. District Court for the District of Delaware against Par Pharmaceutical and additional companies that also indicated an intent to market generic versions of Januvia, Janumet, and Janumet XR following expiration of key patent protection, but prior to the expiration of the 2027 salt/polymorph patent. The Company also filed a patent infringement lawsuit against Mylan in the U.S. District Court for the Northern District of West Virginia.

Prior to the beginning of the scheduled October 2021 trial in the U.S. District Court for the District of Delaware on invalidity issues, the Company settled with all defendants scheduled to participate in that trial. In the Company’s case against Mylan, a bench trial was held in December 2021 in the U.S. District Court for the Northern District of West Virginia, and the closing arguments were held in April 2022. In September 2022, the U.S. District Court for the Northern District of West Virginia issued a decision in the Company’s favor, upholding all asserted patent claims. Mylan (now Viatris) appealed to the U.S. Court of Appeals for the Federal Circuit. The parties have now settled the matter, and Viatris has agreed to voluntarily dismiss the appeal following entry of an amended final judgment by the district court.

In total, the Company has settled with 25 generic companies providing that these generic companies can bring their generic versions of Januvia and Janumet to the market in May 2026 or earlier under certain circumstances, and their generic versions of Janumet XR to the market in July 2026 or earlier under certain circumstances.

In March 2021, the Company filed a patent infringement lawsuit in the U.S. District Court for the District of Delaware against Zydus Worldwide DMCC, Zydus Pharmaceuticals (USA) Inc., and Cadila Healthcare Ltd. (collectively, Zydus). In that lawsuit, the Company alleged infringement of the 2027 salt/polymorph patent based on the filing of Zydus’s NDA seeking approval of its sitagliptin tablets. In December 2022, the parties reached settlement that included dismissal of the case without prejudice enabling Zydus to seek final approval of a non-automatically substitutable product containing a different form of sitagliptin than that used in Januvia.

In January 2023, the Company received a Paragraph IV Certification Letter under the Hatch-Waxman Act notifying the Company that Zydus filed a NDA seeking approval of sitagliptin/metformin HCl tablets and certifying that no valid or enforceable claim of any of the patents listed in FDA’s Orange Book for Janumet will be infringed by the proposed Zydus product. In March 2023, the parties reached settlement enabling Zydus to seek final approval of a non-automatically substitutable product containing a different form of sitagliptin than that used in Janumet.

As a result of these favorable court rulings and settlement agreements related to the later expiring 2027 salt/polymorph patent directed to the specific sitagliptin salt form of the products, the Company expects that Januvia and Janumet will not lose market exclusivity in the U.S. until May 2026 and Janumet XR will not lose market exclusivity in the U.S. until July 2026, although another non-automatically substitutable form of sitagliptin could be available prior to 2026.

Supplementary Protection Certificates (SPCs) for Janumet expired in April 2023 for the majority of European countries. Prior to expiration, generic companies sought revocation of the Janumet SPCs in a number of European countries. In February 2022, a Finnish court referred certain questions to the Court of Justice of the European Union (CJEU) that could determine the validity of the Janumet SPCs in Europe, for which an oral hearing was held on March 8, 2023, and an Advocate General Opinion is expected in the third quarter with a decision in the fourth quarter of 2023. If the CJEU renders a decision that negatively impacts the validity of the Janumet SPCs throughout Europe, generic companies that were prevented from launching products during the SPC period in certain European countries may have an action for damages. Those countries include Belgium, Czech Republic, Ireland, Finland, France, Slovakia and Switzerland. If the Janumet SPCs are ultimately upheld, the Company has reserved its rights related to the pursuit of damages for those countries where a generic launched prior to expiry of the Janumet SPC.

- 20 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Keytruda — The Company filed a complaint against The Johns Hopkins University (JHU) on November 29, 2022, in the U.S. District Court of Maryland. This action concerns patents emerging from a joint research collaboration between Merck and JHU regarding the use of pembrolizumab, which Merck sells under the trade name Keytruda. Merck and JHU partnered to design and conduct a clinical study administering Keytruda to cancer patients having tumors that had the genetic biomarker known as microsatellite instability-high (MSI-H). After the conclusion of the study, JHU secured U.S. patents citing the joint research study. Merck alleges that JHU has breached the collaboration agreement by filing and obtaining these patents without informing or involving Merck and then licensing the patents to others. Merck therefore brought this action for breach of contract, declaratory judgment of noninfringement, and promissory estoppel. JHU answered the complaint on April 13, 2023, denying Merck’s claims, and counterclaiming for willful infringement of five issued U.S. patents, including a demand for damages.

Lynparza — In December 2022, AstraZeneca Pharmaceuticals LP received a Paragraph IV Certification Letter under the Hatch-Waxman Act notifying AstraZeneca that Natco Pharma Limited (Natco) has filed an application to the FDA seeking pre-patent expiry approval to sell generic versions of Lynparza (olaparib) tablet. In February 2023, AstraZeneca and the Company filed a patent infringement lawsuit in the U.S. District Court for the District of New Jersey against Natco. This lawsuit, which asserts one or more patents covering olaparib, automatically stays FDA approval of the generic application until June 2025 or until an adverse court decision, if any, whichever may occur earlier.

Other Litigation

There are various other pending legal proceedings involving the Company, principally product liability and intellectual property lawsuits. While it is not feasible to predict the outcome of such proceedings, in the opinion of the Company, either the likelihood of loss is remote or any reasonably possible loss associated with the resolution of such proceedings is not expected to be material to the Company’s financial condition, results of operations or cash flows either individually or in the aggregate.

Other Matters

As previously disclosed, the Company was involved in an arbitration with Johnson & Johnson with respect to two agreements pursuant to which Merck was supporting the manufacture and supply of Johnson & Johnson’s SARS-CoV-2/COVID-19 vaccine and vaccine drug product. The arbitration has been settled with no material impact to the Company’s financial statements.

Legal Defense Reserves

Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable. Some of the significant factors considered in the review of these legal defense reserves are as follows: the actual costs incurred by the Company; the development of the Company’s legal defense strategy and structure in light of the scope of its litigation; the number of cases being brought against the Company; the costs and outcomes of completed trials and the most current information regarding anticipated timing, progression, and related costs of pre-trial activities and trials in the associated litigation. The amount of legal defense reserves as of June 30, 2023 and December 31, 2022 of approximately $225 million and $230 million, respectively, represents the Company’s best estimate of the minimum amount of defense costs to be incurred in connection with its outstanding litigation; however, events such as additional trials and other events that could arise in the course of its litigation could affect the ultimate amount of legal defense costs to be incurred by the Company. The Company will continue to monitor its legal defense costs and review the adequacy of the associated reserves and may determine to increase the reserves at any time in the future if, based upon the factors set forth, it believes it would be appropriate to do so.

- 21 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

10.    Equity

	Three Months Ended June 30,
	Common Stock			Other Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Non- controlling Interests		Total
($ and shares in millions except per share amounts)	Shares	Par Value								Shares	Cost
Balance at April 1, 2022	3,577	$	1,788	$	44,275	$	56,252	$	(4,369)	1,049	$	(57,063)	$	70	$	40,953
Net income attributable to Merck & Co., Inc.	—	—		—		3,944		—		—	—		—		3,944
Other comprehensive income, net of taxes	—	—		—		—		42		—	—		—		42
Cash dividends declared on common stock ($0.69 per share)	—	—		—		(1,759)		—		—	—		—		(1,759)
Share-based compensation plans and other	—	—		(160)		—		—		(5)	293		—		133
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		5		5
Balance at June 30, 2022	3,577	$	1,788	$	44,115	$	58,437	$	(4,327)	1,044	$	(56,770)	$	75	$	43,318
Balance at April 1, 2023	3,577	$	1,788	$	44,467	$	62,039	$	(4,883)	1,040	$	(56,577)	$	71	$	46,905
Net loss attributable to Merck & Co., Inc.	—	—		—		(5,975)		—		—	—		—		(5,975)
Other comprehensive loss, net of taxes	—	—		—		—		(17)		—	—		—		(17)
Cash dividends declared on common stock ($0.73 per share)	—	—		—		(1,866)		—		—	—		—		(1,866)
Treasury stock shares purchased	—	—		—		—		—		3	(338)		—		(338)
Share-based compensation plans and other	—	—		(248)		—		—		(5)	303		—		55
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		3		3
Distributions attributable to noncontrolling interests	—	—		—		—		—		—	—		(25)		(25)
Balance at June 30, 2023	3,577	$	1,788	$	44,219	$	54,198	$	(4,900)	1,038	$	(56,612)	$	49	$	38,742

	Six Months Ended June 30,
	Common Stock			Other Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Non- controlling Interests		Total
($ and shares in millions except per share amounts)	Shares	Par Value								Shares	Cost
Balance at January 1, 2022	3,577	$	1,788	$	44,238	$	53,696	$	(4,429)	1,049	$	(57,109)	$	73	$	38,257
Net income attributable to Merck & Co., Inc.	—	—		—		8,254		—		—	—		—		8,254
Other comprehensive income, net of taxes	—	—		—		—		102		—	—		—		102
Cash dividends declared on common stock ($1.38 per share)	—	—		—		(3,513)		—		—	—		—		(3,513)
Share-based compensation plans and other	—	—		(123)		—		—		(5)	339		—		216
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		2		2
Balance at June 30, 2022	3,577	$	1,788	$	44,115	$	58,437	$	(4,327)	1,044	$	(56,770)	$	75	$	43,318
Balance at January 1, 2023	3,577	$	1,788	$	44,379	$	61,081	$	(4,768)	1,039	$	(56,489)	$	67	$	46,058
Net loss attributable to Merck & Co., Inc.	—	—		—		(3,154)		—		—	—		—		(3,154)
Other comprehensive loss, net of taxes	—	—		—		—		(132)		—	—		—		(132)
Cash dividends declared on common stock ($1.46 per share)	—	—		—		(3,729)		—		—	—		—		(3,729)
Treasury stock shares purchased	—	—		—		—		—		4	(487)		—		(487)
Share-based compensation plans and other	—	—		(160)		—		—		(5)	364		—		204
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		7		7
Distributions attributable to noncontrolling interests	—	—		—		—		—		—	—		(25)		(25)
Balance at June 30, 2023	3,577	$	1,788	$	44,219	$	54,198	$	(4,900)	1,038	$	(56,612)	$	49	$	38,742

- 22 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

11.    Pension and Other Postretirement Benefit Plans

The Company has defined benefit pension plans covering eligible employees in the U.S. and in certain of its international subsidiaries. The net periodic benefit cost (credit) of such plans consisted of the following components: 

	Three Months Ended June 30,								Six Months Ended June 30,
	2023				2022				2023				2022
($ in millions)	U.S.		International		U.S.		International		U.S.		International		U.S.		International
Service cost	$	76	$	50	$	99	$	72	$	152	$	99	$	198	$	147
Interest cost	133		75		103		37		266		149		206		75
Expected return on plan assets	(185)		(130)		(197)		(98)		(372)		(257)		(393)		(199)
Amortization of unrecognized prior service cost (credit)	—		16		(8)		(3)		(1)		12		(16)		(7)
Net (gain) loss amortization	—		(1)		56		25		—		(2)		112		50
Termination benefits	1		—		1		—		1		—		1		—
Curtailments	2		—		4		—		5		—		8		—
Settlements	5		—		101		—		26		—		101		—
	$	32	$	10	$	159	$	33	$	77	$	1	$	217	$	66

The Company provides medical benefits, principally to its eligible U.S. retirees and similar benefits to their dependents, through its other postretirement benefit plans. The net credit of such plans consisted of the following components: 

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Service cost	$	8	$	12	$	17	$	25
Interest cost	16		11		31		23
Expected return on plan assets	(16)		(21)		(32)		(43)
Amortization of unrecognized prior service credit	(12)		(14)		(25)		(29)
Net gain amortization	(11)		(11)		(21)		(21)
	$	(15)	$	(23)	$	(30)	$	(45)

In connection with restructuring actions (see Note 5), termination charges were recorded on pension plans related to expanded eligibility for certain employees exiting Merck. Also, in connection with these restructuring activities, curtailments were recorded on certain pension plans. In addition, lump sum payments to U.S. pension plan participants triggered partial settlement charges in the second quarter and first six months of both 2023 and 2022. These partial settlements triggered remeasurements of some of the Company’s U.S. pension plans. Remeasurements during the first six months of 2023 resulted in an increase of $47 million to net pension liabilities and a related adjustment to AOCL.

The components of net periodic benefit cost (credit) other than the service cost component are included in Other (income) expense, net (see Note 12), with the exception of certain amounts for termination benefits, curtailments and settlements, which are recorded in Restructuring costs if the event giving rise to the termination benefits, curtailment or settlement related to restructuring actions.

- 23 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

12.    Other (Income) Expense, Net

Other (income) expense, net, consisted of: 

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Interest income	$	(109)	$	(15)	$	(221)	$	(22)
Interest expense	277		240		519		483
Exchange losses	62		86		122		124
Loss (income) from investments in equity securities, net (1)	175		284		(274)		991
Net periodic defined benefit plan (credit) cost other than service cost	(111)		(27)		(226)		(148)
Other, net	(122)		(130)		339		(280)
	$	172	$	438	$	259	$	1,148

(1)    Includes net realized and unrealized gains and losses from investments in equity securities either owned directly or through ownership interests in investment funds. Unrealized gains and losses from investments that are directly owned are determined at the end of the reporting period, while gains and losses from ownership interests in investment funds are accounted for on a one quarter lag.

Other, net (as reflected in the table above) in the first six months of 2023 includes a $572.5 million charge related to settlements with certain plaintiffs in the Zetia antitrust litigation (see Note 9).

Interest paid for both the six months ended June 30, 2023 and 2022 was $449 million.

13.    Income Taxes

The income tax provision of $637 million and $1.5 billion for the second quarter and first six months of 2023, respectively, on pretax losses of $5.3 billion and $1.7 billion, respectively, resulted in effective income tax rates of (11.9)% and (86.8)%, respectively. The second quarter 2023 effective tax rate includes the impact of a charge for the acquisition of Prometheus for which no tax benefit was recognized, which unfavorably affected the tax rate by 25.1 percentage points, as well as the favorable impact of net unrealized losses from investments in equity securities, which were taxed at the U.S. tax rate. The effective income tax rate for the first six months of 2023 includes a 101.9 percentage point combined unfavorable impact of charges for the acquisitions of Prometheus and Imago for which no tax benefits were recognized, as well as higher foreign taxes, the impact of the R&D capitalization provision of the Tax Cuts and Jobs Act of 2017 (TCJA) on the Company’s U.S. global intangible low-taxed income inclusion, and net unrealized gains from investments in equity securities, which were taxed at the U.S. tax rate, partially offset by higher foreign tax credits. The effective income tax rates of 12.0% for the second quarter of 2022 and 11.7% for the first six months of 2022 reflect the favorable impact of net unrealized losses from investments in equity securities, which were taxed at the U.S. tax rate.

The Internal Revenue Service (IRS) is currently conducting examinations of the Company’s tax returns for the years 2017 and 2018, including the one-time transition tax enacted under the TCJA. If the IRS disagrees with the Company’s transition tax position, it may result in a significant tax liability.

14.    Earnings Per Share

The calculations of (loss) earnings per share are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ and shares in millions except per share amounts)	2023		2022		2023		2022
Net (Loss) Income Attributable to Merck & Co., Inc.	$	(5,975)	$	3,944	$	(3,154)	$	8,254
Average common shares outstanding	2,539		2,531		2,539		2,529
Common shares issuable (1)	—		9		—		9
Average common shares outstanding assuming dilution	2,539		2,540		2,539		2,538
Basic (Loss) Earnings per Common Share Attributable to Merck & Co., Inc. Common Shareholders	$	(2.35)	$	1.56	$	(1.24)	$	3.26
(Loss) Earnings per Common Share Assuming Dilution Attributable to Merck & Co., Inc. Common Shareholders	$	(2.35)	$	1.55	$	(1.24)	$	3.25

(1)    Issuable primarily under share-based compensation plans.

The Company recorded a net loss for the three and six months ended June 30, 2023; therefore, no potential dilutive common shares were used in the computations of loss per common share assuming dilution because the effects would have been antidilutive. For the three and six months ended June 30, 2022, 2 million and 6 million, respectively, of common shares issuable under share-based compensation plans were excluded from the computations of earnings per common share assuming dilution because the effect would have been antidilutive.

- 24 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

15.    Other Comprehensive Income (Loss)

Changes in each component of other comprehensive income (loss) are as follows:

	Three Months Ended June 30,
($ in millions)	Derivatives			Employee Benefit Plans			Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Loss
Balance April 1, 2022, net of taxes	$	207		$	(2,711)		$	(1,865)	$	(4,369)
Other comprehensive income (loss) before reclassification adjustments, pretax	403			168			(365)		206
Tax	(85)			(35)			(22)		(142)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	318			133			(387)		64
Reclassification adjustments, pretax	(171)		(1)	144		(2)	—		(27)
Tax	36			(31)			—		5
Reclassification adjustments, net of taxes	(135)			113			—		(22)
Other comprehensive income (loss), net of taxes	183			246			(387)		42
Balance June 30, 2022, net of taxes	$	390		$	(2,465)		$	(2,252)	$	(4,327)
Balance April 1, 2023, net of taxes	$	(60)		$	(2,458)		$	(2,365)	$	(4,883)
Other comprehensive income (loss) before reclassification adjustments, pretax	194			(6)			(115)		73
Tax	(41)			1			(22)		(62)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	153			(5)			(137)		11
Reclassification adjustments, pretax	(11)		(1)	(23)		(2)	—		(34)
Tax	3			3			—		6
Reclassification adjustments, net of taxes	(8)			(20)			—		(28)
Other comprehensive income (loss), net of taxes	145			(25)			(137)		(17)
Balance June 30, 2023, net of taxes	$	85		$	(2,483)		$	(2,502)	$	(4,900)

	Six Months Ended June 30,
($ in millions)	Derivatives			Employee Benefit Plans			Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Loss
Balance January 1, 2022, net of taxes	$	144		$	(2,743)		$	(1,830)	$	(4,429)
Other comprehensive income (loss) before reclassification adjustments, pretax	551			169			(383)		337
Tax	(116)			(37)			(39)		(192)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	435			132			(422)		145
Reclassification adjustments, pretax	(239)		(1)	189		(2)	—		(50)
Tax	50			(43)			—		7
Reclassification adjustments, net of taxes	(189)			146			—		(43)
Other comprehensive income (loss), net of taxes	246			278			(422)		102
Balance June 30, 2022, net of taxes	$	390		$	(2,465)		$	(2,252)	$	(4,327)
Balance January 1, 2023, net of taxes	$	73		$	(2,408)		$	(2,433)	$	(4,768)
Other comprehensive income (loss) before reclassification adjustments, pretax	128			(53)			(36)		39
Tax	(27)			3			(42)		(66)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	101			(50)			(78)		(27)
Reclassification adjustments, pretax	(113)		(1)	(30)		(2)	9		(134)
Tax	24			5			—		29
Reclassification adjustments, net of taxes	(89)			(25)			9		(105)
Other comprehensive income (loss), net of taxes	12			(75)			(69)		(132)
Balance June 30, 2023, net of taxes	$	85		$	(2,483)		$	(2,502)	$	(4,900)

(1)    Primarily relates to foreign currency cash flow hedges that were reclassified from AOCL to Sales.

(2)    Includes net amortization of prior service cost, actuarial gains and losses, settlements and curtailments included in net periodic benefit cost (see Note 11)

- 25 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

16.    Segment Reporting

The Company’s operations are principally managed on a product basis and include two operating segments, Pharmaceutical and Animal Health, both of which are reportable segments.

The Pharmaceutical segment includes human health pharmaceutical and vaccine products. Human health pharmaceutical products consist of therapeutic and preventive agents, generally sold by prescription, for the treatment of human disorders. The Company sells these human health pharmaceutical products primarily to drug wholesalers and retailers, hospitals, government agencies and managed health care providers such as health maintenance organizations, pharmacy benefit managers and other institutions. Human health vaccine products consist of preventive pediatric, adolescent and adult vaccines. The Company sells these human health vaccines primarily to physicians, wholesalers, physician distributors and government entities. A large component of pediatric and adolescent vaccine sales are made to the U.S. Centers for Disease Control and Prevention Vaccines for Children program, which is funded by the U.S. government. Additionally, the Company sells vaccines to the Federal government for placement into vaccine stockpiles.

The Animal Health segment discovers, develops, manufactures and markets a wide range of veterinary pharmaceutical and vaccine products, as well as health management solutions and services, for the prevention, treatment and control of disease in all major livestock and companion animal species. The Company also offers an extensive suite of digitally connected identification, traceability and monitoring products. The Company sells its products to veterinarians, distributors, animal producers, farmers and pet owners.

- 26 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Sales of the Company’s products were as follows:

	Three Months Ended June 30,												Six Months Ended June 30,
	2023						2022						2023						2022
($ in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total		U.S.		Int’l		Total		U.S.		Int’l		Total
Pharmaceutical:
Oncology
Keytruda	$	3,863	$	2,408	$	6,271	$	3,197	$	2,055	$	5,252	$	7,348	$	4,718	$	12,065	$	5,976	$	4,085	$	10,061
Alliance revenue-Lynparza (1)	144		166		310		143		132		275		286		299		585		283		257		541
Alliance revenue-Lenvima (1)	163		79		242		128		103		231		316		158		474		284		175		459
Welireg	49		2		50		27		—		27		90		3		92		45		—		45
Alliance revenue-Reblozyl (2)	36		11		47		28		5		33		66		24		90		55		30		86
Vaccines
Gardasil/Gardasil 9	464		1,994		2,458		428		1,245		1,674		880		3,550		4,430		846		2,287		3,133
ProQuad/M-M-R II/Varivax	447		135		582		434		143		578		868		242		1,109		805		243		1,047
RotaTeq	93		37		131		98		75		173		273		155		428		273		116		389
Vaxneuvance	147		20		168		11		—		12		241		33		274		16		1		16
Pneumovax 23	23		69		92		94		59		153		63		125		188		212		114		325
Vaqta	29		13		42		16		19		35		59		23		82		45		25		71
Hospital Acute Care
Bridion	299		203		502		237		190		426		576		413		989		432		389		821
Prevymis	61		82		143		47		56		103		116		157		273		87		110		197
Dificid	68		8		76		63		3		66		130		11		141		113		6		119
Primaxin	(2)		56		53		—		64		64		2		132		133		1		122		122
Noxafil	11		45		55		16		45		60		25		91		116		25		92		118
Zerbaxa	30		24		54		22		24		46		57		47		104		40		36		76
Cardiovascular
Alliance revenue-Adempas/Verquvo (3)	70		(2)		68		88		10		98		153		14		167		159		11		170
Adempas	—		65		65		—		63		63		—		125		125		—		124		124
Virology
Lagevrio	2		201		203		—		1,177		1,177		—		595		595		1,523		2,901		4,424
Isentress/Isentress HD	56		80		136		67		80		147		108		151		259		128		177		305
Neuroscience
Belsomra	21		42		63		19		50		69		37		82		119		39		98		137
Immunology
Simponi	—		180		180		—		181		181		—		359		359		—		366		366
Remicade	—		48		48		—		53		53		—		99		99		—		114		114
Diabetes
Januvia	243		267		511		301		455		756		514		548		1,062		626		909		1,535
Janumet	82		272		354		105		371		476		138		544		683		168		762		931
Other pharmaceutical (4)	171		382		553		157		372		528		342		793		1,138		317		814		1,131
Total Pharmaceutical segment sales	6,570		6,887		13,457		5,726		7,030		12,756		12,688		13,491		26,179		12,498		14,364		26,863
Animal Health:
Livestock	165		643		807		164		662		826		338		1,318		1,656		335		1,322		1,658
Companion Animal	310		339		649		313		328		641		618		673		1,291		616		676		1,291
Total Animal Health segment sales	475		982		1,456		477		990		1,467		956		1,991		2,947		951		1,998		2,949
Total segment sales	7,045		7,869		14,913		6,203		8,020		14,223		13,644		15,482		29,126		13,449		16,362		29,812
Other (5)	(27)		149		122		35		335		370		32		364		396		128		555		682
	$	7,018	$	8,018	$	15,035	$	6,238	$	8,355	$	14,593	$	13,676	$	15,846	$	29,522	$	13,577	$	16,917	$	30,494

U.S. plus international may not equal total due to rounding.

(1)    Alliance revenue for Lynparza and Lenvima represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs (see Note 3).

(2)    Alliance revenue for Reblozyl represents royalties and, for the first six months of 2022, also includes the receipt of a regulatory approval milestone payment (see Note 3).

(3)    Alliance revenue for Adempas/Verquvo 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 (see Note 3).

(4)    Other pharmaceutical primarily reflects sales of other human health pharmaceutical products, including products within the franchises not listed separately.

(5)    Other is primarily comprised of miscellaneous corporate revenue, including revenue hedging activities which increased sales by $128 million and $277 million for the six months ended June 30, 2023 and 2022, respectively, as well as revenue from third-party manufacturing arrangements (including sales to Organon). Other for the six months ended June 30, 2023 and 2022 also includes $54 million and $146 million, respectively, related to upfront and milestone payments received by Merck for out-licensing arrangements.

- 27 -

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Product sales are recorded net of the provision for discounts, including chargebacks, which are customer discounts that occur when a contracted customer purchases through an intermediary wholesale purchaser, and rebates that are owed based upon definitive contractual agreements or legal requirements with private sector and public sector (Medicaid and Medicare Part D) benefit providers, after the final dispensing of the product by a pharmacy to a benefit plan participant. These discounts, in the aggregate, reduced U.S. sales by $3.2 billion and $3.0 billion for the three months ended June 30, 2023 and 2022, respectively, and $6.3 billion and $5.9 billion for the six months ended June 30, 2023 and 2022, respectively.

Consolidated sales by geographic area where derived are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
United States	$	7,018	$	6,238	$	13,676	$	13,577
Europe, Middle East and Africa	3,348		3,582		6,651		7,942
China	1,913		1,372		3,628		2,515
Asia Pacific (other than China and Japan)	848		1,008		1,694		1,938
Japan	675		1,114		1,434		2,103
Latin America	742		642		1,403		1,249
Other	491		637		1,036		1,170
	$	15,035	$	14,593	$	29,522	$	30,494

A reconciliation of segment profits to (Loss) Income Before Taxes is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Segment profits:
Pharmaceutical segment	$	9,854	$	9,173	$	18,993	$	18,673
Animal Health segment	467		571		1,032		1,156
Total segment profits	10,321		9,744		20,025		19,829
Other profits	19		260		184		454
Unallocated:
Interest income	109		15		221		22
Interest expense	(277)		(240)		(519)		(483)
Amortization	(477)		(463)		(1,020)		(1,163)
Depreciation	(376)		(431)		(775)		(809)
Research and development	(13,194)		(2,652)		(17,341)		(5,097)
Restructuring costs	(151)		(142)		(218)		(194)
Charge for Zetia antitrust litigation settlements	—		—		(573)		—
Other unallocated, net	(1,309)		(1,604)		(1,669)		(3,211)
	$	(5,335)	$	4,487	$	(1,685)	$	9,348

Pharmaceutical segment profits are comprised of segment sales less standard costs, as well as selling, general and administrative expenses directly incurred by the segment. Animal Health segment profits are comprised of segment sales, less all cost of sales, as well as selling, general and administrative expenses and research and development costs directly incurred by the segment. For internal management reporting presented to the chief operating decision maker, Merck does not allocate the remaining cost of sales not included in segment profits as described above, research and development expenses incurred in Merck Research Laboratories, the Company’s research and development division that focuses on human health-related activities, or general and administrative expenses, nor the cost of financing these activities. Separate divisions maintain responsibility for monitoring and managing these costs, including depreciation related to fixed assets utilized by these divisions and, therefore, they are not included in segment profits. In addition, costs related to restructuring activities, as well as the amortization of intangible assets and purchase accounting adjustments are not allocated to segments.

Other profits are primarily comprised of miscellaneous corporate profits, as well as operating profits related to third-party manufacturing arrangements.

Other unallocated, net, includes expenses from corporate and manufacturing cost centers, intangible asset impairment charges, gains or losses on sales of businesses, expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration, and other miscellaneous income or expense items.

- 28 -

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Business Developments

Below is a summary of significant business development activity thus far in 2023. See Note 2 to the condensed consolidated financial statements for additional information.

In June 2023, Merck acquired Prometheus Biosciences, Inc. (Prometheus), a clinical-stage biotechnology company pioneering a precision medicine approach for the discovery, development, and commercialization of novel therapeutic and companion diagnostic products for the treatment of immune-mediated diseases. Total consideration paid of $11.0 billion included $1.2 billion of costs to settle share-based equity awards (including $700 million to settle unvested equity awards). Prometheus’ lead candidate, MK-7240 (formerly PRA023), is a humanized monoclonal antibody directed to tumor necrosis factor-like ligand 1A, a target associated with both intestinal inflammation and fibrosis. MK-7240 is being developed for the treatment of immune-mediated diseases including ulcerative colitis, Crohn’s disease, and other autoimmune conditions. The transaction was accounted for as an acquisition of an asset. Merck recorded net assets of $877 million, including cash of $368 million, investments of $296 million, deferred tax assets of $218 million and other net liabilities of $5 million, as well as Research and development expenses of $10.2 billion in the second quarter and first six months of 2023 related to the transaction or $4.02 per share. There are no future contingent payments associated with the acquisition.

In February 2023, Merck and Kelun-Biotech (a holding subsidiary of Sichuan Kelun Pharmaceutical Co., Ltd.) closed a license and collaboration agreement expanding their relationship in which Merck gained exclusive rights for the research, development, manufacture and commercialization of up to seven investigational preclinical antibody drug conjugates (ADCs) for the treatment of cancer. Kelun-Biotech retained the right to research, develop, manufacture and commercialize certain licensed and option ADCs for Chinese mainland, Hong Kong and Macau. Merck made an upfront payment of $175 million, which was recorded in Research and development expenses in the first six months of 2023. In addition, Kelun-Biotech is eligible to receive future contingent milestone payments and tiered royalties on future net sales for any commercialized ADC product. Also, in connection with the agreement, Merck invested $100 million in Kelun-Biotech’s Series B preferred shares in January 2023.

In January 2023, Merck acquired Imago BioSciences, Inc. (Imago), a clinical stage biopharmaceutical company developing new medicines for the treatment of myeloproliferative neoplasms and other bone marrow diseases, for $1.35 billion (including payments to settle share-based equity awards) and also incurred approximately $60 million of transaction costs. Imago’s lead candidate bomedemstat, MK-3543 (formerly IMG-7289), is an investigational orally available lysine-specific demethylase 1 inhibitor currently being evaluated in multiple Phase 2 clinical trials for the treatment of essential thrombocythemia, myelofibrosis, and polycythemia vera, in addition to other indications. The transaction was accounted for as an acquisition of an asset. Merck recorded net assets of $219 million, as well as Research and development expenses of $1.2 billion in the first six months of 2023 related to the transaction. There are no future contingent payments associated with the acquisition.

Pricing

Global efforts toward health care cost containment continue to exert pressure on product pricing and market access worldwide. Changes to the U.S. health care system enacted in prior years as part of health care reform, as well as increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid, and private sector beneficiaries, have contributed to pricing pressure. In several international markets, government-mandated pricing actions have reduced prices of generic and patented drugs. In addition, the Company’s sales performance in the first six months of 2023 was negatively affected by other cost-reduction measures taken by governments and other third parties to lower health care costs. In 2022, the U.S. Congress passed the Inflation Reduction Act (IRA), which makes significant changes to how drugs are covered and paid for under the Medicare program, including the creation of financial penalties for drugs whose prices rise faster than the rate of inflation, redesign of the Medicare Part D program to require manufacturers to bear more of the liability for certain drug benefits, and government price-setting for certain Medicare Part D drugs (starting in 2026) and Medicare Part B drugs (starting in 2028). The Company has sued the U.S. government regarding the IRA’s “Drug Price Negotiation Program” for Medicare (see Note 9 to the condensed consolidated financial statements). Furthermore, the Biden Administration and Congress continue to discuss legislation designed to control health care costs, including the cost of drugs. The Company anticipates all of these actions and additional actions in the future will negatively affect sales and profits.

- 29 -

Operating Results

Sales

	Three Months Ended June 30,						% Change Excluding Foreign Exchange		Six Months Ended June 30,						% Change Excluding Foreign Exchange
($ in millions)	2023		2022		% Change				2023		2022		% Change
United States	$	7,018	$	6,238	12	%	12	%	$	13,676	$	13,577	1	%	1	%
International	8,018		8,355		(4)	%	2	%	15,846		16,917		(6)	%	—	%
Total	$	15,035	$	14,593	3	%	7	%	$	29,522	$	30,494	(3)	%	—	%

U.S. plus international may not equal total due to rounding.

Worldwide sales grew 3% to $15.0 billion in the second quarter of 2023 primarily due to higher sales in the oncology franchise, largely driven by strong growth of Keytruda (pembrolizumab), and higher sales in the vaccines franchise, primarily attributable to growth of Gardasil 9 (Human Papillomavirus 9-valent Vaccine, Recombinant) and the ongoing launch of Vaxneuvance (Pneumococcal 15-valent Conjugate Vaccine) for pediatric use. Also contributing to revenue growth in the second quarter were higher sales of hospital acute care products, including Bridion (sugammadex) Injection and Prevymis (letermovir). Sales growth in the second quarter of 2023 was partially offset by lower sales in the virology franchise largely due to Lagevrio (molnupiravir) which had sales of $203 million in the second quarter of 2023 compared with $1.2 billion in the second quarter of 2022. Lower sales in the diabetes franchise attributable to Januvia (sitagliptin) and Janumet (sitagliptin and metformin HCl), as well as lower sales of Pneumovax 23 (pneumococcal vaccine polyvalent) also partially offset revenue growth in the second quarter of 2023.

Worldwide sales declined 3% to $29.5 billion in the first six months of 2023 primarily due to lower sales in the virology franchise, largely attributable to Lagevrio, which had sales of $595 million in the first six months of 2023 compared with $4.4 billion in the first six months of 2022. Also contributing to the revenue decline in the first six months of 2023 were lower sales in the diabetes franchise due to Januvia and Janumet, as well as lower sales of Pneumovax 23. The sales decline in the first six months of 2023 was largely offset by higher sales in the oncology franchise, primarily driven by strong growth of Keytruda, higher sales in the vaccines franchise, primarily attributable to growth of Gardasil 9 and the ongoing launch of Vaxneuvance for pediatric use, as well as higher sales of hospital acute care products, including Bridion and Prevymis.

See Note 16 to the condensed consolidated financial statements for details on sales of the Company’s products. A discussion of performance for select products in the franchises follows.

Pharmaceutical Segment

Oncology

	Three Months Ended June 30,						% Change Excluding Foreign Exchange		Six Months Ended June 30,						% Change Excluding Foreign Exchange
($ in millions)	2023		2022		% Change				2023		2022		% Change
Keytruda	$	6,271	$	5,252	19	%	21	%	$	12,065	$	10,061	20	%	23	%
Alliance Revenue - Lynparza (1)	310		275		13	%	15	%	585		541		8	%	12	%
Alliance Revenue - Lenvima (1)	242		231		5	%	6	%	474		459		3	%	5	%
Welireg	50		27		89	%	89	%	92		45		*		*
Alliance Revenue - Reblozyl (2)	47		33		41	%	41	%	90		86		4	%	4	%

* > 100%

(1)    Alliance revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs (see Note 3 to the condensed consolidated financial statements).

(2)    Alliance revenue represents royalties and, for the first six months 2022, also includes a payment received related to the achievement of a regulatory approval milestone (see Note 3 to the condensed consolidated financial statements).

Keytruda is an anti-PD-1 (programmed death receptor-1) therapy that has been approved as monotherapy for the treatment of certain patients with cervical cancer, classical Hodgkin lymphoma, cutaneous squamous cell carcinoma, esophageal or gastroesophageal junction (GEJ) carcinoma, head and neck squamous cell carcinoma (HNSCC), hepatocellular carcinoma (HCC), melanoma, Merkel cell carcinoma, microsatellite instability-high (MSI-H) or mismatch repair deficient (dMMR) solid tumors (including MSI-H/dMMR colorectal cancer and endometrial carcinoma), non-small-cell lung cancer (NSCLC), primary mediastinal large B-cell lymphoma (PMBCL), tumor mutational burden-high (TMB-H) solid tumors, and urothelial carcinoma including non-muscle invasive bladder cancer. Additionally, Keytruda is approved as monotherapy for the adjuvant treatment of certain patients with melanoma, and for certain patients with renal cell carcinoma (RCC) post-surgery. Keytruda is approved for adjuvant treatment following resection and platinum-based chemotherapy for certain patients with NSCLC. Keytruda is also approved for patients with high-risk early-stage triple-negative breast cancer (TNBC) in combination with chemotherapy as neoadjuvant treatment, and then continued as a single agent as adjuvant treatment after surgery. In addition, Keytruda is approved in combination with chemotherapy for the treatment of certain patients with advanced NSCLC, in combination with chemotherapy with or without bevacizumab for advanced cervical cancer, in combination with chemotherapy for advanced esophageal cancer, in combination with trastuzumab and chemotherapy for certain patients with advanced gastric or GEJ adenocarcinoma, in combination with chemotherapy for HNSCC, in combination with chemotherapy for advanced TNBC, in combination with axitinib for advanced RCC, in combination with Lenvima for patients with advanced RCC or certain types of

- 30 -

advanced endometrial carcinoma, and in combination with enfortumab vedotin for certain cisplatin-ineligible patients with locally advanced or metastatic urothelial carcinoma. The Keytruda clinical development program includes studies across a broad range of cancer types. See “Research and Development Update” below.

Global sales of Keytruda grew 19% and 20% in the second quarter and first six months of 2023, respectively. Sales growth in both periods was primarily driven by higher demand as the Company continues to launch Keytruda with multiple new indications globally. Sales growth in the U.S. reflects increased uptake across earlier-stage indications including in high-risk early stage TNBC, as well as certain types of RCC and melanoma, and higher demand across the multiple approved metastatic indications, in particular for the treatment of certain types of RCC, NSCLC, TNBC, and HNSCC cancers. Keytruda sales growth in international markets reflects higher demand for the HNSCC and RCC metastatic indications, as well as uptake in earlier-stage indications, particularly in Europe, Latin America and Japan.

Keytruda received the following regulatory approvals thus far in 2023.

Date	Approval
January 2023	U.S. Food and Drug Administration (FDA) approval as a single agent for adjuvant treatment following surgical resection and platinum-based chemotherapy for adult patients with stage IB (T2a ≥4 cm), II, or IIIA NSCLC, based on the KEYNOTE-091 trial.
March 2023	FDA full approval for the treatment of adult and pediatric patients with unresectable or metastatic MSI-H or dMMR solid tumors that have progressed following prior treatment and who have no satisfactory alternative treatment options. The conversion from an accelerated to a full (regular) approval is based on the KEYNOTE-158, KEYNOTE-164 and KEYNOTE-051 trials.
April 2023	FDA accelerated approval in combination with enfortumab vedotin-ejfv for the treatment of adult patients with locally advanced or metastatic urothelial carcinoma who are not eligible for cisplatin-containing chemotherapy, based on the KEYNOTE-869 trial dose escalation cohort, Cohort A and Cohort K, which was conducted in collaboration with Seagen and Astellas.
June 2023	Japan’s Ministry of Health, Labor and Welfare (MHLW) approval for the treatment of patients with relapsed or refractory PMBCL, based on the KEYNOTE-170 and the KEYNOTE-A33 studies.

Lynparza (olaparib) is an oral poly (ADP-ribose) polymerase (PARP) inhibitor being developed as part of a collaboration with AstraZeneca PLC (AstraZeneca) (see Note 3 to the condensed consolidated financial statements). Lynparza is approved for the treatment of certain types of advanced or recurrent ovarian, early or metastatic breast, metastatic pancreatic and metastatic castration-resistant prostate cancers. Alliance revenue related to Lynparza increased 13% and 8% in the second quarter and first six months of 2023, respectively, primarily driven by higher demand in certain international markets, particularly in Europe for certain patients with ovarian, early breast and prostate cancers, and in Japan in certain patients with ovarian and early breast cancers. In May 2023, the FDA approved Lynparza in combination with abiraterone and prednisone or prednisolone for the treatment of certain adult patients with deleterious or suspected deleterious BRCA-mutated (BRCAm) metastatic castration-resistant prostate cancer (mCRPC), based on the PROpel trial.

Lenvima (lenvatinib) is an oral receptor tyrosine kinase inhibitor being developed as part of a collaboration with Eisai Co., Ltd. (Eisai) (see Note 3 to the condensed consolidated financial statements). Lenvima is approved for the treatment of certain types of thyroid cancer, RCC, HCC, in combination with everolimus for certain patients with advanced RCC, and in combination with Keytruda for certain patients with advanced endometrial carcinoma or advanced RCC. Alliance revenue related to Lenvima grew 5% and 3% in the second quarter and first six months of 2023, respectively, largely reflecting uptake in the advanced RCC and endometrial indications in the U.S., partially offset by lower demand in China.

Sales of Welireg (belzutifan), for the treatment of adult patients with certain von Hippel-Lindau disease-associated tumors, were $50 million and $27 million in the second quarter of 2023 and 2022, respectively, and were $92 million and $45 million in the first six months of 2023 and 2022, respectively. The sales increase in both periods is due to continued uptake in the U.S. following launch in 2021.

Reblozyl (luspatercept-aamt) is a first-in-class erythroid maturation recombinant fusion protein that is being commercialized through a global collaboration with Bristol-Myers Squibb Company (see Note 3 to the condensed consolidated financial statements). Reblozyl is approved for the treatment of anemia in certain rare blood disorders. Alliance revenue related to this collaboration consists of royalties and, for the first six months of 2022, also includes the receipt of a regulatory approval milestone payment of $20 million. Alliance revenue increased 41% and 4% in the second quarter and first six months of 2023, respectively, due to strong underlying sales performance. The increase in alliance revenue in the first six months of 2023 was partially offset by the receipt of the regulatory approval milestone in 2022 as noted above.

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Vaccines

	Three Months Ended June 30,						% Change Excluding Foreign Exchange		Six Months Ended June 30,						% Change Excluding Foreign Exchange
($ in millions)	2023		2022		% Change				2023		2022		% Change
Gardasil/Gardasil 9	$	2,458	$	1,674	47	%	53	%	$	4,430	$	3,133	41	%	48	%
ProQuad	222		214		4	%	4	%	412		376		10	%	10	%
M-M-R II	104		103		2	%	2	%	207		206		—	%	1	%
Varivax	255		261		(2)	%	(2)	%	491		465		5	%	6	%
RotaTeq	131		173		(25)	%	(24)	%	428		389		10	%	13	%
Vaxneuvance	168		12		*		*		274		16		*		*
Pneumovax 23	92		153		(40)	%	(38)	%	188		325		(42)	%	(39)	%

* > 100%

Combined worldwide sales of Gardasil (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant) and Gardasil 9, vaccines to help prevent certain cancers and other diseases caused by certain types of human papillomavirus (HPV), grew 47% and 41% in the second quarter and first six months of 2023, respectively, driven primarily by higher global demand, particularly in China due in part to continued uptake of the expanded indication of Gardasil 9 for girls and women 9 to 45 years of age. The Company anticipates the growth rate of combined Gardasil/Gardasil 9 sales will moderate in the second half of 2023 due in part to the timing of shipments in China.

Global sales of ProQuad (Measles, Mumps, Rubella and Varicella Virus Vaccine Live), a pediatric combination vaccine to help protect against measles, mumps, rubella and varicella, increased 4% and 10% in the second quarter and first six months of 2023, respectively, primarily reflecting higher pricing in the U.S. and the timing of shipments in certain ex-U.S. markets.

Worldwide sales of M-M-R II (Measles, Mumps and Rubella Virus Vaccine Live), a vaccine to help protect against measles, mumps and rubella, were nearly flat in both the second quarter and first six months of 2023 compared with the corresponding prior year periods.

Global sales of Varivax (Varicella Virus Vaccine Live), a vaccine to help prevent chickenpox (varicella), declined 2% in the second quarter of 2023 primarily attributable to lower sales in Latin America reflecting both lower demand and the timing of shipments, partially offset by higher pricing in the U.S. Global sales of Varivax grew 5% in the first six months of 2023 largely due to higher pricing and demand in the U.S., partially offset by lower sales in Latin America reflecting both lower demand and the timing of shipments.

Global sales of RotaTeq (Rotavirus Vaccine, Live Oral, Pentavalent), a vaccine to help protect against rotavirus gastroenteritis in infants and children, declined 25% in the second quarter of 2023 and increased 10% in first six months of 2023 primarily due to first quarter 2023 inventory stocking in China that was partially bought out in the second quarter of 2023.

Worldwide sales of Vaxneuvance, a vaccine to help prevent invasive pneumococcal disease, increased to $168 million and $274 million in the second quarter and first six months of 2023, respectively, primarily due to continued uptake in the pediatric indication in the U.S. following launch in 2022.

Worldwide sales of Pneumovax 23, a vaccine to help prevent pneumococcal disease, declined 40% and 42% in the second quarter and first six months of 2023, respectively, primarily reflecting lower demand in the U.S. as the market continues to shift toward newer adult pneumococcal conjugate vaccines following changes in the recommendations of the U.S. Centers for Disease Control and Prevention’s Advisory Committee on Immunization Practices in 2021. The Company expects the decline in U.S. sales of Pneumovax 23 to continue.

Hospital Acute Care

	Three Months Ended June 30,						% Change Excluding Foreign Exchange		Six Months Ended June 30,						% Change Excluding Foreign Exchange
($ in millions)	2023		2022		% Change				2023		2022		% Change
Bridion	$	502	$	426	18	%	19	%	$	989	$	821	21	%	23	%
Prevymis	143		103		39	%	42	%	273		197		39	%	43	%

Worldwide sales of Bridion, for the reversal of two types of neuromuscular blocking agents used during surgery, grew 18% and 21% in the second quarter and first six months of 2023, respectively, primarily due to higher demand, particularly in the U.S., reflecting Bridion’s growing market share among neuromuscular blockade reversal agents. The patent that provided market exclusivity for Bridion in the European Union (EU) expired in July 2023; the Company anticipates sales of Bridion in these markets will decline in future periods.

Worldwide sales of Prevymis, a medicine for prophylaxis (prevention) of cytomegalovirus (CMV) infection and disease in adult CMV-seropositive recipients of an allogenic hematopoietic stem cell transplant, grew 39% in both the second quarter and first six months of 2023 largely due to higher demand in the U.S. and Europe, as well as continued uptake from the 2022 launch

- 32 -

in China. In June 2023, the FDA approved a new indication for Prevymis for prophylaxis of CMV disease in adult kidney transplant recipients at high risk (Donor CMV-seropositive/Recipient CMV-seronegative [D+/R-]) following a priority review.

Cardiovascular

	Three Months Ended June 30,						% Change Excluding Foreign Exchange		Six Months Ended June 30,						% Change Excluding Foreign Exchange
($ in millions)	2023		2022		% Change				2023		2022		% Change
Alliance Revenue - Adempas/ Verquvo (1)	$	68	$	98	(31)	%	(31)	%	$	167	$	170	(2)	%	(2)	%
Adempas	65		63		3	%	5	%	125		124		—	%	5	%

(1) 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 (see Note 3 to the condensed consolidated financial statements).

Adempas (riociguat) and Verquvo (vericiguat) are part of a worldwide collaboration with Bayer AG (Bayer) to market and develop soluble guanylate cyclase (sGC) modulators (see Note 3 to the condensed consolidated financial statements). Adempas is approved for the treatment of certain types of pulmonary arterial hypertension and chronic pulmonary hypertension. Verquvo is approved to reduce the risk of cardiovascular death and heart failure hospitalization following a hospitalization for heart failure or need for outpatient intravenous diuretics in adults with symptomatic chronic heart failure and reduced ejection fraction. Verquvo was approved in the U.S., the EU and Japan in 2021 and has since been approved in several other markets. Alliance revenue from the collaboration declined 31% and 2% in the second quarter and first six months of 2023, respectively, primarily due to lower profit sharing, which reflects decreased demand in Bayer’s marketing territories. Revenue also includes sales of Adempas and Verquvo in Merck’s marketing territories. Sales of Adempas in Merck’s marketing territories were nearly flat in both the second quarter and first six months of 2023 compared with the same prior year periods.

Virology

	Three Months Ended June 30,						% Change Excluding Foreign Exchange		Six Months Ended June 30,						% Change Excluding Foreign Exchange
($ in millions)	2023		2022		% Change				2023		2022		% Change
Lagevrio	$	203	$	1,177	(83)	%	(82)	%	$	595	$	4,424	(87)	%	(85)	%
Isentress/Isentress HD	136		147		(7)	%	(4)	%	259		305		(15)	%	(12)	%

Lagevrio is an investigational oral antiviral COVID-19 medicine being developed in a collaboration with Ridgeback Biotherapeutics LP (Ridgeback) (see Note 3 to the condensed consolidated financial statements). Following initial authorizations in certain markets in the fourth quarter of 2021, Lagevrio has since received multiple additional authorizations worldwide. Sales of Lagevrio declined 83% and 87% in the second quarter and first six months of 2023, respectively, primarily due to lower demand in Japan and the Asia Pacific region. Additionally, the Company had sales of Lagevrio in the UK in the second quarter and first six months of 2022 and in the U.S. in the first six months of 2022 that did not recur in the corresponding periods of 2023, which also contributed to the sales declines. The Company expects full-year 2023 Lagevrio sales to be approximately $1.0 billion. In April 2023, Japan’s MHLW granted full approval for Lagevrio. Lagevrio was previously granted Special Approval for Emergency in Japan in December 2021.

Global combined sales of Isentress/Isentress HD (raltegravir), an HIV integrase inhibitor for use in combination with other antiretroviral agents for the treatment of HIV-1 infection, declined 7% and 15% in the second quarter and first six months of 2023, respectively, primarily due to competitive pressure in Europe and the U.S. The Company expects competitive pressure for Isentress/Isentress HD to continue. The patent that provided market exclusivity for Isentress/Isentress HD in the EU expired in July 2023; the Company anticipates sales declines of Isentress/Isentress HD in these markets will accelerate in future periods.

Diabetes

	Three Months Ended June 30,						% Change Excluding Foreign Exchange		Six Months Ended June 30,						% Change Excluding Foreign Exchange
($ in millions)	2023		2022		% Change				2023		2022		% Change
Januvia/Janumet	$	864	$	1,233	(30)	%	(28)	%	$	1,744	$	2,466	(29)	%	(26)	%

Worldwide combined sales of Januvia and Janumet, medicines that help lower blood sugar levels in adults with type 2 diabetes, declined 30% and 29% in the second quarter and first six months of 2023, respectively, primarily reflecting the ongoing impact of the loss of exclusivity in most markets in Europe and the Asia Pacific region, as well as in Canada, coupled with lower demand and pricing in the U.S. due to competitive pressures.

While the key U.S. patent for Januvia and Janumet claiming the sitagliptin compound expired in January 2023, as a result of favorable court rulings and settlement agreements related to a later expiring patent directed to the specific sitagliptin salt form of the products (see Note 9 to the condensed consolidated financial statements), the Company expects that Januvia and Janumet will not lose market exclusivity in the U.S. until May 2026 and Janumet XR will not lose market exclusivity in the U.S. until July 2026, although another non-automatically substitutable form of sitagliptin could be available prior to 2026. As a result of competitive pressures, the Company anticipates pricing and volume declines for Januvia and Janumet in the U.S. for the remainder of 2023 and thereafter.

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The Company lost market exclusivity for Januvia in all of the EU and for Janumet in some European countries in September 2022. Exclusivity for Janumet was lost in other European countries in April 2023. While the Company lost market exclusivity for Januvia in China in 2022 with the launch of a generic equivalent product and an additional generic equivalent product was launched in the second quarter of 2023, the impact on sales for full-year 2023 is expected to be modest. Although several generic equivalents of Janumet have been approved in China, none have launched, and the Company expects it is unlikely that any will launch prior to December 2023.

Combined sales of Januvia and Janumet in Europe, China and the U.S. represented 11%, 14% and 37%, respectively, of total combined Januvia and Janumet sales for the first six months of 2023.

In response to a request from a regulatory authority in 2022, Merck evaluated its sitagliptin-containing products for the presence of nitrosamines. Nitrosamines are organic compounds found at trace levels in water and food. Nitrosamines can also result from chemical reactions and can form in drugs either due to the drug’s manufacturing process, chemical structure, or the conditions in which the drugs are stored or packaged. The Company detected a nitrosamine identified as Nitroso-STG-19 (NTTP) in some batches of its sitagliptin-containing medicines. The Company has engaged with major health authorities around the world and has implemented additional quality controls to ensure its portfolio of sitagliptin-containing products meet health authorities’ interim acceptable NTTP limits for continuing distribution of product to the market. The Company has made significant progress in reducing the level of nitrosamines in its sitagliptin-containing medicines and does not anticipate product shortages at this time, subject to regulatory approvals for submitted changes.

Animal Health Segment

	Three Months Ended June 30,						% Change Excluding Foreign Exchange		Six Months Ended June 30,						% Change Excluding Foreign Exchange
($ in millions)	2023		2022		% Change				2023		2022		% Change
Livestock	$	807	$	826	(2)	%	2	%	$	1,656	$	1,658	—	%	5	%
Companion Animal	649		641		1	%	2	%	1,291		1,291		—	%	2	%

Sales of livestock products declined 2% in the second quarter of 2023 and were essentially flat in the first six months of 2023 compared with the corresponding period of 2022. Excluding the unfavorable effect of foreign exchange, livestock sales performance in both periods primarily reflects higher pricing, as well as higher demand for poultry and swine products, partially offset by lower demand for ruminant products, due in part to reduced herd sizes. Sales of companion animal products grew 1% in the second quarter of 2023 and were flat in the first six months of 2023 compared with the corresponding periods of 2022. Excluding the unfavorable effect of foreign exchange, companion animal sales performance in both periods primarily reflects higher pricing, including for the Bravecto (fluralaner) parasiticide line of products, partially offset by supply challenges for certain companion animal vaccines. Sales of Bravecto products were $326 million and $640 million for the second quarter and first six months of 2023, respectively, representing growth of 5% and 3%, respectively, compared with the corresponding prior year periods, or 7% and 5%, respectively, excluding the unfavorable effect of foreign exchange.

Costs, Expenses and Other

	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2023		2022		% Change		2023		2022		% Change
Cost of sales	$	4,024	$	4,216	(5)	%	$	7,951	$	9,596	(17)	%
Selling, general and administrative	2,702		2,512		8	%	5,182		4,834		7	%
Research and development	13,321		2,798		*		17,597		5,374		*
Restructuring costs	151		142		6	%	218		194		12	%
Other (income) expense, net	172		438		(61)	%	259		1,148		(77)	%
	$	20,370	$	10,106	*		$	31,207	$	21,146	48	%

* > 100%

Cost of Sales

Cost of sales decreased 5% and 17% in the second quarter and first six months of 2023, respectively. Cost of sales includes $193 million and $615 million in the second quarter of 2023 and 2022, respectively, and $414 million and $2.3 billion in the first six months of 2023 and 2022, respectively, related to sales of Lagevrio, which is being developed in a collaboration with Ridgeback (see Note 3 to the condensed consolidated financial statements). Cost of sales also includes the amortization of intangible assets recorded in connection with acquisitions, collaborations, and licensing arrangements, which totaled $468 million and $447 million in the second quarter of 2023 and 2022, respectively, and $1.0 billion and $1.1 billion in the first six months of 2023 and 2022, respectively. Amortization expense in the first six months of 2023 and 2022 includes $72 million and $250 million, respectively, of cumulative catch-up amortization related to Merck’s collaborations with Eisai and AstraZeneca, respectively (see Note 3 to the condensed consolidated financial statements). Also included in cost of sales are expenses associated with restructuring activities, which amounted to $32 million and $67 million in the second quarter of 2023 and 2022, respectively, and $61 million and $113 million in the first six months of 2023 and 2022, respectively, including accelerated depreciation and asset write-offs related to the planned sale or closure of manufacturing facilities. Separation costs associated

- 34 -

with manufacturing-related headcount reductions have been incurred and are reflected in Restructuring costs as discussed below.

Gross margin was 73.2% in the second quarter of 2023 compared with 71.1% in the second quarter of 2022. Gross margin was 73.1% in the first six months of 2023 compared with 68.5% in the first six months of 2022. The gross margin improvement in both periods primarily reflects the favorable impacts of lower Lagevrio sales (which have a low gross margin) and product mix, partially offset by the unfavorable impact of foreign exchange and increased restructuring costs. Higher amortization of intangible assets also partially offset the gross margin improvement in the first six months of 2023.

Selling, General and Administrative

Selling, general and administrative (SG&A) expenses increased 8% in the second quarter of 2023 and rose 7% in the first six months of 2023 primarily due to higher administrative costs, including higher compensation and benefit costs, as well as increased promotional spending and higher selling costs, partially offset by the favorable effect of foreign exchange and lower acquisition-related costs.

Research and Development

Research and development (R&D) expenses were $13.3 billion in the second quarter of 2023 compared with $2.8 billion in the second quarter of 2022 and were $17.6 billion in the first six months of 2023 compared with $5.4 billion in the first six months of 2022. The increase in both periods was primarily due to a $10.2 billion charge for the acquisition of Prometheus. Also contributing to the increase in R&D expenses in both periods were higher compensation and benefit costs, reflecting in part increased headcount, higher investments in discovery research and early drug development, as well as increased clinical development spending. The increase in R&D expenses in the first six months of 2023 was also attributable to a $1.2 billion charge for the acquisition of Imago and higher upfront charges related to collaborations and licensing arrangements. The increase in R&D expenses in both periods was partially offset by the favorable effect of foreign exchange.

R&D expenses are comprised of the costs directly incurred by Merck Research Laboratories (MRL), the Company’s research and development division that focuses on human health-related activities, which were $2.3 billion and $1.9 billion for the second quarter of 2023 and 2022, respectively, and $4.3 billion and $3.7 billion for the first six months of 2023 and 2022, respectively. Also included in R&D expenses are Animal Health research costs, licensing costs, charges for transactions accounted for as asset acquisitions, and costs incurred by other divisions in support of R&D activities, including depreciation, production and general and administrative, which in the aggregate were approximately $11.1 billion and $880 million for the second quarter of 2023 and 2022, respectively, and $13.3 billion and $1.6 billion for the first six months of 2023 and 2022, respectively. The increase in these expenses in the second quarter and first six months of 2023 was largely attributable to the $10.2 billion charge for the acquisition of Prometheus (as noted above). The increase in these expenses for the first six months of 2023 was also due in part to a $1.2 billion charge for the acquisition of Imago (as noted above) and a $175 million charge for a license and collaboration agreement with Kelun-Biotech. See Note 2 to the condensed consolidated financial statements for additional information related to business development activity.

Restructuring Costs

In 2019, Merck approved a global restructuring program (Restructuring Program) as part of a worldwide initiative focused on optimizing the Company’s manufacturing and supply network, as well as reducing its global real estate footprint. The actions contemplated under the Restructuring Program are expected to be substantially completed by the end of 2023, with the cumulative pretax costs to be incurred by the Company to implement the program estimated to be approximately $3.9 billion. Merck expects to record charges of approximately $550 million for the full year of 2023 related to the Restructuring Program. The Company anticipates the actions under the Restructuring Program will result in cumulative annual net cost savings of approximately $900 million by the end of 2023.

Restructuring costs, primarily representing separation and other related costs associated with these restructuring activities, were $151 million and $142 million for the second quarter of 2023 and 2022, respectively, and $218 million and $194 million for the first six months of 2023 and 2022, respectively. Separation costs incurred were associated with actual headcount reductions, as well as estimated expenses under existing severance programs for involuntary headcount reductions that were probable and could be reasonably estimated. Also included in restructuring costs are asset abandonment, facility shut-down and other related costs, as well as employee-related costs such as curtailment, settlement and termination charges associated with pension and other postretirement benefit plans and share-based compensation plan costs. For segment reporting, restructuring costs are unallocated expenses.

Additional costs associated with the Company’s restructuring activities are included in Cost of sales, Selling, general and administrative expenses and Research and development costs. The Company recorded aggregate pretax costs of $236 million and $258 million in the second quarter of 2023 and 2022, respectively, and $333 million and $384 million for the first six months of 2023 and 2022, respectively, related to restructuring program activities (see Note 5 to the condensed consolidated financial statements).

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Other (Income) Expense, Net

Other (income) expense, net, was $172 million of expense in the second quarter of 2023 compared with $438 million of expense in the second quarter of 2022 primarily due to lower losses from investments in equity securities and lower pension settlement costs. Other (income) expense, net, was $259 million of expense for the first six months of 2023 compared with $1.1 billion of expense for the first six months of 2022 primarily due to net unrealized gains from investments in equity securities recorded in 2023 compared with net unrealized losses recorded 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 (see Note 9 to the condensed consolidated financial statements).

For details on the components of Other (income) expense, net, see Note 12 to the condensed consolidated financial statements.

Segment Profits
	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Pharmaceutical segment profits	$	9,854	$	9,173	$	18,993	$	18,673
Animal Health segment profits	467		571		1,032		1,156
Other	(15,656)		(5,257)		(21,710)		(10,481)
(Loss) Income Before Taxes	$	(5,335)	$	4,487	$	(1,685)	$	9,348

Pharmaceutical segment profits are comprised of segment sales less standard costs, as well as SG&A expenses directly incurred by the segment. Animal Health segment profits are comprised of segment sales, less all cost of sales, as well as SG&A and R&D expenses directly incurred by the segment. For internal management reporting presented to the chief operating decision maker, Merck does not allocate the remaining cost of sales not included in segment profits as described above, R&D expenses incurred by MRL, or general and administrative expenses, nor the cost of financing these activities. Separate divisions maintain responsibility for monitoring and managing these costs, including depreciation related to fixed assets utilized by these divisions and, therefore, they are not included in segment profits. Also excluded from the determination of segment profits are costs related to restructuring activities and acquisition- and divestiture-related costs, including the amortization of intangible assets and amortization of purchase accounting adjustments, intangible asset impairment charges, and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration. Additionally, segment profits do not reflect other expenses from corporate and manufacturing cost centers and other miscellaneous income or expense. These unallocated items are reflected in “Other” in the above table. Also included in “Other” are miscellaneous corporate profits (losses), as well as operating profits (losses) related to third-party manufacturing arrangements.

Pharmaceutical segment profits grew 7% and 2% in the second quarter and first six months of 2023, respectively, reflecting higher sales, partially offset by higher administrative and promotional costs, as well as the unfavorable effect of foreign exchange. Animal Health segment profits declined 18% and 11% in the second quarter and first six months of 2023, respectively, reflecting higher administrative and promotional costs, increased research and development expenses, as well as the unfavorable effect of foreign exchange.

Income Taxes

The income tax provision of $637 million and $1.5 billion for the second quarter and first six months of 2023, respectively, on pretax losses of $5.3 billion and $1.7 billion, respectively, resulted in effective income tax rates of (11.9)% and (86.8)%, respectively. The second quarter 2023 effective tax rate includes the impact of a charge for the acquisition of Prometheus for which no tax benefit was recognized, which unfavorably affected the tax rate by 25.1 percentage points, as well as the favorable impact of net unrealized losses from investments in equity securities, which were taxed at the U.S. tax rate. The effective income tax rate for the first six months of 2023 includes a 101.9 percentage point combined unfavorable impact of charges for the acquisitions of Prometheus and Imago for which no tax benefits were recognized, as well as higher foreign taxes, the impact of the R&D capitalization provision of the Tax Cuts and Jobs Act of 2017 on the Company’s U.S. global intangible low-taxed income inclusion, and net unrealized gains from investments in equity securities, which were taxed at the U.S. tax rate, partially offset by higher foreign tax credits. The effective income tax rates of 12.0% for the second quarter of 2022 and 11.7% for the first six months of 2022 reflect the favorable impact of net unrealized losses from investments in equity securities, which were taxed at the U.S. tax rate.

Non-GAAP (Loss) Income and Non-GAAP EPS

Non-GAAP (loss) income and non-GAAP (loss) earnings per share (EPS) are alternative views of the Company’s performance that Merck is providing because management believes this information enhances investors’ understanding of the Company’s results since management uses non-GAAP measures to assess performance. Non-GAAP (loss) income and non-GAAP EPS exclude certain items because of the nature of these items and the impact that they have on the analysis of underlying business performance and trends. The excluded items (which should not be considered non-recurring) consist of acquisition- and divestiture-related costs, restructuring costs, income and losses from investments in equity securities, and certain other items. These excluded items are significant components in understanding and assessing financial performance.

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Non-GAAP (loss) income and non-GAAP EPS are important internal measures for the Company. Senior management receives a monthly analysis of operating results that includes a non-GAAP EPS metric. 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. Since non-GAAP (loss) income and non-GAAP EPS are not measures determined in accordance with GAAP, they have no standardized meaning prescribed by GAAP and, therefore, may not be comparable to the calculation of similar measures of other companies. The information on non-GAAP income and non-GAAP EPS should be considered in addition to, but not as a substitute for or superior to, net (loss) income and EPS prepared in accordance with generally accepted accounting principles in the U.S. (GAAP).

A reconciliation between GAAP financial measures and non-GAAP financial measures is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions except per share amounts)	2023		2022		2023		2022
(Loss) income before taxes as reported under GAAP	$	(5,335)	$	4,487	$	(1,685)	$	9,348
Increase (decrease) for excluded items:
Acquisition- and divestiture-related costs	498		530		1,088		1,168
Restructuring costs	236		258		333		384
Loss (income) from investments in equity securities, net	194		234		(235)		918
Other items:
Charge for Zetia antitrust litigation settlements	—		—		573		—
Non-GAAP (loss) income before taxes	(4,407)		5,509		74		11,818
Income tax provision as reported under GAAP	637		538		1,462		1,092
Estimated tax benefit on excluded items (1)	173		223		261		552
Non-GAAP income tax provision	810		761		1,723		1,644
Non-GAAP net (loss) income	(5,217)		4,748		(1,649)		10,174
Less: Net income attributable to noncontrolling interests as reported under GAAP	3		5		7		2
Non-GAAP net (loss) income attributable to Merck & Co., Inc.	$	(5,220)	$	4,743	$	(1,656)	$	10,172
EPS assuming dilution as reported under GAAP (2)	$	(2.35)	$	1.55	$	(1.24)	$	3.25
EPS difference	0.29		0.32		0.59		0.76
Non-GAAP EPS assuming dilution (2)	$	(2.06)	$	1.87	$	(0.65)	$	4.01

(1)    The estimated tax impact on the excluded items is determined by applying the statutory rate of the originating territory of the non-GAAP adjustments.

(2)    The Company recorded a net loss on both a GAAP and non-GAAP basis for the three and six months ended June 30, 2023; therefore, no potential dilutive common shares were used in the computations of loss per common share assuming dilution because the effects would have been antidilutive.

Acquisition- and Divestiture-Related Costs

Non-GAAP (loss) income and non-GAAP EPS exclude the impact of certain amounts recorded in connection with acquisitions and divestitures of businesses. These amounts include the amortization of intangible assets and amortization of purchase accounting adjustments to inventories, as well as intangible asset impairment charges, and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration. Also excluded are integration, transaction, and certain other costs associated with acquisitions and divestitures. Non-GAAP (loss) income and non-GAAP EPS also exclude amortization of intangible assets related to collaborations and licensing arrangements.

Restructuring Costs

Non-GAAP (loss) income and non-GAAP EPS exclude costs related to restructuring actions (see Note 5 to the condensed consolidated financial statements). These amounts include employee separation costs and accelerated depreciation associated with facilities to be closed or divested. Accelerated depreciation costs represent the difference between the depreciation expense to be recognized over the revised useful life of the asset, based upon the anticipated date the site will be closed or divested or the equipment disposed of, and depreciation expense as determined utilizing the useful life prior to the restructuring actions. Restructuring costs also include asset abandonment, facility shut-down and other related costs, as well as employee-related costs such as curtailment, settlement and termination charges associated with pension and other postretirement benefit plans and share-based compensation costs.

Income and Losses from Investments in Equity Securities

Non-GAAP (loss) income and non-GAAP EPS exclude realized and unrealized gains and losses from investments in equity securities either owned directly or through ownership interests in investment funds.

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Certain Other Items

Non-GAAP (loss) income and non-GAAP EPS exclude certain other items. These items are adjusted for after evaluating them on an individual basis, considering their quantitative and qualitative aspects. Typically, these consist of items that are unusual in nature, significant to the results of a particular period or not indicative of future operating results. Excluded from non-GAAP (loss) income and non-GAAP EPS in 2023 is a charge related to settlements with certain plaintiffs in the Zetia antitrust litigation (see Note 9 to the condensed consolidated financial statements).

Research and Development Update

The Company currently has candidates under regulatory review in the U.S. and internationally.

MK-7264, gefapixant, is an investigational, non-narcotic, orally selective P2X3 receptor antagonist, for the treatment of adults with refractory or unexplained chronic cough under review by the FDA and the European Medicines Agency (EMA). The marketing applications for gefapixant are based on results from the COUGH-1 and COUGH-2 clinical trials. In July 2023, the FDA accepted Merck’s resubmission of the New Drug Application (NDA) for gefapixant and assigned a Prescription Drug User Fee Act (PDUFA), or target action, date of December 27, 2023. Merck submitted additional analyses to the FDA in June 2023 in response to the Complete Response Letter (CRL) that was received in January 2022 regarding Merck’s NDA for gefapixant. In the CRL, the FDA requested additional information related to the cough counting system that was used to assess efficacy. The CRL was not related to the safety of gefapixant. In July 2023, the Committee for Medicinal Products for Human Use (CHMP) of the EMA recommended the approval of gefapixant. The CHMP’s recommendation will now be reviewed by the European Commission (EC) for marketing authorization in the EU and a final decision is expected later in 2023.

MK-3475, Keytruda, is an anti-PD-1 therapy approved for the treatment of many cancers that is in clinical development for expanded indications. These approvals were the result of a broad clinical development program that currently encompasses more than 30 cancer types including: biliary, estrogen receptor positive breast cancer, cervical, colorectal, cutaneous squamous cell, endometrial, esophageal, gastric, glioblastoma, head and neck, hepatocellular, Hodgkin lymphoma, non-Hodgkin lymphoma, non-small-cell lung, small-cell lung, melanoma, mesothelioma, ovarian, prostate, renal, triple-negative breast, and urothelial, many of which are currently in Phase 3 clinical development. Further trials are being planned for other cancers.

Keytruda is under review by the FDA for the treatment of patients with previously treated advanced HCC. This submission is based on data from the Phase 3 KEYNOTE-394 trial along with supportive data from the KEYNOTE-240 and KEYNOTE-224 trials. Keytruda is approved for this indication in the U.S. under the FDA’s accelerated approval process. This submission is to convert the accelerated approval to full (regular) approval.

Keytruda is also under review by the FDA for the treatment of adult and pediatric patients with recurrent locally advanced or metastatic Merkel cell carcinoma. This submission is based on data from the Phase 3 KEYNOTE-913 trial. Keytruda is approved for this indication in the U.S. under the FDA’s accelerated approval process. This submission is to convert the accelerated approval to full (regular) approval.

Additionally, Keytruda is under review by the FDA in combination with standard of care chemotherapy (gemcitabine and cisplatin) for the treatment of patients with locally advanced unresectable or metastatic biliary tract cancer. The submission is based on data from the KEYNOTE-966 trial. The FDA set a PDUFA date of February 7, 2024. KEYNOTE-966 is also under review in the EU and Japan.

Keytruda is also under review by the FDA in combination with fluoropyrimidine- and platinum-containing chemotherapy for the first-line treatment of patients with locally advanced unresectable or metastatic gastric or GEJ adenocarcinoma. The submission is based on data from the KEYNOTE-859 trial. The FDA set a PDUFA date of December 16, 2023. KEYNOTE-859 is also under review in the EU and Japan.

In addition, Keytruda is under review by the FDA as a perioperative treatment regimen for patients with resectable stage II, IIIA or IIIB NSCLC based on the KEYNOTE-671 study. A perioperative treatment regimen includes treatment before surgery (neoadjuvant) and continued after surgery (adjuvant). The FDA set a PDUFA date of October 16, 2023. KEYNOTE-671 is also under review in the EU.

Keytruda is under review in the EU for the adjuvant treatment of patients with stage IB (≥4 cm), II or IIIA NSCLC following complete surgical resection. The submission is based on data from the pivotal Phase 3 KEYNOTE-091 trial, also known as EORTC-1416-LCG/ETOP-8-15 – PEARLS.

Keytruda is also under review in the EU in combination with trastuzumab, fluoropyrimidine- and platinum-containing chemotherapy, for the first-line treatment of locally advanced unresectable or metastatic human epidermal growth factor 2 (HER2)-positive gastric or GEJ adenocarcinoma in adults whose tumors express PD-L1. In July 2023, the CHMP adopted a positive opinion recommending approval of Keytruda for this indication based on interim results from the Phase 3 KEYNOTE-811 trial. The CHMP’s recommendation will now be reviewed by the EC for marketing authorization in the EU, and a final decision is expected in the third quarter of 2023. This indication was approved by the FDA under accelerated approval based on objective response rate data from KEYNOTE-811, and continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials. Merck is working with the FDA to update this indication to patients whose tumors are PD-L1 positive.

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MK-7339, Lynparza, is an oral PARP inhibitor currently approved for the treatment of several cancers being co-developed for additional cancer types as part of a collaboration with AstraZeneca (see Note 3 to the condensed consolidated financial statements). Lynparza is under review in Japan for the treatment of certain patients with mCRPC based on the PROpel trial.

In July 2023, Merck submitted a Biologics License Application to the FDA for sotatercept (MK-7962), Merck’s novel investigational activin signaling inhibitor for the treatment of adults with pulmonary arterial hypertension (World Health Organization Group 1).

Also in July 2023, Merck and Moderna, Inc. announced the initiation of the pivotal Phase 3 randomized V940-001 clinical trial evaluating V940 (mRNA-4157), an investigational individualized neoantigen therapy, in combination with Keytruda, as an adjuvant treatment in patients with resected high-risk (Stage IIB-IV) melanoma. The FDA and EMA granted Breakthrough Therapy Designation and the Priority Medicines (PRIME) scheme, respectively, for V940 (mRNA-4157) in combination with Keytruda for the adjuvant treatment of patients with high-risk melanoma based on data from the Phase 2b KEYNOTE-942/mRNA-4157-P201 study.

KEYNOTE-A86, a study evaluating pembrolizumab subcutaneous versus pembrolizumab intravenous administered with platinum doublet chemotherapy in patients with metastatic squamous or nonsquamous NSCLC, met its dual primary endpoints and Merck anticipates disclosing details in the future.

MK-4482, Lagevrio, is an investigational oral antiviral medicine for the treatment of mild to moderate COVID-19 in adults who are at risk for progressing to severe disease. Merck is developing Lagevrio in collaboration with Ridgeback. The FDA granted Emergency Use Authorization for Lagevrio in December 2021, which was last reissued in February 2023. Lagevrio is authorized for the treatment of adults with a current diagnosis of mild to moderate COVID-19, and who are at high risk for progression to severe COVID-19, including hospitalization or death, and for whom alternative COVID-19 treatment options approved or authorized by the FDA are not accessible or clinically appropriate. The authorization is based on the Phase 3 MOVe-OUT trial. Lagevrio is not approved for any use in the U.S. and is authorized only for the duration of the declaration that circumstances exist justifying the authorization of its emergency use under the Food, Drug and Cosmetic Act, unless the authorization is terminated or revoked sooner. In November 2021, the EMA issued a positive scientific opinion for Lagevrio, which was intended to support national decision-making on the possible use of Lagevrio prior to marketing authorization. In October 2021, the EMA initiated a rolling review for Lagevrio for the treatment of COVID-19 in adults. In February 2023, Merck and Ridgeback announced that the CHMP of the EMA recommended the refusal of the marketing authorization application (MAA) for Lagevrio. Merck and Ridgeback appealed the decision and requested a re-examination of the MAA. In June 2023, Merck and Ridgeback announced that they have withdrawn the EU application for marketing authorization of Lagevrio based on the CHMP’s view that the data submitted are not sufficient to satisfy EU regulatory requirements for marketing authorization of Lagevrio. Applications to other regulatory bodies are underway.

The Company is in the process of discontinuing development of ladiratuzumab vedotin, an ADC targeting LIV-1, which was being developed in collaboration with Seagen Inc.

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The charts below reflect the Company’s research pipeline as of August 2, 2023. Candidates shown in Phase 3 include the date such candidate entered into Phase 3 development. Candidates shown in Phase 2 include the most advanced compound with a specific mechanism or, if listed compounds have the same mechanism, they are each currently intended for commercialization in a given therapeutic area. Small molecules and biologics are given MK-number designations and vaccine candidates are given V-number designations. Except as otherwise noted, candidates in Phase 1, additional indications in the same therapeutic area (other than with respect to cancer) and additional claims, line extensions or formulations for in-line products are not shown.

Phase 2
Cancer MK-0482(2)      Non-Small-Cell Lung MK-1308 (quavonlimab)(2) Non-Small-Cell Lung MK-1308A (quavonlimab+pembrolizumab) Colorectal Hepatocellular Melanoma Small-Cell Lung MK-2140 (zilovertamab vedotin) Bladder Breast Gastric Hematological Malignancies Non-Small-Cell Lung Ovarian Pancreatic MK-2870(1)(3) Neoplasm Malignant MK-3475 Keytruda Advanced Solid Tumors Prostate MK-3543 (bomedemstat) Myeloproliferative Disorders MK-4280 (favezelimab)(2)     Non-Small-Cell Lung MK-4280A (favezelimab+pembrolizumab) Bladder Esophageal Melanoma Renal Cell Small-Cell Lung MK-4830(2)         Colorectal      Esophageal      Melanoma Non-Small-Cell Lung Ovarian Renal Cell     Small-Cell Lung	Cancer MK-5684(1) Prostate MK-5890 (boserolimab)(2)      Non-Small-Cell Lung      Small-Cell Lung MK-6482 Welireg(3) Biliary Colorectal Endometrial Esophageal Hepatocellular Pancreatic Rare cancers Von Hippel-Lindau Disease-Associated Tumors (EU) MK-7119 Tukysa(1) Advanced Solid Tumors Biliary Bladder Cervical Endometrial Gastric Non-Small-Cell Lung MK-7339 Lynparza(1)(3) Advanced Solid Tumors MK-7684A (vibostolimab+pembrolizumab) Biliary Bladder Breast Cervical Colorectal Endometrial Esophageal Gastric Head and Neck Hematological Malignancies Hepatocellular Ovarian Prostate	Cancer MK-7902 Lenvima(1)(2) Biliary Pancreatic Prostate Small-Cell Lung Dengue Fever Virus Vaccine V181 HIV-1 Infection MK-8591B (islatravir+MK-8507)(4) MK-8591D (islatravir+lenacapavir)(1)(5) Hypercholesterolemia MK-0616 Nonalcoholic Steatohepatitis (NASH) MK-6024 (efinopegdutide) Pulmonary Arterial Hypertension MK-5475 Pulmonary Hypertension Due To Left Heart Disease MK-7962 (sotatercept) Schizophrenia MK-8189(6) Thrombosis MK-2060 Treatment Resistant Depression MK-1942 Ulcerative Colitis MK-7240

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Phase 3 (Phase 3 entry date)	Under Review
Antiviral COVID-19      MK-4482 Lagevrio (U.S.) (May 2021)(1)(7) Cancer MK-1026 (nemtabrutinib)      Hematological Malignancies (March 2023) MK-1308A (quavonlimab+pembrolizumab) Renal Cell (April 2021) MK-3475 Keytruda Cutaneous Squamous Cell (August 2019) (EU) Hepatocellular (May 2016) (EU) Mesothelioma (May 2018) Ovarian (December 2018) Small-Cell Lung (May 2017) MK-3475A (pembrolizumab+hyaluronidase subcutaneous) Non-Small-Cell Lung (February 2023) MK-4280A (favezelimab+pembrolizumab) Colorectal (November 2021) Hematological Malignancies (October 2022) MK-6482 Welireg(3) Renal Cell (February 2020) MK-7119 Tukysa(1) Breast (October 2019) Colorectal (August 2022) MK-7339 Lynparza(2) Non-Small-Cell Lung (June 2019) Small-Cell Lung (December 2020) MK-7684A (vibostolimab+pembrolizumab) Melanoma (January 2023) Non-Small-Cell Lung (April 2021) Small-Cell Lung (March 2022) MK-7902 Lenvima(1)(2) Esophageal (July 2021) Gastric (December 2020) Head and Neck (February 2020) Non-Small-Cell Lung (March 2019) V940(1)(2) Melanoma (July 2023) HIV-1 Infection      MK-8591A (doravirine+islatravir) (February 2020)(5) Pneumococcal Vaccine Adult V116 (July 2022) Pulmonary Arterial Hypertension MK-7962 (sotatercept) (January 2021) Respiratory Syncytial Virus MK-1654 (clesrovimab) (November 2021)	New Molecular Entities Cough MK-7264 (gefapixant) (U.S.)(8) (EU)	Certain Supplemental Filings Cancer MK-3475 Keytruda • Second-Line Hepatocellular Carcinoma (KEYNOTE-394) (U.S.) • Locally Advanced or Metastatic Merkel Cell Carcinoma (KEYNOTE-913) (U.S.) • First-Line Advanced or Unresectable Biliary Tract Cancer (KEYNOTE-966) (U.S.) (EU) (JPN) • First-Line HER2 Negative Locally Advanced Unresectable or Metastatic Gastric Cancer (KEYNOTE-859) (U.S.) (EU) (JPN) • Resectable Stage II, IIIA or IIIB NSCLC (KEYNOTE-671) (U.S.) (EU) • Adjuvant Non-Small-Cell Lung Cancer (KEYNOTE-091) (EU) • Metastatic HER2+ Gastric Cancer (KEYNOTE-811) (EU) MK-7339 Lynparza(1) • First-Line Metastatic Prostate Cancer (PROpel) (JPN)
	Footnotes: (1) Being developed in a collaboration. (2) Being developed in combination with Keytruda. (3) Being developed as monotherapy and/or in combination with Keytruda. (4) On FDA clinical hold. (5) On FDA partial clinical hold for higher doses than those used in current clinical trials. (6) Phase 2b development costs are being co-funded. (7) Available in the U.S. under Emergency Use Authorization. (8) In July 2023, the FDA accepted Merck’s resubmission of the NDA for gefapixant following the Company’s response to the CRL received in January 2022.

Analysis of Liquidity and Capital Resources

($ in millions)	June 30, 2023			December 31, 2022
Cash and investments	$	7,592		$	14,207
Working capital	6,583			11,483
Total debt to total liabilities and equity	35.3		%	28.1		%

Cash provided by operating activities was $5.0 billion in the first six months of 2023 compared with $9.1 billion in the first six months of 2022 primarily reflecting the impact of lower Lagevrio sales. Cash provided by operating activities was reduced by milestone payments related to certain collaborations of $240 million and $1.7 billion in the first six months of 2023 and 2022, respectively. Cash provided by operating activities continues to be the Company’s primary source of funds to finance operating needs, with excess cash generally serving as the primary source of funds to finance business development transactions, capital expenditures, dividends paid to shareholders and treasury stock purchases.

Cash used in investing activities was $13.8 billion in the first six months of 2023 compared with $2.3 billion in the first six months of 2022. The higher use of cash in investing activities was primarily due to the acquisitions of Prometheus and Imago, partially offset by higher proceeds from sales of securities and other investments, lower purchases of securities and other investments, and lower capital expenditures.

Cash provided by financing activities was $1.7 billion in the first six months of 2023 compared with a use of cash in financing activities of $4.9 billion in the first six months of 2022. The change was primarily due to proceeds from the issuance of debt (see below) and an increase in short-term borrowings, partially offset by higher payments on long-term debt (see below), treasury stock purchases and higher dividends paid to shareholders.

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The Company has accounts receivable factoring agreements with financial institutions in certain countries to sell accounts receivable. The Company factored $2.9 billion and $2.5 billion of accounts receivable at June 30, 2023 and December 31, 2022, respectively, under these factoring arrangements, which reduced outstanding accounts receivable. The cash received from the financial institutions is reported within operating activities in the Condensed Consolidated Statement of Cash Flows. In certain of these factoring arrangements, for ease of administration, the Company will collect customer payments related to the factored receivables, which it then remits to the financial institutions. The net cash flows relating to these collections are reported as financing activities in the Condensed Consolidated Statement of Cash Flows.

In May 2023, the Company issued $6.0 billion principal amount of senior unsecured notes consisting of $500 million of 4.05% notes due 2028, $750 million of 4.30% notes due 2030, $1.5 billion of 4.50% notes due 2033, $750 million of 4.90% notes due 2044, $1.5 billion of 5.00% notes due 2053, and $1.0 billion of 5.15% notes due 2063. The Company used a portion of the $5.9 billion net proceeds from this offering to fund a portion of the cash consideration paid for the acquisition of Prometheus and related fees and expenses, and used the remaining net proceeds for general corporate purposes including to repay commercial paper borrowings and other indebtedness with upcoming maturities.

In May 2023, the Company’s $1.75 billion, 2.80% notes matured in accordance with their terms and were repaid. In February 2022, the Company’s $1.25 billion, 2.35% notes matured in accordance with their terms and were repaid.

Dividends paid to stockholders were $3.7 billion and $3.5 billion for the first six months of 2023 and 2022, respectively. In May 2023, the Board of Directors declared a quarterly dividend of $0.73 per share on the Company’s outstanding common stock for the second quarter that was paid in July 2023. In July 2023, the Board of Directors declared a quarterly dividend of $0.73 per share on the Company’s outstanding common stock for the third quarter that will be paid in October 2023.

In 2018, Merck’s Board of Directors authorized purchases of up to $10 billion of Merck’s common stock for its treasury. The treasury stock purchase authorization has no time limit and will be made over time in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions. The Company has made and anticipates continuing to make modest share repurchases under this program in 2023. During the first six months of 2023, the Company purchased $487 million (4 million shares) of its common stock for its treasury under this program. As of June 30, 2023, the Company’s remaining share repurchase authorization was $4.6 billion.

The Company has a $6.0 billion credit facility that matures in May 2028. The facility provides backup liquidity for the Company’s commercial paper borrowing facility and is to be used for general corporate purposes. The Company has not drawn funding from this facility.

Critical Accounting Estimates

The Company’s significant accounting policies, which include management’s best estimates and judgments, are included in Note 2 to the consolidated financial statements for the year ended December 31, 2022 included in Merck’s Form 10‑K filed on February 24, 2023. See Note 1 to the condensed consolidated financial statements for information on the adoption of new accounting standards during 2023. A discussion of accounting estimates considered critical because of the potential for a significant impact on the financial statements due to the inherent uncertainty in such estimates are disclosed in the Critical Accounting Estimates section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Merck’s Form 10-K. There have been no significant changes in the Company’s critical accounting estimates since December 31, 2022.

Recently Issued Accounting Standards

For a discussion of recently issued accounting standards, see Note 1 to the condensed consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in market risk exposures that affect the disclosures presented in “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in the Company’s 2022 Form 10-K filed on February 24, 2023.

Item 4. Controls and Procedures

Management of the Company, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures over financial reporting. Based on their evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, 2023, the Company’s disclosure controls and procedures are effective. For the second quarter of 2023, there were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS

This report and other written reports and oral statements made from time to time by the Company may contain so-called “forward-looking statements,” all of which are based on management’s current expectations and are subject to risks and uncertainties which may cause results to differ materially from those set forth in the statements. One can identify these forward-

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looking statements by their use of words such as “anticipates,” “expects,” “plans,” “will,” “estimates,” “forecasts,” “projects” and other words of similar meaning, or negative variations of any of the foregoing. One can also identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address the Company’s growth strategy, financial results, product approvals, product potential, development programs, environmental or other sustainability initiatives, and may include statements related to the expected impact of the COVID-19 pandemic. One must carefully consider any such statement and should understand that many factors could cause actual results to differ materially from the Company’s forward-looking statements. These factors include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially.

The Company does not assume the obligation to update any forward-looking statement. One should carefully evaluate such statements in light of factors, including risk factors, described in the Company’s filings with the Securities and Exchange Commission, especially on Forms 10-K, 10-Q and 8-K. In Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10‑K for the year ended December 31, 2022, filed on February 24, 2023, the Company discusses in more detail various important risk factors that could cause actual results to differ from expected or historic results. The Company notes these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. One should understand that it is not possible to predict or identify all such factors. Consequently, the reader should not consider any such list to be a complete statement of all potential risks or uncertainties.

PART II - Other Information

Item 1. Legal Proceedings

The information called for by this Item is incorporated herein by reference to Note 9 included in Part I, Item 1, Financial Statements (unaudited) — Notes to Condensed Consolidated Financial Statements.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer purchases of equity securities for the three months ended June 30, 2023 were as follows:

ISSUER PURCHASES OF EQUITY SECURITIES

				($ in millions)
Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
April 1 - April 30	376,898	$110.51	376,898	$4,856
May 1 - May 31	907,404	$114.76	907,404	$4,752
June 1 - June 30	1,734,532	$110.72	1,734,532	$4,560
Total	3,018,834	$111.91	3,018,834

(1) Shares purchased during the period were made as part of a plan approved by the Board of Directors in October 2018 to purchase up to $10 billion of Merck’s common stock for its treasury.

Item 5. Other Information

Insider Trading Arrangements

During the three months ended June 30, 2023, none of the Company’s directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.

Frequency of Future Non-Binding Shareholder Advisory Votes on Executive Compensation

As previously reported in a Current Report on Form 8-K filed on May 26, 2023, at the Company’s 2023 Annual Meeting of Shareholders held on May 23, 2023, the Company’s shareholders approved, on a non-binding advisory basis, the holding of a non-binding shareholder advisory vote on executive compensation annually. Based on this voting result, among other factors, the Company will include a non-binding shareholder advisory vote on executive compensation in its proxy materials annually until the next required shareholder vote on the frequency of such non-binding advisory votes on executive compensation.

- 43 -

Item 6. Exhibits

Number		Description
3.1	—	Restated Certificate of Incorporation of Merck & Co., Inc. (November 3, 2009) – Incorporated by reference to Merck & Co., Inc.'s Current Report on Form 8-K filed on November 4, 2009 (No. 1-6571)
3.2	—	By-Laws of Merck & Co., Inc. (effective March 22, 2022) – Incorporated by reference to Merck & Co., Inc.'s Current Report on Form 8-K filed on March 25, 2022 (No. 1-6571)
31.1	—	Rule 13a – 14(a)/15d – 14(a) Certification of Chief Executive Officer
31.2	—	Rule 13a – 14(a)/15d – 14(a) Certification of Chief Financial Officer
32.1	—	Section 1350 Certification of Chief Executive Officer
32.2	—	Section 1350 Certification of Chief Financial Officer
101.INS	—	XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	—	XBRL Taxonomy Extension Schema Document.
101.CAL	—	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	—	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	—	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	—	XBRL Taxonomy Extension Presentation Linkbase Document.
104	—	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

- 44 -

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MERCK & CO., INC.
Date: August 7, 2023	/s/ Jennifer Zachary
	JENNIFER ZACHARY
	Executive Vice President and General Counsel
Date: August 7, 2023	/s/ Rita A. Karachun
	RITA A. KARACHUN
	Senior Vice President Finance - Global Controller

- 45 -

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Robert M. Davis, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Merck & Co., Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2023

By:	/s/ Robert M. Davis
	ROBERT M. DAVIS Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Caroline Litchfield, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Merck & Co., Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   August 7, 2023

By:	/s/ Caroline Litchfield
	CAROLINE LITCHFIELD Executive Vice President, Chief Financial Officer

EX-32.1

Exhibit 32.1

Section 1350

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350, the undersigned officer of Merck & Co., Inc. (the “Company”), hereby certifies that the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 7, 2023	/s/ Robert M. Davis
	Name: Title:	ROBERT M. DAVIS Chairman and Chief Executive Officer

EX-32.2

Exhibit 32.2

Section 1350

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350, the undersigned officer of Merck & Co., Inc. (the “Company”), hereby certifies that the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 7, 2023	/s/ Caroline Litchfield
	Name: Title:	CAROLINE LITCHFIELD Executive Vice President, Chief Financial Officer

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2023	Jul. 31, 2023
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	1-6571
Entity Registrant Name	Merck & Co., Inc.
Entity Incorporation, State or Country Code	NJ
Entity Tax Identification Number	22-1918501
Entity Address, Address Line One	126 East Lincoln Avenue
Entity Address, City or Town	Rahway
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	07065
City Area Code	(908)
Local Phone Number	740-4000
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		2,537,521,169
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Entity Central Index Key	0000310158
Current Fiscal Year End Date	--12-31
Common Stock ($0.50 par value)
Entity Information [Line Items]
Title of 12(b) Security	Common Stock ($0.50 par value)
Trading Symbol	MRK
Security Exchange Name	NYSE
0.500% Notes due 2024
Entity Information [Line Items]
Title of 12(b) Security	0.500% Notes due 2024
Trading Symbol	MRK 24
Security Exchange Name	NYSE
1.875% Notes due 2026
Entity Information [Line Items]
Title of 12(b) Security	1.875% Notes due 2026
Trading Symbol	MRK/26
Security Exchange Name	NYSE
2.500% Notes due 2034
Entity Information [Line Items]
Title of 12(b) Security	2.500% Notes due 2034
Trading Symbol	MRK/34
Security Exchange Name	NYSE
1.375% Notes due 2036
Entity Information [Line Items]
Title of 12(b) Security	1.375% Notes due 2036
Trading Symbol	MRK 36A
Security Exchange Name	NYSE

XML

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Sales	$ 15,035	$ 14,593	$ 29,522	$ 30,494
Costs, Expenses and Other
Cost of sales	4,024	4,216	7,951	9,596
Selling, general and administrative	2,702	2,512	5,182	4,834
Research and development	13,321	2,798	17,597	5,374
Restructuring costs	151	142	218	194
Other (income) expense, net	172	438	259	1,148
Total Costs, Expenses and Other	20,370	10,106	31,207	21,146
(Loss) Income Before Taxes	(5,335)	4,487	(1,685)	9,348
Income Tax Provision	637	538	1,462	1,092
Net (Loss) Income	(5,972)	3,949	(3,147)	8,256
Less: Net Income Attributable to Noncontrolling Interests	3	5	7	2
Net (Loss) Income Attributable to Merck & Co., Inc.	$ (5,975)	$ 3,944	$ (3,154)	$ 8,254
Basic (Loss) Earnings per Common Share Attributable to Merck & Co., Inc. Common Shareholders (in dollars per share)	$ (2.35)	$ 1.56	$ (1.24)	$ 3.26
(Loss) Earnings per Common Share Attributable to Merck & Co., Inc. Common Shareholders (in dollars per share)	$ (2.35)	$ 1.55	$ (1.24)	$ 3.25

XML

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net (Loss) Income Attributable to Merck & Co., Inc.	$ (5,975)	$ 3,944	$ (3,154)	$ 8,254
Other Comprehensive (Loss) Income Net of Taxes:
Net unrealized gain on derivatives, net of reclassifications	145	183	12	246
Benefit plan net (loss) gain and prior service (cost) credit, net of amortization	(25)	246	(75)	278
Cumulative translation adjustment	(137)	(387)	(69)	(422)
Other comprehensive income (loss), net of taxes	(17)	42	(132)	102
Comprehensive (Loss) Income Attributable to Merck & Co., Inc.	$ (5,992)	$ 3,986	$ (3,286)	$ 8,356

XML

CONDENSED CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Current Assets
Cash and cash equivalents	$ 5,660	$ 12,694
Short-term investments	718	498
Accounts receivable (net of allowance for doubtful accounts of $86 in 2023 and $72 in 2022)	11,030	9,450
Inventories (excludes inventories of $3,220 in 2023 and $2,938 in 2022 classified in Other assets - see Note 7)	5,930	5,911
Other current assets	6,639	7,169
Total current assets	29,977	35,722
Investments	1,214	1,015
Property, Plant and Equipment, at cost, net of accumulated depreciation of $18,432 in 2023 and $17,985 in 2022	22,231	21,422
Goodwill	21,195	21,204
Other Intangibles, Net	19,665	20,269
Other Assets	10,187	9,528
Total Assets	104,469	109,160
Current Liabilities
Loans payable and current portion of long-term debt	2,839	1,946
Trade accounts payable	3,442	4,264
Accrued and other current liabilities	13,747	14,159
Income taxes payable	1,489	1,986
Dividends payable	1,877	1,884
Total current liabilities	23,394	24,239
Long-Term Debt	34,072	28,745
Deferred Income Taxes	996	1,795
Other Noncurrent Liabilities	7,265	8,323
Merck & Co., Inc. Stockholders’ Equity
Common stock, $0.50 par value Authorized - 6,500,000,000 shares Issued - 3,577,103,522 shares in 2023 and 2022	1,788	1,788
Other paid-in capital	44,219	44,379
Retained earnings	54,198	61,081
Accumulated other comprehensive loss	(4,900)	(4,768)
Stockholders' equity before deduction for treasury stock	95,305	102,480
Less treasury stock, at cost: 1,037,678,033 shares in 2023 and 1,039,269,638 shares in 2022	56,612	56,489
Total Merck & Co., Inc. stockholders’ equity	38,693	45,991
Noncontrolling Interests	49	67
Total equity	38,742	46,058
Liabilities and Equity	$ 104,469	$ 109,160

XML

CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 86	$ 72
Inventories classified in Other assets	3,220	2,938
Accumulated depreciation	$ 18,432	$ 17,985
Common stock, par value (in dollars per share)	$ 0.50	$ 0.50
Common stock, authorized (shares)	6,500,000,000	6,500,000,000
Common stock, issued (in shares)	3,577,103,522	3,577,103,522
Treasury stock (in shares)	1,037,678,033	1,039,269,638

XML

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash Flows from Operating Activities
Net (loss) income	$ (3,147)	$ 8,256
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Amortization	1,020	1,163
Depreciation	874	895
(Income) loss from investments in equity securities, net	(274)	991
Charge for the acquisition of Prometheus Biosciences, Inc.	10,217	0
Charge for the acquisition of Imago BioSciences, Inc.	1,192	0
Deferred income taxes	(632)	(600)
Share-based compensation	314	257
Other	5	799
Net changes in assets and liabilities	(4,526)	(2,698)
Net Cash Provided by Operating Activities	5,043	9,063
Cash Flows from Investing Activities
Capital expenditures	(1,972)	(2,113)
Purchases of securities and other investments	(587)	(705)
Proceeds from sales of securities and other investments	785	374
Acquisition of Prometheus Biosciences, Inc., net of cash acquired	(10,705)	0
Acquisition of Imago BioSciences, Inc., net of cash acquired	(1,327)	0
Other	4	194
Net Cash Used in Investing Activities	(13,802)	(2,250)
Cash Flows from Financing Activities
Net change in short-term borrowings	1,937	0
Proceeds from issuance of debt	5,946	0
Payments on debt	(1,751)	(1,250)
Purchases of treasury stock	(487)	0
Dividends paid to stockholders	(3,738)	(3,515)
Proceeds from exercise of stock options	112	109
Other	(315)	(207)
Net Cash Provided by (Used in) Financing Activities	1,704	(4,863)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash	(6)	(364)
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash	(7,061)	1,586
Cash, Cash Equivalents and Restricted Cash at Beginning of Year (includes restricted cash of $79 and $71 at January 1, 2023 and 2022, respectively, included in Other current assets)	12,773	8,167
Cash, Cash Equivalents and Restricted Cash at End of Period (includes restricted cash of $52 and $78 at June 30, 2023 and 2022, respectively, included in Other current assets)	$ 5,712	$ 9,753

XML

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
Statement of Cash Flows [Abstract]
Restricted cash	$ 52	$ 79	$ 78	$ 71

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Merck & Co., Inc. (Merck or the Company) have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by accounting principles generally accepted in the United States (U.S.) (GAAP) for complete consolidated financial statements are not included herein. These interim statements should be read in conjunction with the audited financial statements and notes thereto included in Merck’s Form 10-K filed on February 24, 2023.

The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. In the Company’s opinion, all adjustments necessary for a fair statement of these interim statements have been included and are of a normal and recurring nature. Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

Recently Adopted Accounting Standards

In October 2021, the FASB issued amended guidance that requires acquiring entities to recognize and measure contract assets and liabilities in a business combination in accordance with existing revenue recognition guidance. The Company adopted the guidance effective January 1, 2023. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements for prior acquisitions; however, the impact in future periods will be dependent upon the contract assets and contract liabilities acquired in future business combinations.

In June 2022, the FASB issued guidance related to the fair value measurement of an equity security subject to contractual restrictions that prohibit the sale of the equity security. The new guidance also introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. The Company adopted the guidance effective July 1, 2023. There was no impact to the Company’s consolidated financial statements upon adoption.

XML

Acquisitions, Research Collaborations and License Agreements

6 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Acquisitions, Research Collaborations and License Agreements

Acquisitions, Research Collaborations and Licensing Agreements

The Company continues to pursue acquisitions and the establishment of external alliances such as research collaborations and licensing agreements to complement its internal research capabilities. These arrangements often include upfront payments, as well as expense reimbursements or payments to the third party, and milestone, royalty or profit share arrangements, contingent upon the occurrence of certain future events linked to the success of the asset in development. The Company also reviews its marketed products and pipeline to examine candidates which may provide more value through out-licensing and, as part of its portfolio assessment process, may also divest certain assets. Pro forma financial information for acquired businesses is not presented if the historical financial results of the acquired entity are not significant when compared with the Company’s financial results.

In June 2023, Merck acquired Prometheus Biosciences, Inc. (Prometheus), a clinical-stage biotechnology company pioneering a precision medicine approach for the discovery, development, and commercialization of novel therapeutic and companion diagnostic products for the treatment of immune-mediated diseases. Total consideration paid of $11.0 billion included $1.2 billion of costs to settle share-based equity awards (including $700 million to settle unvested equity awards). Prometheus’ lead candidate, MK-7240 (formerly PRA023), is a humanized monoclonal antibody directed to tumor necrosis factor-like ligand 1A, a target associated with both intestinal inflammation and fibrosis. MK-7240 is being developed for the treatment of immune-mediated diseases including ulcerative colitis, Crohn’s disease, and other autoimmune conditions. The transaction was accounted for as an acquisition of an asset since MK-7240 accounted for substantially all of the fair value of the gross assets acquired (excluding cash and deferred income taxes). Merck recorded net assets of $877 million, including cash of $368 million, investments of $296 million, deferred tax assets of $218 million and other net liabilities of $5 million, as well as Research and development expenses of $10.2 billion in the second quarter and first six months of 2023 related to the transaction. There are no future contingent payments associated with the acquisition.

In February 2023, Merck and Kelun-Biotech (a holding subsidiary of Sichuan Kelun Pharmaceutical Co., Ltd.) closed a license and collaboration agreement expanding their relationship in which Merck gained exclusive rights for the research, development, manufacture and commercialization of up to seven investigational preclinical antibody drug conjugates (ADCs) for the treatment of cancer. Kelun-Biotech retained the right to research, develop, manufacture and commercialize certain licensed and option ADCs for Chinese mainland, Hong Kong and Macau. Merck made an upfront payment of $175 million, which was recorded in Research and development expenses in the first six months of 2023. In addition, Kelun-Biotech is eligible to receive future contingent development-related payments aggregating up to $1.0 billion, $2.8 billion in regulatory milestones, and $5.5 billion in sales-based milestones if Kelun-Biotech does not retain Chinese mainland, Hong Kong and Macau rights for the option ADCs and all candidates achieve regulatory approval. In addition, Kelun-Biotech is eligible to receive tiered royalties ranging from a mid-single-digit rate to a low-double-digit rate on future net sales for any commercialized ADC product. Also, in connection with the agreement, Merck invested $100 million in Kelun-Biotech’s Series B preferred shares in January 2023.

In January 2023, Merck acquired Imago BioSciences, Inc. (Imago), a clinical stage biopharmaceutical company developing new medicines for the treatment of myeloproliferative neoplasms and other bone marrow diseases, for $1.35 billion (including payments to settle share-based equity awards) and also incurred approximately $60 million of transaction costs. Imago’s lead candidate bomedemstat, MK-3543 (formerly IMG-7289), is an investigational orally available lysine-specific demethylase 1 inhibitor currently being evaluated in multiple Phase 2 clinical trials for the treatment of essential

thrombocythemia, myelofibrosis, and polycythemia vera, in addition to other indications. The transaction was accounted for as an acquisition of an asset since bomedemstat represented substantially all of the fair value of the gross assets acquired (excluding cash and deferred income taxes). Merck recorded net assets of $219 million, as well as Research and development expenses of $1.2 billion in the first six months of 2023 related to the transaction. There are no future contingent payments associated with the acquisition.

In May 2022, in connection with an existing arrangement, Merck exercised its option to obtain an exclusive license outside of Chinese mainland, Hong Kong, Macau and Taiwan for the development, manufacture and commercialization of Kelun-Biotech’s trophoblast antigen 2 (TROP2)-targeting ADC programs, including its lead compound, SKB-264 (MK-2870), which is currently in Phase 2 clinical development. Under the terms of the agreement, Merck and Kelun-Biotech will collaborate on certain early clinical development plans, including evaluating the potential of MK-2870 as a monotherapy and in combination with Keytruda for advanced solid tumors. Upon option exercise, Merck made a payment of $30 million, which was recorded in Research and development expenses in the second quarter and first six months of 2022, and agreed to make additional payments of $30 million upon completion of specified project activities and $25 million upon technology transfer. Merck also agreed to make quarterly payments in 2022 and 2023 aggregating up to $111 million to fund Kelun-Biotech’s ongoing research and development activities, of which $81 million has been paid through June 2023. In addition, Kelun-Biotech is eligible to receive future contingent milestone payments (which include all program compounds) aggregating up to $90 million in developmental milestones, $290 million in first commercial sale milestones, and $780 million in sales-based milestones. The agreement also provides for Merck to pay tiered royalties ranging from a mid-single-digit rate to a low-double-digit rate on future net sales.

XML

Collaborative Arrangements

6 Months Ended

Jun. 30, 2023

Collaborative Arrangements [Abstract]

Collaborative Arrangements

Collaborative Arrangements

Merck has entered into collaborative arrangements that provide the Company with varying rights to develop, produce and market products together with its collaborative partners. Both parties in these arrangements are active participants and exposed to significant risks and rewards dependent on the commercial success of the activities of the collaboration. Merck’s more significant collaborative arrangements are discussed below.

AstraZeneca PLC

In 2017, Merck and AstraZeneca PLC (AstraZeneca) entered into a global strategic oncology collaboration to co-develop and co-commercialize AstraZeneca’s Lynparza (olaparib) for multiple cancer types. Independently, Merck and AstraZeneca will develop and commercialize Lynparza in combinations with their respective PD-1 and PD-L1 medicines, Keytruda (pembrolizumab) and Imfinzi. The companies are also jointly developing and commercializing AstraZeneca’s Koselugo (selumetinib) for multiple indications. Under the terms of the agreement, AstraZeneca and Merck will share the development and commercialization costs for Lynparza and Koselugo monotherapy and non-PD-L1/PD-1 combination therapy opportunities.

Profits from Lynparza and Koselugo product sales generated through monotherapies or combination therapies are shared equally. AstraZeneca is the principal on Lynparza and Koselugo sales transactions. Merck records its share of Lynparza and Koselugo product sales, net of cost of sales and commercialization costs, as alliance revenue and its share of development costs associated with the collaboration as part of Research and development expenses. Reimbursements received from AstraZeneca for research and development expenses are recognized as reductions to Research and development costs.

As part of the agreement, Merck made an upfront payment to AstraZeneca and also made payments over a multi-year period for certain license options. In addition, the agreement provides for contingent payments from Merck to AstraZeneca related to the successful achievement of sales-based and regulatory milestones.

In the first quarter of 2022, Merck determined it was probable that sales of Lynparza in the future would trigger a $600 million sales-based milestone payment from Merck to AstraZeneca. Accordingly, Merck recorded a $600 million liability (which remained accrued at June 30, 2023) and a corresponding increase to the intangible asset related to Lynparza. Merck also recognized $250 million of cumulative amortization catch-up expense related to the recognition of this milestone in the first six months of 2022. Additionally, in the first six months of 2022, Merck made a sales-based milestone payment to AstraZeneca (which had been previously accrued for) of $400 million. Potential future sales-based milestone payments of $2.1 billion have not yet been accrued as they are not deemed by the Company to be probable at this time. In the first quarter of 2023, Merck made a regulatory milestone payment to AstraZeneca of $105 million (which had been previously accrued for). In the second quarter of 2023, Lynparza received a regulatory approval triggering a future milestone payment of up to $245 million from Merck to AstraZeneca. In 2022, Lynparza received regulatory approvals triggering capitalized milestone payments of $250 million from Merck to AstraZeneca (of which $175 million was paid in the first six months of 2022). Potential future regulatory milestone payments of $850 million remain under the agreement.

The intangible asset balance related to Lynparza (which includes capitalized sales-based and regulatory milestone payments) was $1.7 billion at June 30, 2023 and is included in Other Intangibles, Net. The amount is being amortized over its estimated useful life through 2028 as supported by projected future cash flows, subject to impairment testing.

Summarized financial information related to this collaboration is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Alliance revenue - Lynparza	$	310	$	275	$	585	$	541
Alliance revenue - Koselugo	25		24		48		33
Total alliance revenue	$	335	$	299	$	633	$	574
Cost of sales (1)	78		62		148		361
Selling, general and administrative	51		46		98		90
Research and development	22		25		43		51
($ in millions)					June 30, 2023		December 31, 2022
Receivables from AstraZeneca included in Other current assets					$	332	$	303
Payables to AstraZeneca included in Accrued and other current liabilities (2)					260		123
Payables to AstraZeneca included in Other Noncurrent Liabilities (2)					600		600

(1)    Represents amortization of capitalized milestone payments. Amount in the first six months of 2022 includes $250 million of cumulative amortization catch-up expense as noted above.

(2)    Includes accrued milestone payments.

Eisai Co., Ltd.

In 2018, Merck and Eisai Co., Ltd. (Eisai) announced a strategic collaboration for the worldwide co-development and co-commercialization of Lenvima (lenvatinib), an orally available tyrosine kinase inhibitor discovered by Eisai. Under the agreement, Merck and Eisai will develop and commercialize Lenvima jointly, both as monotherapy and in combination with Keytruda. Eisai records Lenvima product sales globally (Eisai is the principal on Lenvima sales transactions) and Merck and Eisai share applicable profits equally. Merck records its share of Lenvima product sales, net of cost of sales and commercialization costs, as alliance revenue. Expenses incurred during co-development are shared by the two companies in accordance with the collaboration agreement and reflected in Research and development expenses. Certain expenses incurred solely by Merck or Eisai are not shareable under the collaboration agreement, including costs incurred in excess of agreed upon caps and costs related to certain combination studies of Keytruda and Lenvima.

Under the agreement, Merck made an upfront payment to Eisai and also made payments over a multi-year period for certain option rights. In addition, the agreement provides for contingent payments from Merck to Eisai related to the successful achievement of sales-based and regulatory milestones.

In the first quarter of 2023, Merck determined it was probable that sales of Lenvima in the future would trigger a $125 million sales-based milestone payment from Merck to Eisai. Accordingly, Merck recorded a $125 million liability and a corresponding increase to the intangible asset related to Lenvima. Merck also recognized $72 million of cumulative amortization catch-up expense related to the recognition of this milestone in the first six months of 2023. The Company made this sales-based milestone payment to Eisai in the second quarter of 2023. In the first six months of 2022, Merck made sales-based milestone payments to Eisai (which had been previously accrued for) aggregating $600 million. Potential future sales-based milestone payments of $2.4 billion have not yet been accrued as they are not deemed by the Company to be probable at this time. In 2022, Lenvima received regulatory approvals triggering capitalized milestone payments of $50 million from Merck to Eisai (of which $25 million was paid in the first six months of 2022). There are no regulatory milestone payments remaining under the agreement.

The intangible asset balance related to Lenvima (which includes capitalized sales-based and regulatory milestone payments) was $756 million at June 30, 2023 and is included in Other Intangibles, Net. The amount is being amortized over its estimated useful life through 2026 as supported by projected future cash flows, subject to impairment testing.

Summarized financial information related to this collaboration is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Alliance revenue - Lenvima	$	242	$	231	$	474	$	459
Cost of sales (1)	57		53		183		106
Selling, general and administrative	48		42		99		73
Research and development	17		47		56		104
($ in millions)					June 30, 2023		December 31, 2022
Receivables from Eisai included in Other current assets					$	242	$	214

(1)    Represents amortization of capitalized milestone payments. Amount in the first six months of 2023 includes $72 million of cumulative amortization catch-up expense as noted above.

Bayer AG

In 2014, the Company entered into a worldwide clinical development collaboration with Bayer AG (Bayer) to market and develop soluble guanylate cyclase (sGC) modulators including Bayer’s Adempas (riociguat). The two companies have implemented a joint development and commercialization strategy. The collaboration also includes development of Bayer’s Verquvo (vericiguat), which was approved in the U.S., the European Union (EU) and Japan in 2021, and has since been approved in several other markets. Under the agreement, Bayer commercializes Adempas in the Americas, while Merck commercializes in the rest of the world. For Verquvo, Merck commercializes in the U.S. and Bayer commercializes in the rest of the world. Both companies share in development costs and profits on sales. Merck records sales of Adempas and Verquvo in its marketing territories, as well as alliance revenue. Alliance revenue represents Merck’s share of profits from sales of Adempas and Verquvo in Bayer’s marketing territories, which are product sales net of cost of sales and commercialization costs. Cost of sales includes Bayer’s share of profits from sales in Merck’s marketing territories.

In addition, the agreement provided for contingent payments from Merck to Bayer related to the successful achievement of sales-based milestones. In the first six months of 2022, Merck made the final $400 million sales-based milestone payment under this collaboration to Bayer.

The intangible asset balances related to Adempas (which includes the acquired intangible asset balance, as well as capitalized sales-based milestone payments attributed to Adempas) and Verquvo (which reflects the portion of the final sales-based milestone payment that was attributed to Verquvo) were $586 million and $55 million, respectively, at June 30, 2023 and are included in Other Intangibles, Net. The assets are being amortized over their estimated useful lives (through 2027 for Adempas and through 2031 for Verquvo) as supported by projected future cash flows, subject to impairment testing.

Summarized financial information related to this collaboration is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Alliance revenue - Adempas/Verquvo	$	68	$	98	$	167	$	170
Net sales of Adempas recorded by Merck	65		63		125		124
Net sales of Verquvo recorded by Merck	9		6		16		9
Total sales	$	142	$	167	$	308	$	303
Cost of sales (1)	56		54		113		103
Selling, general and administrative	34		42		67		65
Research and development	25		17		50		34
($ in millions)					June 30, 2023		December 31, 2022
Receivables from Bayer included in Other current assets					$	144	$	143
Payables to Bayer included in Accrued and other current liabilities					82		80

(1)    Includes amortization of intangible assets.

Ridgeback Biotherapeutics LP

In 2020, Merck and Ridgeback Biotherapeutics LP (Ridgeback), a closely held biotechnology company, entered into a collaboration agreement to develop Lagevrio (molnupiravir), an investigational orally available antiviral candidate for the treatment of patients with COVID-19. Merck gained exclusive worldwide rights to develop and commercialize Lagevrio and related molecules. Following initial authorizations in certain markets in the fourth quarter of 2021, Lagevrio has since received multiple additional authorizations worldwide.

Under the terms of the agreement, Ridgeback received an upfront payment and is eligible to receive future contingent payments dependent upon the achievement of certain developmental and regulatory approval milestones. The agreement also provides for Merck to reimburse Ridgeback for a portion of certain third-party contingent milestone payments and royalties on net sales, which is part of the profit-sharing calculation. Merck is the principal on sales transactions, recognizing sales and related costs, with profit-sharing amounts recorded within Cost of sales. Profits from the collaboration are split equally between the partners. Reimbursements from Ridgeback for its share of research and development costs (deducted from Ridgeback’s share of profits) are reflected as decreases to Research and development expenses.

Summarized financial information related to this collaboration is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Net sales of Lagevrio recorded by Merck	$	203	$	1,177	$	595	$	4,424
Cost of sales (1)(2)	193		615		414		2,341
Selling, general and administrative (2)	24		34		51		69
Research and development (2)	10		30		26		56
($ in millions)					June 30, 2023		December 31, 2022
Receivables from Ridgeback included in Other current assets (3)					$	51	$	—
Payables to Ridgeback included in Accrued and other current liabilities (4)					30		348

(1)    Includes royalty expense, amortization of capitalized milestone payments and inventory reserves.

(2)    Expenses include an allocation for overhead charges.

(3)    Includes partner advances.

(4)    Includes accrued royalties. Amount at December 31, 2022 also includes an accrued milestone payment.

Bristol-Myers Squibb Company

Reblozyl (luspatercept-aamt) is a first-in-class erythroid maturation recombinant fusion protein that is being commercialized through a global collaboration with Bristol-Myers Squibb Company (BMS). Reblozyl is approved in the U.S., Europe and certain other markets for the treatment of anemia in certain rare blood disorders and is also being evaluated for additional indications for hematology therapies. BMS is the principal on sales transactions for Reblozyl; however, Merck co-promotes Reblozyl (and will co-promote all future products approved under this collaboration) in North America, which is reimbursed by BMS. Merck receives a 20% sales royalty from BMS which could increase to a maximum of 24% based on sales levels. This royalty will be reduced by 50% upon the earlier of patent expiry or generic entry on an indication-by-indication basis in each market. Additionally, Merck is eligible to receive future contingent sales-based milestone payments of up to $80 million. Alliance revenue related to this collaboration (recorded within Sales) consists of royalties and, for the first six months of 2022, also includes the receipt of a regulatory approval milestone payment of $20 million. Merck recorded alliance revenue related to this collaboration of $47 million and $90 million in the second quarter and first six months of 2023, respectively, compared with $33 million and $86 million in the second quarter and first six months of 2022, respectively.

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Spin-Off of Organon & Co.

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Spin-Off of Organon & Co.

Spin-Off of Organon & Co. On June 2, 2021, Merck completed the spin-off of Organon through a distribution of Organon’s publicly traded stock to Company shareholders. In connection with the spin-off, Merck and Organon entered into a separation and distribution agreement and also entered into various other agreements to effect the spin-off and provide a framework for the relationship between Merck and Organon after the spin-off, including a transition services agreement (TSA), manufacturing and supply agreements (MSAs), trademark license agreements, intellectual property license agreements, an employee matters agreement, a tax matters agreement and certain other commercial agreements. Under the TSA, Merck is providing Organon various services and, similarly, Organon is providing Merck various services. A majority of the services provided under the TSA terminated within 25 months following the spin-off; a majority of the remaining services will terminate within 35 months following the spin-off. Merck and Organon also entered into a series of interim operating agreements pursuant to which in various jurisdictions where Merck held licenses, permits and other rights in connection with marketing, import and/or distribution of Organon products prior to the separation, Merck is continuing to market, import and distribute such products until such time as the relevant licenses and permits are transferred to Organon. Under such interim operating agreements and in accordance with the separation and distribution agreement, Merck is continuing operations in the affected markets on behalf of Organon, with Organon receiving all of the economic benefits and burdens of such activities. Additionally, Merck and Organon entered into a number of MSAs pursuant to which Merck is (a) manufacturing and supplying certain active pharmaceutical ingredients for Organon, (b) manufacturing and supplying certain formulated pharmaceutical products for Organon, and (c) packaging and labeling certain finished pharmaceutical products for Organon. Similarly, Organon and Merck entered into a number of MSAs pursuant to which Organon is (a) manufacturing and supplying certain formulated pharmaceutical products for Merck, and (b) packaging and labeling certain finished pharmaceutical products for Merck. The terms of the MSAs range in initial duration from four years to ten years.

The amounts included in the condensed consolidated statement of operations for the above MSAs include sales of $96 million and $95 million and related cost of sales of $101 million and $103 million for the second quarter of 2023 and 2022, respectively, and sales of $191 million and $194 million and related cost of sales of $208 million and $208 million for the first six months of 2023 and 2022, respectively. Amounts included in the condensed consolidated statement of operations for the TSAs were immaterial for the three and six months ended June 30, 2023 and June 30, 2022.

The amounts due from Organon under all of the above agreements were $539 million and $511 million at June 30, 2023 and December 31, 2022, respectively, and are reflected in Other current assets. The amounts due to Organon under these agreements were $351 million and $345 million at June 30, 2023 and December 31, 2022, respectively, and are included in Accrued and other current liabilities.

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Restructuring

6 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

In 2019, Merck approved a global restructuring program (Restructuring Program) as part of a worldwide initiative focused on optimizing the Company’s manufacturing and supply network, as well as reducing its global real estate footprint. The actions contemplated under the Restructuring Program are expected to be substantially completed by the end of 2023, with the cumulative pretax costs to be incurred by the Company to implement the program estimated to be approximately $3.9 billion. The Company estimates that approximately 70% of the cumulative pretax costs will result in cash outlays, primarily related to employee separation expense and facility shut-down costs. Approximately 30% of the cumulative pretax costs will be non-cash, relating primarily to the accelerated depreciation of facilities to be closed or divested.

The Company recorded total pretax costs of $236 million and $258 million in the second quarter of 2023 and 2022, respectively, and $333 million and $384 million for the first six months of 2023 and 2022, respectively, related to restructuring program activities. Since inception of the Restructuring Program through June 30, 2023, Merck has recorded total pretax accumulated costs of approximately $3.7 billion. For the full year of 2023, the Company expects to record charges of approximately $550 million related to the Restructuring Program. For segment reporting, restructuring charges are unallocated expenses.

The following tables summarize the charges related to restructuring program activities by type of cost:

	Three Months Ended June 30, 2023								Six Months Ended June 30, 2023
($ in millions)	Separation Costs		Accelerated Depreciation		Other		Total		Separation Costs		Accelerated Depreciation		Other		Total
Cost of sales	$	—	$	22	$	10	$	32	$	—	$	43	$	18	$	61
Selling, general and administrative	—		—		52		52		—		—		53		53
Research and development	—		—		1		1		—		—		1		1
Restructuring costs	110		—		41		151		151		—		67		218
	$	110	$	22	$	104	$	236	$	151	$	43	$	139	$	333

	Three Months Ended June 30, 2022								Six Months Ended June 30, 2022
($ in millions)	Separation Costs		Accelerated Depreciation		Other		Total		Separation Costs		Accelerated Depreciation		Other		Total
Cost of sales	$	—	$	17	$	50	$	67	$	—	$	35	$	78	$	113
Selling, general and administrative	—		8		19		27		—		12		36		48
Research and development	—		22		—		22		—		29		—		29
Restructuring costs	106		—		36		142		132		—		62		194
	$	106	$	47	$	105	$	258	$	132	$	76	$	176	$	384

Separation costs are associated with actual headcount reductions, as well as involuntary headcount reductions which were probable and could be reasonably estimated.

Accelerated depreciation costs primarily relate to manufacturing, research and administrative facilities and equipment to be sold or closed as part of the program. Accelerated depreciation costs represent the difference between the depreciation expense to be recognized over the revised useful life of the asset, based upon the anticipated date the site will be closed or divested or the equipment disposed of, and depreciation expense as determined utilizing the useful life prior to the restructuring actions. All the sites have and will continue to operate up through the respective closure dates and, since future undiscounted cash flows are sufficient to recover the respective book values, Merck is recording accelerated depreciation over the revised useful life of the site assets. Anticipated site closure dates, particularly related to manufacturing locations, have been and may continue to be adjusted to reflect changes resulting from regulatory or other factors.

Other activity in 2023 and 2022 includes asset abandonment, facility shut-down and other related costs, as well as pretax gains and losses resulting from the sales of facilities and related assets. Additionally, other activity includes certain employee-related costs associated with pension and other postretirement benefit plans (see Note 11) and share-based compensation.

The following table summarizes the charges and spending relating to restructuring program activities for the six months ended June 30, 2023:

($ in millions)	Separation Costs		Accelerated Depreciation		Other		Total
Restructuring reserves January 1, 2023	$	479	$	—	$	34	$	513
Expenses	151		43		139		333
(Payments) receipts, net	(84)		—		(74)		(158)
Non-cash activity	—		(43)		(68)		(111)
Restructuring reserves June 30, 2023 (1)	$	546	$	—	$	31	$	577

(1)The remaining cash outlays are expected to be largely completed by the end of 2025.

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Financial Instruments

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments

Financial Instruments

Derivative Instruments and Hedging Activities

The Company manages the impact of foreign exchange rate movements and interest rate movements on its earnings, cash flows and fair values of assets and liabilities through operational means and through the use of various financial instruments, including derivative instruments.

A significant portion of the Company’s revenues and earnings in foreign affiliates is exposed to changes in foreign exchange rates. The objectives of and accounting related to the Company’s foreign currency risk management program, as well as its interest rate risk management activities are discussed below.

Foreign Currency Risk Management

The Company has established revenue hedging, balance sheet risk management and net investment hedging programs to protect against volatility of future foreign currency cash flows and changes in fair value caused by changes in foreign exchange rates.

The objective of the revenue hedging program is to reduce the variability caused by changes in foreign exchange rates that would affect the U.S. dollar value of future cash flows derived from foreign currency denominated sales, primarily the euro, Japanese yen and Chinese renminbi. To achieve this objective, the Company will hedge a portion of its forecasted foreign currency denominated third-party and intercompany distributor entity sales (forecasted sales) that are expected to occur over its planning cycle, typically no more than two years into the future. The Company will layer in hedges over time, increasing the portion of forecasted sales hedged as it gets closer to the expected date of the forecasted sales. The portion of forecasted sales hedged is based on assessments of cost-benefit profiles that consider natural offsetting exposures, revenue and exchange rate volatilities and correlations, and the cost of hedging instruments. The Company manages its anticipated transaction exposure principally with purchased local currency put options, forward contracts, and purchased collar options.

The fair values of these derivative contracts are recorded as either assets (gain positions) or liabilities (loss positions) in the Condensed Consolidated Balance Sheet. Changes in the fair value of derivative contracts are recorded each period in either current earnings or Other comprehensive income (OCI), depending on whether the derivative is designated as part of a hedge transaction and, if so, the type of hedge transaction. For derivatives that are designated as cash flow hedges, the unrealized gains or losses on these contracts are recorded in Accumulated Other Comprehensive Loss (AOCL) and reclassified into Sales when the hedged anticipated revenue is recognized. For those derivatives which are not designated as cash flow hedges, but serve as economic hedges of forecasted sales, unrealized gains or losses are recorded in Sales each period. The cash flows from both designated and non-designated contracts are reported as operating activities in the Condensed Consolidated Statement of Cash Flows. The Company does not enter into derivatives for trading or speculative purposes.

The Company manages operating activities and net asset positions at each local subsidiary in order to mitigate the effects of exchange on monetary assets and liabilities. Monetary assets and liabilities denominated in a currency other than the functional currency of a given subsidiary are remeasured at spot rates in effect on the balance sheet date with the effects of changes in spot rates reported in Other (income) expense, net. The Company also uses a balance sheet risk management program to mitigate the exposure of such assets and liabilities from the effects of volatility in foreign exchange. Merck principally utilizes forward exchange contracts to offset the effects of exchange in developed country currencies, primarily the euro, Japanese yen, British pound, Canadian dollar, Australian dollar and Swiss franc. For exposures in developing country currencies, including the Chinese renminbi, the Company will enter into forward contracts to offset the effects of exchange on exposures when it is deemed economical to do so based on a cost-benefit analysis that considers the magnitude of the exposure, the volatility of the exchange rate and the cost of the hedging instrument. The forward contracts are not designated as hedges and are marked to market through Other (income) expense, net. Accordingly, fair value changes in the forward contracts help mitigate the changes in the value of the remeasured assets and liabilities attributable to changes in foreign currency exchange rates, except to the extent of the spot-forward differences. These differences are not significant due to the short-term nature of the contracts, which typically have average maturities at inception of less than six months. The cash flows from these contracts are reported as operating activities in the Condensed Consolidated Statement of Cash Flows.

The Company also uses forward exchange contracts to hedge a portion of its net investment in foreign operations against movements in exchange rates. The forward contracts are designated as hedges of the net investment in a foreign operation. The unrealized gains or losses on these contracts are recorded in foreign currency translation adjustment within OCI

and remain in AOCL until either the sale or complete or substantially complete liquidation of the subsidiary. The Company excludes certain portions of the change in fair value of its derivative instruments from the assessment of hedge effectiveness (excluded components). Changes in fair value of the excluded components are recognized in OCI. The Company recognizes in earnings the initial value of the excluded components on a straight-line basis over the life of the derivative instrument, rather than using the mark-to-market approach. The cash flows from these contracts are reported as investing activities in the Condensed Consolidated Statement of Cash Flows.

Foreign exchange risk is also managed through the use of foreign currency debt. The Company’s senior unsecured euro-denominated notes have been designated as, and are effective as, economic hedges of the net investment in a foreign operation. Accordingly, foreign currency transaction gains or losses due to spot rate fluctuations on the euro-denominated debt instruments are included in foreign currency translation adjustment within OCI.

The effects of the Company’s net investment hedges on OCI and the Condensed Consolidated Statement of Operations are shown below:

	Amount of Pretax (Gain) Loss Recognized in Other Comprehensive Income (1)								Amount of Pretax (Gain) Loss Recognized in Other (income) expense, net for Amounts Excluded from Effectiveness Testing
	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022		2023		2022		2023		2022
Net Investment Hedging Relationships
Foreign exchange contracts	$	—	$	(31)	$	1	$	(46)	$	—	$	(1)	$	1	$	(2)
Euro-denominated notes	21		(128)		73		(181)		—		—		—		—

(1)    No amounts were reclassified from AOCL into income related to the sale of a subsidiary.

Interest Rate Risk Management

The Company may use interest rate swap contracts on certain investing and borrowing transactions to manage its net exposure to interest rate changes and to reduce its overall cost of borrowing. The Company does not use leveraged swaps and, in general, does not leverage any of its investment activities that would put principal at risk. The Company is not currently a party to any interest rate swaps.

Presented in the table below is the fair value of derivatives on a gross basis segregated between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments:

		June 30, 2023						December 31, 2022
		Fair Value of Derivative				U.S. Dollar Notional		Fair Value of Derivative				U.S. Dollar Notional
($ in millions)		Asset		Liability				Asset		Liability
Derivatives Designated as Hedging Instruments	Balance Sheet Caption
Foreign exchange contracts	Other current assets	$	200	$	—	$	5,976	$	220	$	—	$	4,824
Foreign exchange contracts	Other Assets	43		—		1,750		27		—		1,609
Foreign exchange contracts	Accrued and other current liabilities	—		62		2,245		—		101		2,691
Foreign exchange contracts	Other Noncurrent Liabilities	—		1		328		—		1		91
		$	243	$	63	$	10,299	$	247	$	102	$	9,215
Derivatives Not Designated as Hedging Instruments	Balance Sheet Caption
Foreign exchange contracts	Other current assets	$	222	$	—	$	8,838	$	186	$	—	$	8,540
Foreign exchange contracts	Accrued and other current liabilities	—		181		10,112		—		307		10,926
		$	222	$	181	$	18,950	$	186	$	307	$	19,466
		$	465	$	244	$	29,249	$	433	$	409	$	28,681

As noted above, the Company records its derivatives on a gross basis in the Condensed Consolidated Balance Sheet. The Company has master netting agreements with several of its financial institution counterparties (see Concentrations of Credit Risk below). The following table provides information on the Company’s derivative positions subject to these master netting arrangements as if they were presented on a net basis, allowing for the right of offset by counterparty and cash collateral exchanged per the master agreements and related credit support annexes:

	June 30, 2023				December 31, 2022
($ in millions)	Asset		Liability		Asset		Liability
Gross amounts recognized in the condensed consolidated balance sheet	$	465	$	244	$	433	$	409
Gross amounts subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet	(180)		(180)		(220)		(220)
Cash collateral received/posted	(102)		—		(66)		(19)
Net amounts	$	183	$	64	$	147	$	170

The table below provides information regarding the location and amount of pretax gains and losses of derivatives designated in fair value or cash flow hedging relationships:

	Three Months Ended June 30,												Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022
Financial Statement Caption in which Effects of Fair Value or Cash Flow Hedges are Recorded	Sales				Other (income) expense, net (1)				Other comprehensive income (loss)				Sales				Other (income) expense, net (1)				Other comprehensive income (loss)
	$	15,035	$	14,593	$	172	$	438	$	(17)	$	42	$	29,522	$	30,494	$	259	$	1,148	$	(132)	$	102
(Gain) loss on fair value hedging relationships:
Interest rate swap contracts
Hedged items	—		—		—		(4)		—		—		—		—		—		(14)		—		—
Derivatives designated as hedging instruments	—		—		—		1		—		—		—		—		—		4		—		—
Impact of cash flow hedging relationships:
Foreign exchange contracts
Amount of gain recognized in OCI on derivatives	—		—		—		—		194		403		—		—		—		—		128		551
Increase in Sales as a result of AOCL reclassifications	24		172		—		—		(24)		(172)		125		239		—		—		(125)		(239)
Interest rate contracts
Amount of gain recognized in Other (income) expense, net on derivatives	—		—		—		—		—		—		—		—		(1)		(1)		—		—
Amount of gain (loss) recognized in OCI on derivatives	—		—		—		—		13		—		—		—		—		—		13		(1)

(1)    Interest expense is a component of Other (income) expense, net.

The table below provides information regarding the income statement effects of derivatives not designated as hedging instruments:

		Amount of Derivative Pretax (Gain) Loss Recognized in Income
		Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)		2023		2022		2023		2022
Derivatives Not Designated as Hedging Instruments	Income Statement Caption
Foreign exchange contracts (1)	Other (income) expense, net	$	(41)	$	(64)	$	(28)	$	(36)
Foreign exchange contracts (2)	Sales	(5)		(36)		(3)		(38)

(1)    These derivative contracts primarily mitigate changes in the value of remeasured foreign currency denominated monetary assets and liabilities attributable to changes in foreign currency exchange rates.

(2)    These derivative contracts serve as economic hedges of forecasted transactions.

At June 30, 2023, the Company estimates $83 million of pretax net unrealized gains on derivatives maturing within the next 12 months that hedge foreign currency denominated sales over that same period will be reclassified from AOCL to Sales. The amount ultimately reclassified to Sales may differ as foreign exchange rates change. Realized gains and losses are ultimately determined by actual exchange rates at maturity.

Investments in Debt and Equity Securities

Information on investments in debt and equity securities is as follows:

	June 30, 2023								December 31, 2022
	Amortized Cost		Gross Unrealized				Fair Value		Amortized Cost		Gross Unrealized				Fair Value
($ in millions)			Gains		Losses						Gains		Losses
Commercial paper	$	561	$	—	$	—	$	561	$	498	$	—	$	—	$	498
U.S. government and agency securities	256		—		—		256		68		—		—		68
Corporate notes and bonds	4		—		—		4		3		—		—		3
Total debt securities	$	821	$	—	$	—	$	821	$	569	$	—	$	—	$	569
Publicly traded equity securities (1)							1,520								1,284
Total debt and publicly traded equity securities							$	2,341							$	1,853

(1)    Unrealized net losses (gains) of $71 million and $(267) million were recorded in Other (income) expense, net in the second quarter and first six months of 2023, respectively, on equity securities still held at June 30, 2023. Unrealized net (gains) losses of $(25) million and $194 million were recorded in Other (income) expense, net in the second quarter and first six months of 2022, respectively, on equity securities still held at June 30, 2022.

At June 30, 2023 and June 30, 2022, the Company also had $949 million and $671 million, respectively, of equity investments without readily determinable fair values included in Other Assets. The Company records unrealized gains on these equity investments based on favorable observable price changes from transactions involving similar investments of the same investee and records unrealized losses based on unfavorable observable price changes, which are included in Other (income) expense, net. During the first six months of 2023, the Company recorded unrealized gains of $3 million and unrealized losses of $23 million related to certain of these equity investments still held at June 30, 2023. During the first six months of 2022, the Company recorded unrealized gains of $20 million and unrealized losses of $1 million related to certain of these investments still held at June 30, 2022. Cumulative unrealized gains and cumulative unrealized losses based on observable price changes for investments in equity investments without readily determinable fair values still held at June 30, 2023 were $287 million and $42 million, respectively.

At June 30, 2023 and June 30, 2022, the Company also had $622 million and $805 million, respectively, recorded in Other Assets for equity securities held through ownership interests in investment funds. (Gains) losses recorded in Other (income) expense, net relating to these investment funds were $105 million and $302 million for the second quarter of 2023 and 2022, respectively, and were $(27) million and $811 million for the first six months of 2023 and 2022, respectively.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses a fair value hierarchy which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. There are three levels of inputs used to measure fair value with Level 1 having the highest priority and Level 3 having the lowest:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities;

Level 3 - Unobservable inputs that are supported by little or no market activity. Level 3 assets or liabilities are those whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques with significant unobservable inputs, as well as assets or liabilities for which the determination of fair value requires significant judgment or estimation.

If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:

	Fair Value Measurements Using								Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
($ in millions)	June 30, 2023								December 31, 2022
Assets
Investments
Commercial paper	$	—	$	561	$	—	$	561	$	—	$	498	$	—	$	498
U.S. government and agency securities	—		187		—		187		—		—		—		—
Publicly traded equity securities	1,184		—		—		1,184		1,015		—		—		1,015
	1,184		748		—		1,932		1,015		498		—		1,513
Other assets (1)
U.S. government and agency securities	69		—		—		69		68		—		—		68
Corporate notes and bonds	4		—		—		4		3		—		—		3
Publicly traded equity securities	336		—		—		336		269		—		—		269
	409		—		—		409		340		—		—		340
Derivative assets (2)
Forward exchange contracts	—		316		—		316		—		218		—		218
Purchased currency options	—		149		—		149		—		215		—		215
	—		465		—		465		—		433		—		433
Total assets	$	1,593	$	1,213	$	—	$	2,806	$	1,355	$	931	$	—	$	2,286
Liabilities
Other liabilities
Contingent consideration	$	—	$	—	$	349	$	349	$	—	$	—	$	456	$	456
Derivative liabilities (2)
Forward exchange contracts	—		235		—		235		—		402		—		402
Written currency options	—		9		—		9		—		7		—		7
	—		244		—		244		—		409		—		409
Total liabilities	$	—	$	244	$	349	$	593	$	—	$	409	$	456	$	865

(1)    Investments included in other assets are restricted as to use, including for the payment of benefits under employee benefit plans.

(2)    The fair value determination of derivatives includes the impact of the credit risk of counterparties to the derivatives and the Company’s own credit risk, the effects of which were not significant.

As of June 30, 2023 and December 31, 2022, Cash and cash equivalents included $4.9 billion and $11.3 billion of cash equivalents, respectively (which would be considered Level 2 in the fair value hierarchy).

Contingent Consideration

Summarized information about the changes in the fair value of liabilities for contingent consideration associated with business combinations is as follows:

($ in millions)	2023		2022
Fair value January 1	$	456	$	777
Changes in estimated fair value (1)	10		(114)
Payments	(117)		(119)
Other	—		(2)
Fair value June 30 (2)	$	349	$	542

(1)    Recorded in Cost of sales, Research and development expenses, and Other (income) expense, net. Includes cumulative translation adjustments.

(2)    At June 30, 2023, $262 million of the liabilities relate to the termination of the Sanofi Pasteur MSD joint venture in 2016. As part of the termination, Merck recorded a liability for contingent future royalty payments of 11.5% on net sales of all Merck products that were previously sold by the joint venture through December 31, 2024. The fair value of this liability is determined utilizing the estimated amount and timing of projected cash flows using a risk-adjusted discount rate to present value the cash flows. Balance at June 30, 2023 includes $130 million recorded as a current liability for amounts expected to be paid within the next 12 months.

The payments of contingent consideration in both periods relate to the Sanofi Pasteur MSD liabilities described above.

Other Fair Value Measurements

Some of the Company’s financial instruments, such as cash and cash equivalents, receivables and payables, are reflected in the balance sheet at carrying value, which approximates fair value due to their short-term nature.

The estimated fair value of loans payable and long-term debt (including current portion) at June 30, 2023, was $34.0 billion compared with a carrying value of $36.9 billion and at December 31, 2022, was $26.7 billion compared with a carrying value of $30.7 billion. Fair value was estimated using recent observable market prices and would be considered Level 2 in the fair value hierarchy.

Concentrations of Credit Risk

On an ongoing basis, the Company monitors concentrations of credit risk associated with corporate and government issuers of securities and financial institutions with which it conducts business. Credit exposure limits are established to limit a concentration with any single issuer or institution. Cash and investments are placed in instruments that meet high credit quality standards as specified in the Company’s investment policy guidelines.

The majority of the Company’s accounts receivable arise from product sales in the U.S., Europe and China and are primarily due from drug wholesalers and retailers, hospitals and government agencies. The Company monitors the financial performance and creditworthiness of its customers so that it can properly assess and respond to changes in their credit profile. The Company also continues to monitor global economic conditions, including the volatility associated with international sovereign economies, and associated impacts on the financial markets and its business.

The Company has accounts receivable factoring agreements with financial institutions in certain countries to sell accounts receivable. The Company factored $2.9 billion and $2.5 billion of accounts receivable as of June 30, 2023 and December 31, 2022, respectively, under these factoring arrangements, which reduced outstanding accounts receivable. The cash received from the financial institutions is reported within operating activities in the Condensed Consolidated Statement of Cash Flows. In certain of these factoring arrangements, for ease of administration, the Company will collect customer payments related to the factored receivables, which it then remits to the financial institutions. As of June 30, 2023 and December 31, 2022, the Company had collected $44 million and $67 million, respectively, on behalf of the financial institutions, which is reflected as restricted cash in Other current assets and the related obligation to remit the cash within Accrued and other current liabilities. The Company remitted the cash to the financial institutions in July 2023 and January 2023, respectively. The net cash flows related to these collections are reported as financing activities in the Condensed Consolidated Statement of Cash Flows. The cost of factoring such accounts receivable was de minimis.

Derivative financial instruments are executed under International Swaps and Derivatives Association master agreements. The master agreements with several of the Company’s financial institution counterparties also include credit support annexes. These annexes contain provisions that require collateral to be exchanged depending on the value of the derivative assets and liabilities, the Company’s credit rating, and the credit rating of the counterparty. Cash collateral received by the Company from various counterparties was $102 million and $66 million at June 30, 2023 and December 31, 2022, respectively. The obligation to return such collateral is recorded in Accrued and other current liabilities. Cash collateral advanced by the Company to various counterparties was $19 million at December 31, 2022.

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Inventories

6 Months Ended

Jun. 30, 2023

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consisted of:

($ in millions)	June 30, 2023		December 31, 2022
Finished goods	$	1,841	$	1,841
Raw materials and work in process	7,453		7,063
Supplies	269		238
Total	9,563		9,142
Decrease to LIFO cost	(413)		(293)
	$	9,150	$	8,849
Recognized as:
Inventories	$	5,930	$	5,911
Other Assets	3,220		2,938

Amounts recognized as Other Assets are comprised almost entirely of raw materials and work in process inventories. At June 30, 2023 and December 31, 2022, these amounts included $2.6 billion and $2.4 billion, respectively, of inventories not expected to be sold within one year. In addition, these amounts included $663 million and $516 million at June 30, 2023 and December 31, 2022, respectively, of inventories produced in preparation for product launches.

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Long-Term Debt

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

In May 2023, the Company issued $6.0 billion principal amount of senior unsecured notes consisting of $500 million of 4.05% notes due 2028, $750 million of 4.30% notes due 2030, $1.5 billion of 4.50% notes due 2033, $750 million of 4.90% notes due 2044, $1.5 billion of 5.00% notes due 2053, and $1.0 billion of 5.15% notes due 2063.

The Company used a portion of the $5.9 billion net proceeds from this offering to fund a portion of the cash consideration paid for the acquisition of Prometheus and related fees and expenses, and used the remaining net proceeds for general corporate purposes including to repay commercial paper borrowings and other indebtedness with upcoming maturities.

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Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

The Company is involved in various claims and legal proceedings of a nature considered normal to its business, including product liability, intellectual property, and commercial litigation, as well as certain additional matters including governmental and environmental matters. In the opinion of the Company, it is unlikely that the resolution of these matters will be material to the Company’s financial condition, results of operations or cash flows.

Given the nature of the litigation discussed below and the complexities involved in these matters, the Company is unable to reasonably estimate a possible loss or range of possible loss for such matters until the Company knows, among other factors, (i) what claims, if any, will survive dispositive motion practice, (ii) the extent of the claims, including the size of any potential class, particularly when damages are not specified or are indeterminate, (iii) how the discovery process will affect the litigation, (iv) the settlement posture of the other parties to the litigation and (v) any other factors that may have a material effect on the litigation.

The Company records accruals for contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available. For product liability claims, a portion of the overall accrual is actuarially determined and considers such factors as past experience, number of claims reported and estimates of claims incurred but not yet reported. Individually significant contingent losses are accrued when probable and reasonably estimable. Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable.

The Company’s decision to obtain insurance coverage is dependent on market conditions, including cost and availability, existing at the time such decisions are made. The Company has evaluated its risks and has determined that the cost of obtaining product liability insurance outweighs the likely benefits of the coverage that is available and, as such, has no insurance for most product liabilities.

Product Liability Litigation

Gardasil/Gardasil 9

Merck is a defendant in product liability lawsuits in the U.S. involving Gardasil (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant) and Gardasil 9 (Human Papillomavirus 9-valent Vaccine, Recombinant). As of June 30, 2023, approximately 95 cases were filed and pending against Merck in either federal or state court. In these actions, plaintiffs allege, among other things, that they suffered various personal injuries after vaccination with Gardasil or Gardasil 9, with postural orthostatic tachycardia syndrome as a predominate alleged injury. In August 2022, the Judicial Panel on Multidistrict Litigation ordered that Gardasil/Gardasil 9 product liability cases pending in federal courts nationwide be transferred to Judge Robert J. Conrad in the Western District of North Carolina for coordinated pre-trial proceedings. There are fewer than 15 product liability cases pending outside the U.S.

Governmental Proceedings

Inflation Reduction Act

On June 6, 2023, Merck filed a complaint in the U.S. District Court for the District of Columbia against the U.S. government regarding the Inflation Reduction Act’s “Drug Price Negotiation Program” for Medicare (the Program). This litigation seeks relief from the Program by challenging its constitutionality as violative of the First and Fifth Amendments to the U.S. Constitution.

Other Governmental Proceedings

As previously disclosed, from time to time, the Company’s subsidiaries in China receive inquiries regarding their operations from various Chinese governmental agencies. Some of these inquiries may be related to matters involving other multinational pharmaceutical companies, as well as Chinese entities doing business with such companies. The Company’s policy is to cooperate with these authorities and to provide responses as appropriate.

As previously disclosed, from time to time, the Company receives inquiries and is the subject of preliminary investigation activities from competition and other governmental authorities in markets outside the U.S. These authorities may include regulators, administrative authorities, and law enforcement and other similar officials, and these preliminary investigation activities may include site visits, formal or informal requests or demands for documents or materials, inquiries or interviews and similar matters. Certain of these preliminary inquiries or activities may lead to the commencement of formal proceedings. Should those proceedings be determined adversely to the Company, monetary fines and/or remedial undertakings may be required.

Commercial and Other Litigation

Zetia Antitrust Litigation

As previously disclosed, Merck, Merck Sharp & Dohme, LLC. (MSD), Schering Corporation, Schering-Plough Corporation, and MSP Singapore Company LLC (collectively, the Merck Defendants) were defendants in a number of lawsuits filed in 2018 on behalf of direct and indirect purchasers of Zetia alleging violations of federal and state antitrust laws, as well as other state statutory and common law causes of action. The cases were consolidated in a federal multidistrict litigation (the Zetia MDL) before Judge Rebecca Beach Smith in the Eastern District of Virginia.

In 2020 and 2021, United Healthcare Services, Inc., Humana Inc., Centene Corporation and others, and Kaiser Foundation Health Plan, Inc. (collectively, the Insurer Plaintiffs), each filed a lawsuit in a jurisdiction outside of the Eastern District of Virginia against the Merck Defendants and others, making similar allegations as those made in the Zetia MDL, as well as additional allegations about Vytorin. These cases have been transferred to the Eastern District of Virginia to proceed with the Zetia MDL and remain pending.

In February 2022, the Insurer Plaintiffs filed amended complaints. In March 2022, the Merck Defendants, jointly with other defendants, moved to dismiss certain aspects of the Insurer Plaintiffs’ complaints, including any claims for Vytorin damages. That motion to dismiss the Vytorin-related claims is still pending.

As previously disclosed, in April 2023, the Merck Defendants reached settlements with the direct purchaser and retailer plaintiffs and a proposed settlement, subject to court approval, with the indirect purchaser class. Under these agreements, Merck agreed to pay $572.5 million to resolve the direct purchaser, retailer, and indirect purchaser plaintiffs’ claims, which was recorded as an expense in the Company’s first quarter 2023 financial results. On June 6, 2023, the court granted preliminary approval of the indirect purchaser class settlement and scheduled a fairness hearing for September 21, 2023.

Qui Tam Litigation

As previously disclosed, in June 2012, the U.S. District Court for the Eastern District of Pennsylvania unsealed a complaint that had been filed against the Company under the federal False Claims Act by two former employees alleging, among other things, that the Company defrauded the U.S. government by falsifying data in connection with a clinical study conducted on the mumps component of the Company’s M-M-R II vaccine. The complaint alleges the fraud took place between 1999 and 2001. The U.S. government had the right to participate in and take over the prosecution of this lawsuit but notified the court that it declined to exercise that right. The two former employees are pursuing the lawsuit without the involvement of the U.S. government. In addition, as previously disclosed, two putative class action lawsuits on behalf of direct purchasers of the M-M-R II vaccine, which charge that the Company misrepresented the efficacy of the M-M-R II vaccine in violation of federal antitrust laws and various state consumer protection laws, are pending in the Eastern District of Pennsylvania. In September 2014, the court denied Merck’s motion to dismiss the False Claims Act suit and granted in part and denied in part its motion to dismiss the then-pending antitrust suit. As a result, both the False Claims Act suit and the antitrust suits proceeded into discovery, which is complete, and the parties filed and briefed cross-motions for summary judgment. On July 27, 2023, in the False Claims Act case, the court denied relators’ motion for summary judgment, granted two of the Company’s motions for summary judgment, and denied the Company’s remaining motions for summary judgment as moot. The court entered judgment in favor of the Company and dismissed relators’ amended complaint in full with prejudice. Relators can appeal that decision. In the antitrust case, the court granted the Company’s motion for summary judgment as to plaintiffs’ state law claims and denied the motion as to plaintiffs’ antitrust claim. Plaintiffs’ antitrust claim will proceed in litigation.

Patent Litigation

From time to time, generic manufacturers of pharmaceutical products file abbreviated New Drug Applications (NDAs) with the U.S. Food and Drug Administration (FDA) seeking to market generic forms of the Company’s products prior to the expiration of relevant patents owned by the Company. To protect its patent rights, the Company may file patent infringement lawsuits against such generic companies. Similar lawsuits defending the Company’s patent rights may exist in other countries. The Company intends to vigorously defend its patents, which it believes are valid, against infringement by companies attempting to market products prior to the expiration of such patents. As with any litigation, there can be no assurance of the outcomes, which, if adverse, could result in significantly shortened periods of exclusivity for these products and, with respect to products acquired through acquisitions accounted for as business combinations, potentially significant intangible asset impairment charges.

Bridion — As previously disclosed, between January and November 2020, the Company received multiple Paragraph IV Certification Letters under the Hatch-Waxman Act notifying the Company that generic drug companies have filed applications to the FDA seeking pre-patent expiry approval to sell generic versions of Bridion (sugammadex) Injection. In March, April and December 2020, the Company filed patent infringement lawsuits in the U.S. District Courts for the District of New Jersey and the Northern District of West Virginia against those generic companies. All actions in the District of New Jersey were consolidated. The West Virginia case was jointly dismissed with prejudice on August 8, 2022 in favor of proceeding in New Jersey. The remaining defendants in the New Jersey action stipulated to infringement of the asserted claims and withdrew all remaining claims and defenses other than a defense seeking to shorten the patent term extension (PTE) of the sugammadex patent to December 2022. The U.S. District Court for the District of New Jersey held a one-day trial on December 19, 2022 on this remaining PTE calculation defense and held closing arguments on February 3, 2023.

While the New Jersey action was pending, the Company settled with five generic companies providing that these generic companies can bring their generic versions of Bridion to the market in January 2026 (which may be delayed by any applicable pediatric exclusivity) or earlier under certain circumstances. The Company agreed to stay the lawsuit filed against two generic companies, which in exchange agreed to be bound by a judgment on the merits of the consolidated action in the District of New Jersey. One of the generic companies in the consolidated action requested dismissal of the action against it and the Company did not oppose this request, which was subsequently granted by the court. The Company does not expect this company to bring its generic version of Bridion to the market before January 2026 or later, depending on any applicable pediatric exclusivity.

On June 13, 2023, the U.S. District Court for the District of New Jersey ruled in Merck’s favor. The court held that Merck’s calculation of PTE for the sugammadex patent covering the compound is not invalid and that the U.S. Patent & Trademark Office correctly granted a full 5-year extension. This ruling affirms and validates Merck’s U.S. patent protection for Bridion through at least January 2026. On June 29, 2023, the U.S. District Court for the District of New Jersey issued a final judgment prohibiting the FDA from approving any of the pending or tentatively approved generic applications until January 27, 2026, except for any subsequent agreements between Defendants and Merck or further order by the court.

Januvia, Janumet, Janumet XR — As previously disclosed, the FDA granted pediatric exclusivity with respect to Januvia (sitagliptin), Janumet (sitagliptin/metformin HCI), and Janumet XR (sitagliptin and metformin HCl extended-release), which provides a further six months of exclusivity in the U.S. beyond the expiration of all patents listed in the FDA’s Orange Book. Adding this exclusivity to the term of the key patent protection extended exclusivity on these products to January 2023. However, Januvia, Janumet, and Janumet XR contain sitagliptin phosphate monohydrate and the Company has another patent covering certain phosphate salt and polymorphic forms of sitagliptin that expires in May 2027, including pediatric exclusivity (2027 salt/polymorph patent). In 2019, Par Pharmaceutical filed suit against the Company in the U.S. District Court for the District of New Jersey, seeking a declaratory judgment of invalidity of the 2027 salt/polymorph patent. In response, the Company filed a patent infringement lawsuit in the U.S. District Court for the District of Delaware against Par Pharmaceutical and additional companies that also indicated an intent to market generic versions of Januvia, Janumet, and Janumet XR following expiration of key patent protection, but prior to the expiration of the 2027 salt/polymorph patent. The Company also filed a patent infringement lawsuit against Mylan in the U.S. District Court for the Northern District of West Virginia.

Prior to the beginning of the scheduled October 2021 trial in the U.S. District Court for the District of Delaware on invalidity issues, the Company settled with all defendants scheduled to participate in that trial. In the Company’s case against Mylan, a bench trial was held in December 2021 in the U.S. District Court for the Northern District of West Virginia, and the closing arguments were held in April 2022. In September 2022, the U.S. District Court for the Northern District of West Virginia issued a decision in the Company’s favor, upholding all asserted patent claims. Mylan (now Viatris) appealed to the U.S. Court of Appeals for the Federal Circuit. The parties have now settled the matter, and Viatris has agreed to voluntarily dismiss the appeal following entry of an amended final judgment by the district court.

In total, the Company has settled with 25 generic companies providing that these generic companies can bring their generic versions of Januvia and Janumet to the market in May 2026 or earlier under certain circumstances, and their generic versions of Janumet XR to the market in July 2026 or earlier under certain circumstances.

In March 2021, the Company filed a patent infringement lawsuit in the U.S. District Court for the District of Delaware against Zydus Worldwide DMCC, Zydus Pharmaceuticals (USA) Inc., and Cadila Healthcare Ltd. (collectively, Zydus). In that lawsuit, the Company alleged infringement of the 2027 salt/polymorph patent based on the filing of Zydus’s NDA seeking approval of its sitagliptin tablets. In December 2022, the parties reached settlement that included dismissal of the case without prejudice enabling Zydus to seek final approval of a non-automatically substitutable product containing a different form of sitagliptin than that used in Januvia.

In January 2023, the Company received a Paragraph IV Certification Letter under the Hatch-Waxman Act notifying the Company that Zydus filed a NDA seeking approval of sitagliptin/metformin HCl tablets and certifying that no valid or enforceable claim of any of the patents listed in FDA’s Orange Book for Janumet will be infringed by the proposed Zydus product. In March 2023, the parties reached settlement enabling Zydus to seek final approval of a non-automatically substitutable product containing a different form of sitagliptin than that used in Janumet.

As a result of these favorable court rulings and settlement agreements related to the later expiring 2027 salt/polymorph patent directed to the specific sitagliptin salt form of the products, the Company expects that Januvia and Janumet will not lose market exclusivity in the U.S. until May 2026 and Janumet XR will not lose market exclusivity in the U.S. until July 2026, although another non-automatically substitutable form of sitagliptin could be available prior to 2026.

Supplementary Protection Certificates (SPCs) for Janumet expired in April 2023 for the majority of European countries. Prior to expiration, generic companies sought revocation of the Janumet SPCs in a number of European countries. In February 2022, a Finnish court referred certain questions to the Court of Justice of the European Union (CJEU) that could determine the validity of the Janumet SPCs in Europe, for which an oral hearing was held on March 8, 2023, and an Advocate General Opinion is expected in the third quarter with a decision in the fourth quarter of 2023. If the CJEU renders a decision that negatively impacts the validity of the Janumet SPCs throughout Europe, generic companies that were prevented from launching products during the SPC period in certain European countries may have an action for damages. Those countries include Belgium, Czech Republic, Ireland, Finland, France, Slovakia and Switzerland. If the Janumet SPCs are ultimately upheld, the Company has reserved its rights related to the pursuit of damages for those countries where a generic launched prior to expiry of the Janumet SPC.

Keytruda — The Company filed a complaint against The Johns Hopkins University (JHU) on November 29, 2022, in the U.S. District Court of Maryland. This action concerns patents emerging from a joint research collaboration between Merck and JHU regarding the use of pembrolizumab, which Merck sells under the trade name Keytruda. Merck and JHU partnered to design and conduct a clinical study administering Keytruda to cancer patients having tumors that had the genetic biomarker known as microsatellite instability-high (MSI-H). After the conclusion of the study, JHU secured U.S. patents citing the joint research study. Merck alleges that JHU has breached the collaboration agreement by filing and obtaining these patents without informing or involving Merck and then licensing the patents to others. Merck therefore brought this action for breach of contract, declaratory judgment of noninfringement, and promissory estoppel. JHU answered the complaint on April 13, 2023, denying Merck’s claims, and counterclaiming for willful infringement of five issued U.S. patents, including a demand for damages.

Lynparza — In December 2022, AstraZeneca Pharmaceuticals LP received a Paragraph IV Certification Letter under the Hatch-Waxman Act notifying AstraZeneca that Natco Pharma Limited (Natco) has filed an application to the FDA seeking pre-patent expiry approval to sell generic versions of Lynparza (olaparib) tablet. In February 2023, AstraZeneca and the Company filed a patent infringement lawsuit in the U.S. District Court for the District of New Jersey against Natco. This lawsuit, which asserts one or more patents covering olaparib, automatically stays FDA approval of the generic application until June 2025 or until an adverse court decision, if any, whichever may occur earlier.

Other Litigation

There are various other pending legal proceedings involving the Company, principally product liability and intellectual property lawsuits. While it is not feasible to predict the outcome of such proceedings, in the opinion of the Company, either the likelihood of loss is remote or any reasonably possible loss associated with the resolution of such proceedings is not expected to be material to the Company’s financial condition, results of operations or cash flows either individually or in the aggregate.

Other Matters

As previously disclosed, the Company was involved in an arbitration with Johnson & Johnson with respect to two agreements pursuant to which Merck was supporting the manufacture and supply of Johnson & Johnson’s SARS-CoV-2/COVID-19 vaccine and vaccine drug product. The arbitration has been settled with no material impact to the Company’s financial statements.

Legal Defense Reserves

Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable. Some of the significant factors considered in the review of these legal defense reserves are as follows: the actual costs incurred by the Company; the development of the Company’s legal defense strategy and structure in light of the scope of its litigation; the number of cases being brought against the Company; the costs and outcomes of completed trials and the most current information regarding anticipated timing, progression, and related costs of pre-trial activities and trials in the associated litigation. The amount of legal defense reserves as of June 30, 2023 and December 31, 2022 of approximately $225 million and $230 million, respectively, represents the Company’s best estimate of the minimum amount of defense costs to be incurred in connection with its outstanding litigation; however, events such as additional trials and other events that could arise in the course of its litigation could affect the ultimate amount of legal defense costs to be incurred by the Company. The Company will continue to monitor its legal defense costs and review the adequacy of the associated reserves and may determine to increase the reserves at any time in the future if, based upon the factors set forth, it believes it would be appropriate to do so.

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Equity

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Equity

Equity

	Three Months Ended June 30,
	Common Stock			Other Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Non- controlling Interests		Total
($ and shares in millions except per share amounts)	Shares	Par Value								Shares	Cost
Balance at April 1, 2022	3,577	$	1,788	$	44,275	$	56,252	$	(4,369)	1,049	$	(57,063)	$	70	$	40,953
Net income attributable to Merck & Co., Inc.	—	—		—		3,944		—		—	—		—		3,944
Other comprehensive income, net of taxes	—	—		—		—		42		—	—		—		42
Cash dividends declared on common stock ($0.69 per share)	—	—		—		(1,759)		—		—	—		—		(1,759)
Share-based compensation plans and other	—	—		(160)		—		—		(5)	293		—		133
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		5		5
Balance at June 30, 2022	3,577	$	1,788	$	44,115	$	58,437	$	(4,327)	1,044	$	(56,770)	$	75	$	43,318
Balance at April 1, 2023	3,577	$	1,788	$	44,467	$	62,039	$	(4,883)	1,040	$	(56,577)	$	71	$	46,905
Net loss attributable to Merck & Co., Inc.	—	—		—		(5,975)		—		—	—		—		(5,975)
Other comprehensive loss, net of taxes	—	—		—		—		(17)		—	—		—		(17)
Cash dividends declared on common stock ($0.73 per share)	—	—		—		(1,866)		—		—	—		—		(1,866)
Treasury stock shares purchased	—	—		—		—		—		3	(338)		—		(338)
Share-based compensation plans and other	—	—		(248)		—		—		(5)	303		—		55
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		3		3
Distributions attributable to noncontrolling interests	—	—		—		—		—		—	—		(25)		(25)
Balance at June 30, 2023	3,577	$	1,788	$	44,219	$	54,198	$	(4,900)	1,038	$	(56,612)	$	49	$	38,742

	Six Months Ended June 30,
	Common Stock			Other Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Non- controlling Interests		Total
($ and shares in millions except per share amounts)	Shares	Par Value								Shares	Cost
Balance at January 1, 2022	3,577	$	1,788	$	44,238	$	53,696	$	(4,429)	1,049	$	(57,109)	$	73	$	38,257
Net income attributable to Merck & Co., Inc.	—	—		—		8,254		—		—	—		—		8,254
Other comprehensive income, net of taxes	—	—		—		—		102		—	—		—		102
Cash dividends declared on common stock ($1.38 per share)	—	—		—		(3,513)		—		—	—		—		(3,513)
Share-based compensation plans and other	—	—		(123)		—		—		(5)	339		—		216
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		2		2
Balance at June 30, 2022	3,577	$	1,788	$	44,115	$	58,437	$	(4,327)	1,044	$	(56,770)	$	75	$	43,318
Balance at January 1, 2023	3,577	$	1,788	$	44,379	$	61,081	$	(4,768)	1,039	$	(56,489)	$	67	$	46,058
Net loss attributable to Merck & Co., Inc.	—	—		—		(3,154)		—		—	—		—		(3,154)
Other comprehensive loss, net of taxes	—	—		—		—		(132)		—	—		—		(132)
Cash dividends declared on common stock ($1.46 per share)	—	—		—		(3,729)		—		—	—		—		(3,729)
Treasury stock shares purchased	—	—		—		—		—		4	(487)		—		(487)
Share-based compensation plans and other	—	—		(160)		—		—		(5)	364		—		204
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		7		7
Distributions attributable to noncontrolling interests	—	—		—		—		—		—	—		(25)		(25)
Balance at June 30, 2023	3,577	$	1,788	$	44,219	$	54,198	$	(4,900)	1,038	$	(56,612)	$	49	$	38,742

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Pension and Other Postretirement Benefit Plans

6 Months Ended

Jun. 30, 2023

Retirement Benefits [Abstract]

Pension and Other Postretirement Benefit Plans

Pension and Other Postretirement Benefit Plans

The Company has defined benefit pension plans covering eligible employees in the U.S. and in certain of its international subsidiaries. The net periodic benefit cost (credit) of such plans consisted of the following components: 

	Three Months Ended June 30,								Six Months Ended June 30,
	2023				2022				2023				2022
($ in millions)	U.S.		International		U.S.		International		U.S.		International		U.S.		International
Service cost	$	76	$	50	$	99	$	72	$	152	$	99	$	198	$	147
Interest cost	133		75		103		37		266		149		206		75
Expected return on plan assets	(185)		(130)		(197)		(98)		(372)		(257)		(393)		(199)
Amortization of unrecognized prior service cost (credit)	—		16		(8)		(3)		(1)		12		(16)		(7)
Net (gain) loss amortization	—		(1)		56		25		—		(2)		112		50
Termination benefits	1		—		1		—		1		—		1		—
Curtailments	2		—		4		—		5		—		8		—
Settlements	5		—		101		—		26		—		101		—
	$	32	$	10	$	159	$	33	$	77	$	1	$	217	$	66

The Company provides medical benefits, principally to its eligible U.S. retirees and similar benefits to their dependents, through its other postretirement benefit plans. The net credit of such plans consisted of the following components: 

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Service cost	$	8	$	12	$	17	$	25
Interest cost	16		11		31		23
Expected return on plan assets	(16)		(21)		(32)		(43)
Amortization of unrecognized prior service credit	(12)		(14)		(25)		(29)
Net gain amortization	(11)		(11)		(21)		(21)
	$	(15)	$	(23)	$	(30)	$	(45)

In connection with restructuring actions (see Note 5), termination charges were recorded on pension plans related to expanded eligibility for certain employees exiting Merck. Also, in connection with these restructuring activities, curtailments were recorded on certain pension plans. In addition, lump sum payments to U.S. pension plan participants triggered partial settlement charges in the second quarter and first six months of both 2023 and 2022. These partial settlements triggered remeasurements of some of the Company’s U.S. pension plans. Remeasurements during the first six months of 2023 resulted in an increase of $47 million to net pension liabilities and a related adjustment to AOCL.

The components of net periodic benefit cost (credit) other than the service cost component are included in Other (income) expense, net (see Note 12), with the exception of certain amounts for termination benefits, curtailments and settlements, which are recorded in Restructuring costs if the event giving rise to the termination benefits, curtailment or settlement related to restructuring actions.

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Other (Income) Expense, Net

6 Months Ended

Jun. 30, 2023

Other Income and Expenses [Abstract]

Other (Income) Expense, Net

Other (Income) Expense, Net

Other (income) expense, net, consisted of: 

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Interest income	$	(109)	$	(15)	$	(221)	$	(22)
Interest expense	277		240		519		483
Exchange losses	62		86		122		124
Loss (income) from investments in equity securities, net (1)	175		284		(274)		991
Net periodic defined benefit plan (credit) cost other than service cost	(111)		(27)		(226)		(148)
Other, net	(122)		(130)		339		(280)
	$	172	$	438	$	259	$	1,148

(1)    Includes net realized and unrealized gains and losses from investments in equity securities either owned directly or through ownership interests in investment funds. Unrealized gains and losses from investments that are directly owned are determined at the end of the reporting period, while gains and losses from ownership interests in investment funds are accounted for on a one quarter lag.

Other, net (as reflected in the table above) in the first six months of 2023 includes a $572.5 million charge related to settlements with certain plaintiffs in the Zetia antitrust litigation (see Note 9).

Interest paid for both the six months ended June 30, 2023 and 2022 was $449 million.

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Income Taxes	6 Months Ended
	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesThe income tax provision of $637 million and $1.5 billion for the second quarter and first six months of 2023, respectively, on pretax losses of $5.3 billion and $1.7 billion, respectively, resulted in effective income tax rates of (11.9)% and (86.8)%, respectively. The second quarter 2023 effective tax rate includes the impact of a charge for the acquisition of Prometheus for which no tax benefit was recognized, which unfavorably affected the tax rate by 25.1 percentage points, as well as the favorable impact of net unrealized losses from investments in equity securities, which were taxed at the U.S. tax rate. The effective income tax rate for the first six months of 2023 includes a 101.9 percentage point combined unfavorable impact of charges for the acquisitions of Prometheus and Imago for which no tax benefits were recognized, as well as higher foreign taxes, the impact of the R&D capitalization provision of the Tax Cuts and Jobs Act of 2017 (TCJA) on the Company’s U.S. global intangible low-taxed income inclusion, and net unrealized gains from investments in equity securities, which were taxed at the U.S. tax rate, partially offset by higher foreign tax credits. The effective income tax rates of 12.0% for the second quarter of 2022 and 11.7% for the first six months of 2022 reflect the favorable impact of net unrealized losses from investments in equity securities, which were taxed at the U.S. tax rate.The Internal Revenue Service (IRS) is currently conducting examinations of the Company’s tax returns for the years 2017 and 2018, including the one-time transition tax enacted under the TCJA. If the IRS disagrees with the Company’s transition tax position, it may result in a significant tax liability.

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Earnings Per Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The calculations of (loss) earnings per share are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ and shares in millions except per share amounts)	2023		2022		2023		2022
Net (Loss) Income Attributable to Merck & Co., Inc.	$	(5,975)	$	3,944	$	(3,154)	$	8,254
Average common shares outstanding	2,539		2,531		2,539		2,529
Common shares issuable (1)	—		9		—		9
Average common shares outstanding assuming dilution	2,539		2,540		2,539		2,538
Basic (Loss) Earnings per Common Share Attributable to Merck & Co., Inc. Common Shareholders	$	(2.35)	$	1.56	$	(1.24)	$	3.26
(Loss) Earnings per Common Share Assuming Dilution Attributable to Merck & Co., Inc. Common Shareholders	$	(2.35)	$	1.55	$	(1.24)	$	3.25

(1)    Issuable primarily under share-based compensation plans.

The Company recorded a net loss for the three and six months ended June 30, 2023; therefore, no potential dilutive common shares were used in the computations of loss per common share assuming dilution because the effects would have been antidilutive. For the three and six months ended June 30, 2022, 2 million and 6 million, respectively, of common shares issuable under share-based compensation plans were excluded from the computations of earnings per common share assuming dilution because the effect would have been antidilutive.

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Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Other Comprehensive Income (Loss)

Other Comprehensive Income (Loss)

Changes in each component of other comprehensive income (loss) are as follows:

	Three Months Ended June 30,
($ in millions)	Derivatives			Employee Benefit Plans			Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Loss
Balance April 1, 2022, net of taxes	$	207		$	(2,711)		$	(1,865)	$	(4,369)
Other comprehensive income (loss) before reclassification adjustments, pretax	403			168			(365)		206
Tax	(85)			(35)			(22)		(142)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	318			133			(387)		64
Reclassification adjustments, pretax	(171)		(1)	144		(2)	—		(27)
Tax	36			(31)			—		5
Reclassification adjustments, net of taxes	(135)			113			—		(22)
Other comprehensive income (loss), net of taxes	183			246			(387)		42
Balance June 30, 2022, net of taxes	$	390		$	(2,465)		$	(2,252)	$	(4,327)
Balance April 1, 2023, net of taxes	$	(60)		$	(2,458)		$	(2,365)	$	(4,883)
Other comprehensive income (loss) before reclassification adjustments, pretax	194			(6)			(115)		73
Tax	(41)			1			(22)		(62)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	153			(5)			(137)		11
Reclassification adjustments, pretax	(11)		(1)	(23)		(2)	—		(34)
Tax	3			3			—		6
Reclassification adjustments, net of taxes	(8)			(20)			—		(28)
Other comprehensive income (loss), net of taxes	145			(25)			(137)		(17)
Balance June 30, 2023, net of taxes	$	85		$	(2,483)		$	(2,502)	$	(4,900)

	Six Months Ended June 30,
($ in millions)	Derivatives			Employee Benefit Plans			Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Loss
Balance January 1, 2022, net of taxes	$	144		$	(2,743)		$	(1,830)	$	(4,429)
Other comprehensive income (loss) before reclassification adjustments, pretax	551			169			(383)		337
Tax	(116)			(37)			(39)		(192)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	435			132			(422)		145
Reclassification adjustments, pretax	(239)		(1)	189		(2)	—		(50)
Tax	50			(43)			—		7
Reclassification adjustments, net of taxes	(189)			146			—		(43)
Other comprehensive income (loss), net of taxes	246			278			(422)		102
Balance June 30, 2022, net of taxes	$	390		$	(2,465)		$	(2,252)	$	(4,327)
Balance January 1, 2023, net of taxes	$	73		$	(2,408)		$	(2,433)	$	(4,768)
Other comprehensive income (loss) before reclassification adjustments, pretax	128			(53)			(36)		39
Tax	(27)			3			(42)		(66)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	101			(50)			(78)		(27)
Reclassification adjustments, pretax	(113)		(1)	(30)		(2)	9		(134)
Tax	24			5			—		29
Reclassification adjustments, net of taxes	(89)			(25)			9		(105)
Other comprehensive income (loss), net of taxes	12			(75)			(69)		(132)
Balance June 30, 2023, net of taxes	$	85		$	(2,483)		$	(2,502)	$	(4,900)

(1)    Primarily relates to foreign currency cash flow hedges that were reclassified from AOCL to Sales.

(2)    Includes net amortization of prior service cost, actuarial gains and losses, settlements and curtailments included in net periodic benefit cost (see Note 11)

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Segment Reporting

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

The Company’s operations are principally managed on a product basis and include two operating segments, Pharmaceutical and Animal Health, both of which are reportable segments.

The Pharmaceutical segment includes human health pharmaceutical and vaccine products. Human health pharmaceutical products consist of therapeutic and preventive agents, generally sold by prescription, for the treatment of human disorders. The Company sells these human health pharmaceutical products primarily to drug wholesalers and retailers, hospitals, government agencies and managed health care providers such as health maintenance organizations, pharmacy benefit managers and other institutions. Human health vaccine products consist of preventive pediatric, adolescent and adult vaccines. The Company sells these human health vaccines primarily to physicians, wholesalers, physician distributors and government entities. A large component of pediatric and adolescent vaccine sales are made to the U.S. Centers for Disease Control and Prevention Vaccines for Children program, which is funded by the U.S. government. Additionally, the Company sells vaccines to the Federal government for placement into vaccine stockpiles.

The Animal Health segment discovers, develops, manufactures and markets a wide range of veterinary pharmaceutical and vaccine products, as well as health management solutions and services, for the prevention, treatment and control of disease in all major livestock and companion animal species. The Company also offers an extensive suite of digitally connected identification, traceability and monitoring products. The Company sells its products to veterinarians, distributors, animal producers, farmers and pet owners.

Sales of the Company’s products were as follows:

	Three Months Ended June 30,												Six Months Ended June 30,
	2023						2022						2023						2022
($ in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total		U.S.		Int’l		Total		U.S.		Int’l		Total
Pharmaceutical:
Oncology
Keytruda	$	3,863	$	2,408	$	6,271	$	3,197	$	2,055	$	5,252	$	7,348	$	4,718	$	12,065	$	5,976	$	4,085	$	10,061
Alliance revenue-Lynparza (1)	144		166		310		143		132		275		286		299		585		283		257		541
Alliance revenue-Lenvima (1)	163		79		242		128		103		231		316		158		474		284		175		459
Welireg	49		2		50		27		—		27		90		3		92		45		—		45
Alliance revenue-Reblozyl (2)	36		11		47		28		5		33		66		24		90		55		30		86
Vaccines
Gardasil/Gardasil 9	464		1,994		2,458		428		1,245		1,674		880		3,550		4,430		846		2,287		3,133
ProQuad/M-M-R II/Varivax	447		135		582		434		143		578		868		242		1,109		805		243		1,047
RotaTeq	93		37		131		98		75		173		273		155		428		273		116		389
Vaxneuvance	147		20		168		11		—		12		241		33		274		16		1		16
Pneumovax 23	23		69		92		94		59		153		63		125		188		212		114		325
Vaqta	29		13		42		16		19		35		59		23		82		45		25		71
Hospital Acute Care
Bridion	299		203		502		237		190		426		576		413		989		432		389		821
Prevymis	61		82		143		47		56		103		116		157		273		87		110		197
Dificid	68		8		76		63		3		66		130		11		141		113		6		119
Primaxin	(2)		56		53		—		64		64		2		132		133		1		122		122
Noxafil	11		45		55		16		45		60		25		91		116		25		92		118
Zerbaxa	30		24		54		22		24		46		57		47		104		40		36		76
Cardiovascular
Alliance revenue-Adempas/Verquvo (3)	70		(2)		68		88		10		98		153		14		167		159		11		170
Adempas	—		65		65		—		63		63		—		125		125		—		124		124
Virology
Lagevrio	2		201		203		—		1,177		1,177		—		595		595		1,523		2,901		4,424
Isentress/Isentress HD	56		80		136		67		80		147		108		151		259		128		177		305
Neuroscience
Belsomra	21		42		63		19		50		69		37		82		119		39		98		137
Immunology
Simponi	—		180		180		—		181		181		—		359		359		—		366		366
Remicade	—		48		48		—		53		53		—		99		99		—		114		114
Diabetes
Januvia	243		267		511		301		455		756		514		548		1,062		626		909		1,535
Janumet	82		272		354		105		371		476		138		544		683		168		762		931
Other pharmaceutical (4)	171		382		553		157		372		528		342		793		1,138		317		814		1,131
Total Pharmaceutical segment sales	6,570		6,887		13,457		5,726		7,030		12,756		12,688		13,491		26,179		12,498		14,364		26,863
Animal Health:
Livestock	165		643		807		164		662		826		338		1,318		1,656		335		1,322		1,658
Companion Animal	310		339		649		313		328		641		618		673		1,291		616		676		1,291
Total Animal Health segment sales	475		982		1,456		477		990		1,467		956		1,991		2,947		951		1,998		2,949
Total segment sales	7,045		7,869		14,913		6,203		8,020		14,223		13,644		15,482		29,126		13,449		16,362		29,812
Other (5)	(27)		149		122		35		335		370		32		364		396		128		555		682
	$	7,018	$	8,018	$	15,035	$	6,238	$	8,355	$	14,593	$	13,676	$	15,846	$	29,522	$	13,577	$	16,917	$	30,494

U.S. plus international may not equal total due to rounding.

(1)    Alliance revenue for Lynparza and Lenvima represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs (see Note 3).

(2)    Alliance revenue for Reblozyl represents royalties and, for the first six months of 2022, also includes the receipt of a regulatory approval milestone payment (see Note 3).

(3)    Alliance revenue for Adempas/Verquvo 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 (see Note 3).

(4)    Other pharmaceutical primarily reflects sales of other human health pharmaceutical products, including products within the franchises not listed separately.

(5)    Other is primarily comprised of miscellaneous corporate revenue, including revenue hedging activities which increased sales by $128 million and $277 million for the six months ended June 30, 2023 and 2022, respectively, as well as revenue from third-party manufacturing arrangements (including sales to Organon). Other for the six months ended June 30, 2023 and 2022 also includes $54 million and $146 million, respectively, related to upfront and milestone payments received by Merck for out-licensing arrangements.

Product sales are recorded net of the provision for discounts, including chargebacks, which are customer discounts that occur when a contracted customer purchases through an intermediary wholesale purchaser, and rebates that are owed based upon definitive contractual agreements or legal requirements with private sector and public sector (Medicaid and Medicare Part D) benefit providers, after the final dispensing of the product by a pharmacy to a benefit plan participant. These discounts, in the aggregate, reduced U.S. sales by $3.2 billion and $3.0 billion for the three months ended June 30, 2023 and 2022, respectively, and $6.3 billion and $5.9 billion for the six months ended June 30, 2023 and 2022, respectively.

Consolidated sales by geographic area where derived are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
United States	$	7,018	$	6,238	$	13,676	$	13,577
Europe, Middle East and Africa	3,348		3,582		6,651		7,942
China	1,913		1,372		3,628		2,515
Asia Pacific (other than China and Japan)	848		1,008		1,694		1,938
Japan	675		1,114		1,434		2,103
Latin America	742		642		1,403		1,249
Other	491		637		1,036		1,170
	$	15,035	$	14,593	$	29,522	$	30,494

A reconciliation of segment profits to (Loss) Income Before Taxes is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Segment profits:
Pharmaceutical segment	$	9,854	$	9,173	$	18,993	$	18,673
Animal Health segment	467		571		1,032		1,156
Total segment profits	10,321		9,744		20,025		19,829
Other profits	19		260		184		454
Unallocated:
Interest income	109		15		221		22
Interest expense	(277)		(240)		(519)		(483)
Amortization	(477)		(463)		(1,020)		(1,163)
Depreciation	(376)		(431)		(775)		(809)
Research and development	(13,194)		(2,652)		(17,341)		(5,097)
Restructuring costs	(151)		(142)		(218)		(194)
Charge for Zetia antitrust litigation settlements	—		—		(573)		—
Other unallocated, net	(1,309)		(1,604)		(1,669)		(3,211)
	$	(5,335)	$	4,487	$	(1,685)	$	9,348

Pharmaceutical segment profits are comprised of segment sales less standard costs, as well as selling, general and administrative expenses directly incurred by the segment. Animal Health segment profits are comprised of segment sales, less all cost of sales, as well as selling, general and administrative expenses and research and development costs directly incurred by the segment. For internal management reporting presented to the chief operating decision maker, Merck does not allocate the remaining cost of sales not included in segment profits as described above, research and development expenses incurred in Merck Research Laboratories, the Company’s research and development division that focuses on human health-related activities, or general and administrative expenses, nor the cost of financing these activities. Separate divisions maintain responsibility for monitoring and managing these costs, including depreciation related to fixed assets utilized by these divisions and, therefore, they are not included in segment profits. In addition, costs related to restructuring activities, as well as the amortization of intangible assets and purchase accounting adjustments are not allocated to segments.

Other profits are primarily comprised of miscellaneous corporate profits, as well as operating profits related to third-party manufacturing arrangements.

Other unallocated, net, includes expenses from corporate and manufacturing cost centers, intangible asset impairment charges, gains or losses on sales of businesses, expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration, and other miscellaneous income or expense items.

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Pay vs Performance Disclosure - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net (Loss) Income Attributable to Merck & Co., Inc.	$ (5,975)	$ 3,944	$ (3,154)	$ 8,254

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Insider Trading Arrangements	3 Months Ended
	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of PresentationThe accompanying unaudited condensed consolidated financial statements of Merck & Co., Inc. (Merck or the Company) have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by accounting principles generally accepted in the United States (U.S.) (GAAP) for complete consolidated financial statements are not included herein. These interim statements should be read in conjunction with the audited financial statements and notes thereto included in Merck’s Form 10-K filed on February 24, 2023. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. In the Company’s opinion, all adjustments necessary for a fair statement of these interim statements have been included and are of a normal and recurring nature.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

Recently Adopted Accounting Standard

Recently Adopted Accounting Standards

In October 2021, the FASB issued amended guidance that requires acquiring entities to recognize and measure contract assets and liabilities in a business combination in accordance with existing revenue recognition guidance. The Company adopted the guidance effective January 1, 2023. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements for prior acquisitions; however, the impact in future periods will be dependent upon the contract assets and contract liabilities acquired in future business combinations.

In June 2022, the FASB issued guidance related to the fair value measurement of an equity security subject to contractual restrictions that prohibit the sale of the equity security. The new guidance also introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. The Company adopted the guidance effective July 1, 2023. There was no impact to the Company’s consolidated financial statements upon adoption.

Legal Costs

Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable.

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Collaborative Arrangements (Tables)

6 Months Ended

Jun. 30, 2023

Collaborative Arrangements [Abstract]

Collaboration Arrangements

Summarized financial information related to this collaboration is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Alliance revenue - Lynparza	$	310	$	275	$	585	$	541
Alliance revenue - Koselugo	25		24		48		33
Total alliance revenue	$	335	$	299	$	633	$	574
Cost of sales (1)	78		62		148		361
Selling, general and administrative	51		46		98		90
Research and development	22		25		43		51
($ in millions)					June 30, 2023		December 31, 2022
Receivables from AstraZeneca included in Other current assets					$	332	$	303
Payables to AstraZeneca included in Accrued and other current liabilities (2)					260		123
Payables to AstraZeneca included in Other Noncurrent Liabilities (2)					600		600

(1)    Represents amortization of capitalized milestone payments. Amount in the first six months of 2022 includes $250 million of cumulative amortization catch-up expense as noted above.

(2)    Includes accrued milestone payments.

Summarized financial information related to this collaboration is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Alliance revenue - Lenvima	$	242	$	231	$	474	$	459
Cost of sales (1)	57		53		183		106
Selling, general and administrative	48		42		99		73
Research and development	17		47		56		104
($ in millions)					June 30, 2023		December 31, 2022
Receivables from Eisai included in Other current assets					$	242	$	214

(1)    Represents amortization of capitalized milestone payments. Amount in the first six months of 2023 includes $72 million of cumulative amortization catch-up expense as noted above.

Summarized financial information related to this collaboration is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Alliance revenue - Adempas/Verquvo	$	68	$	98	$	167	$	170
Net sales of Adempas recorded by Merck	65		63		125		124
Net sales of Verquvo recorded by Merck	9		6		16		9
Total sales	$	142	$	167	$	308	$	303
Cost of sales (1)	56		54		113		103
Selling, general and administrative	34		42		67		65
Research and development	25		17		50		34
($ in millions)					June 30, 2023		December 31, 2022
Receivables from Bayer included in Other current assets					$	144	$	143
Payables to Bayer included in Accrued and other current liabilities					82		80

(1)    Includes amortization of intangible assets.

Summarized financial information related to this collaboration is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Net sales of Lagevrio recorded by Merck	$	203	$	1,177	$	595	$	4,424
Cost of sales (1)(2)	193		615		414		2,341
Selling, general and administrative (2)	24		34		51		69
Research and development (2)	10		30		26		56
($ in millions)					June 30, 2023		December 31, 2022
Receivables from Ridgeback included in Other current assets (3)					$	51	$	—
Payables to Ridgeback included in Accrued and other current liabilities (4)					30		348

(1)    Includes royalty expense, amortization of capitalized milestone payments and inventory reserves.

(2)    Expenses include an allocation for overhead charges.

(3)    Includes partner advances.

(4)    Includes accrued royalties. Amount at December 31, 2022 also includes an accrued milestone payment.

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Restructuring (Tables)

6 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

Charges Related to Restructuring Program Activities by Type of Cost

The following tables summarize the charges related to restructuring program activities by type of cost:

	Three Months Ended June 30, 2023								Six Months Ended June 30, 2023
($ in millions)	Separation Costs		Accelerated Depreciation		Other		Total		Separation Costs		Accelerated Depreciation		Other		Total
Cost of sales	$	—	$	22	$	10	$	32	$	—	$	43	$	18	$	61
Selling, general and administrative	—		—		52		52		—		—		53		53
Research and development	—		—		1		1		—		—		1		1
Restructuring costs	110		—		41		151		151		—		67		218
	$	110	$	22	$	104	$	236	$	151	$	43	$	139	$	333

	Three Months Ended June 30, 2022								Six Months Ended June 30, 2022
($ in millions)	Separation Costs		Accelerated Depreciation		Other		Total		Separation Costs		Accelerated Depreciation		Other		Total
Cost of sales	$	—	$	17	$	50	$	67	$	—	$	35	$	78	$	113
Selling, general and administrative	—		8		19		27		—		12		36		48
Research and development	—		22		—		22		—		29		—		29
Restructuring costs	106		—		36		142		132		—		62		194
	$	106	$	47	$	105	$	258	$	132	$	76	$	176	$	384

Charges and Spending Relating to Restructuring Activities by Program

The following table summarizes the charges and spending relating to restructuring program activities for the six months ended June 30, 2023:

($ in millions)	Separation Costs		Accelerated Depreciation		Other		Total
Restructuring reserves January 1, 2023	$	479	$	—	$	34	$	513
Expenses	151		43		139		333
(Payments) receipts, net	(84)		—		(74)		(158)
Non-cash activity	—		(43)		(68)		(111)
Restructuring reserves June 30, 2023 (1)	$	546	$	—	$	31	$	577

(1)The remaining cash outlays are expected to be largely completed by the end of 2025.

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Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Effect of Net Investment Hedges on OCI and the Consolidated Statement of Operations

The effects of the Company’s net investment hedges on OCI and the Condensed Consolidated Statement of Operations are shown below:

	Amount of Pretax (Gain) Loss Recognized in Other Comprehensive Income (1)								Amount of Pretax (Gain) Loss Recognized in Other (income) expense, net for Amounts Excluded from Effectiveness Testing
	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022		2023		2022		2023		2022
Net Investment Hedging Relationships
Foreign exchange contracts	$	—	$	(31)	$	1	$	(46)	$	—	$	(1)	$	1	$	(2)
Euro-denominated notes	21		(128)		73		(181)		—		—		—		—

(1)    No amounts were reclassified from AOCL into income related to the sale of a subsidiary.

Fair Value of Derivatives on a Gross Basis Segregated between those Derivatives that are Designated as Hedging Instruments and those that are Not Designated as Hedging Instruments

Presented in the table below is the fair value of derivatives on a gross basis segregated between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments:

		June 30, 2023						December 31, 2022
		Fair Value of Derivative				U.S. Dollar Notional		Fair Value of Derivative				U.S. Dollar Notional
($ in millions)		Asset		Liability				Asset		Liability
Derivatives Designated as Hedging Instruments	Balance Sheet Caption
Foreign exchange contracts	Other current assets	$	200	$	—	$	5,976	$	220	$	—	$	4,824
Foreign exchange contracts	Other Assets	43		—		1,750		27		—		1,609
Foreign exchange contracts	Accrued and other current liabilities	—		62		2,245		—		101		2,691
Foreign exchange contracts	Other Noncurrent Liabilities	—		1		328		—		1		91
		$	243	$	63	$	10,299	$	247	$	102	$	9,215
Derivatives Not Designated as Hedging Instruments	Balance Sheet Caption
Foreign exchange contracts	Other current assets	$	222	$	—	$	8,838	$	186	$	—	$	8,540
Foreign exchange contracts	Accrued and other current liabilities	—		181		10,112		—		307		10,926
		$	222	$	181	$	18,950	$	186	$	307	$	19,466
		$	465	$	244	$	29,249	$	433	$	409	$	28,681

Information on Derivative Positions Subject to Master Netting Arrangements as if they were Presented on a Net Basis

The following table provides information on the Company’s derivative positions subject to these master netting arrangements as if they were presented on a net basis, allowing for the right of offset by counterparty and cash collateral exchanged per the master agreements and related credit support annexes:

	June 30, 2023				December 31, 2022
($ in millions)	Asset		Liability		Asset		Liability
Gross amounts recognized in the condensed consolidated balance sheet	$	465	$	244	$	433	$	409
Gross amounts subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet	(180)		(180)		(220)		(220)
Cash collateral received/posted	(102)		—		(66)		(19)
Net amounts	$	183	$	64	$	147	$	170

Location and Amount of Pretax Gains and Losses of Derivatives

The table below provides information regarding the location and amount of pretax gains and losses of derivatives designated in fair value or cash flow hedging relationships:

	Three Months Ended June 30,												Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022
Financial Statement Caption in which Effects of Fair Value or Cash Flow Hedges are Recorded	Sales				Other (income) expense, net (1)				Other comprehensive income (loss)				Sales				Other (income) expense, net (1)				Other comprehensive income (loss)
	$	15,035	$	14,593	$	172	$	438	$	(17)	$	42	$	29,522	$	30,494	$	259	$	1,148	$	(132)	$	102
(Gain) loss on fair value hedging relationships:
Interest rate swap contracts
Hedged items	—		—		—		(4)		—		—		—		—		—		(14)		—		—
Derivatives designated as hedging instruments	—		—		—		1		—		—		—		—		—		4		—		—
Impact of cash flow hedging relationships:
Foreign exchange contracts
Amount of gain recognized in OCI on derivatives	—		—		—		—		194		403		—		—		—		—		128		551
Increase in Sales as a result of AOCL reclassifications	24		172		—		—		(24)		(172)		125		239		—		—		(125)		(239)
Interest rate contracts
Amount of gain recognized in Other (income) expense, net on derivatives	—		—		—		—		—		—		—		—		(1)		(1)		—		—
Amount of gain (loss) recognized in OCI on derivatives	—		—		—		—		13		—		—		—		—		—		13		(1)

(1)    Interest expense is a component of Other (income) expense, net.

Income Statement Effects of Derivatives Not Designated as Hedging Instruments

The table below provides information regarding the income statement effects of derivatives not designated as hedging instruments:

		Amount of Derivative Pretax (Gain) Loss Recognized in Income
		Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)		2023		2022		2023		2022
Derivatives Not Designated as Hedging Instruments	Income Statement Caption
Foreign exchange contracts (1)	Other (income) expense, net	$	(41)	$	(64)	$	(28)	$	(36)
Foreign exchange contracts (2)	Sales	(5)		(36)		(3)		(38)

(1)    These derivative contracts primarily mitigate changes in the value of remeasured foreign currency denominated monetary assets and liabilities attributable to changes in foreign currency exchange rates.

(2)    These derivative contracts serve as economic hedges of forecasted transactions.

Information on Investments in Debt and Equity Securities

Information on investments in debt and equity securities is as follows:

	June 30, 2023								December 31, 2022
	Amortized Cost		Gross Unrealized				Fair Value		Amortized Cost		Gross Unrealized				Fair Value
($ in millions)			Gains		Losses						Gains		Losses
Commercial paper	$	561	$	—	$	—	$	561	$	498	$	—	$	—	$	498
U.S. government and agency securities	256		—		—		256		68		—		—		68
Corporate notes and bonds	4		—		—		4		3		—		—		3
Total debt securities	$	821	$	—	$	—	$	821	$	569	$	—	$	—	$	569
Publicly traded equity securities (1)							1,520								1,284
Total debt and publicly traded equity securities							$	2,341							$	1,853

(1)    Unrealized net losses (gains) of $71 million and $(267) million were recorded in Other (income) expense, net in the second quarter and first six months of 2023, respectively, on equity securities still held at June 30, 2023. Unrealized net (gains) losses of $(25) million and $194 million were recorded in Other (income) expense, net in the second quarter and first six months of 2022, respectively, on equity securities still held at June 30, 2022.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:

	Fair Value Measurements Using								Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
($ in millions)	June 30, 2023								December 31, 2022
Assets
Investments
Commercial paper	$	—	$	561	$	—	$	561	$	—	$	498	$	—	$	498
U.S. government and agency securities	—		187		—		187		—		—		—		—
Publicly traded equity securities	1,184		—		—		1,184		1,015		—		—		1,015
	1,184		748		—		1,932		1,015		498		—		1,513
Other assets (1)
U.S. government and agency securities	69		—		—		69		68		—		—		68
Corporate notes and bonds	4		—		—		4		3		—		—		3
Publicly traded equity securities	336		—		—		336		269		—		—		269
	409		—		—		409		340		—		—		340
Derivative assets (2)
Forward exchange contracts	—		316		—		316		—		218		—		218
Purchased currency options	—		149		—		149		—		215		—		215
	—		465		—		465		—		433		—		433
Total assets	$	1,593	$	1,213	$	—	$	2,806	$	1,355	$	931	$	—	$	2,286
Liabilities
Other liabilities
Contingent consideration	$	—	$	—	$	349	$	349	$	—	$	—	$	456	$	456
Derivative liabilities (2)
Forward exchange contracts	—		235		—		235		—		402		—		402
Written currency options	—		9		—		9		—		7		—		7
	—		244		—		244		—		409		—		409
Total liabilities	$	—	$	244	$	349	$	593	$	—	$	409	$	456	$	865

(1)    Investments included in other assets are restricted as to use, including for the payment of benefits under employee benefit plans.

(2)    The fair value determination of derivatives includes the impact of the credit risk of counterparties to the derivatives and the Company’s own credit risk, the effects of which were not significant.

Information About the Changes in Liabilities for Contingent Consideration

Summarized information about the changes in the fair value of liabilities for contingent consideration associated with business combinations is as follows:

($ in millions)	2023		2022
Fair value January 1	$	456	$	777
Changes in estimated fair value (1)	10		(114)
Payments	(117)		(119)
Other	—		(2)
Fair value June 30 (2)	$	349	$	542

(1)    Recorded in Cost of sales, Research and development expenses, and Other (income) expense, net. Includes cumulative translation adjustments.

(2)    At June 30, 2023, $262 million of the liabilities relate to the termination of the Sanofi Pasteur MSD joint venture in 2016. As part of the termination, Merck recorded a liability for contingent future royalty payments of 11.5% on net sales of all Merck products that were previously sold by the joint venture through December 31, 2024. The fair value of this liability is determined utilizing the estimated amount and timing of projected cash flows using a risk-adjusted discount rate to present value the cash flows. Balance at June 30, 2023 includes $130 million recorded as a current liability for amounts expected to be paid within the next 12 months.

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Inventories (Tables)

6 Months Ended

Jun. 30, 2023

Inventory Disclosure [Abstract]

Inventories

Inventories consisted of:

($ in millions)	June 30, 2023		December 31, 2022
Finished goods	$	1,841	$	1,841
Raw materials and work in process	7,453		7,063
Supplies	269		238
Total	9,563		9,142
Decrease to LIFO cost	(413)		(293)
	$	9,150	$	8,849
Recognized as:
Inventories	$	5,930	$	5,911
Other Assets	3,220		2,938

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Equity (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Schedule of Equity

	Three Months Ended June 30,
	Common Stock			Other Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Non- controlling Interests		Total
($ and shares in millions except per share amounts)	Shares	Par Value								Shares	Cost
Balance at April 1, 2022	3,577	$	1,788	$	44,275	$	56,252	$	(4,369)	1,049	$	(57,063)	$	70	$	40,953
Net income attributable to Merck & Co., Inc.	—	—		—		3,944		—		—	—		—		3,944
Other comprehensive income, net of taxes	—	—		—		—		42		—	—		—		42
Cash dividends declared on common stock ($0.69 per share)	—	—		—		(1,759)		—		—	—		—		(1,759)
Share-based compensation plans and other	—	—		(160)		—		—		(5)	293		—		133
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		5		5
Balance at June 30, 2022	3,577	$	1,788	$	44,115	$	58,437	$	(4,327)	1,044	$	(56,770)	$	75	$	43,318
Balance at April 1, 2023	3,577	$	1,788	$	44,467	$	62,039	$	(4,883)	1,040	$	(56,577)	$	71	$	46,905
Net loss attributable to Merck & Co., Inc.	—	—		—		(5,975)		—		—	—		—		(5,975)
Other comprehensive loss, net of taxes	—	—		—		—		(17)		—	—		—		(17)
Cash dividends declared on common stock ($0.73 per share)	—	—		—		(1,866)		—		—	—		—		(1,866)
Treasury stock shares purchased	—	—		—		—		—		3	(338)		—		(338)
Share-based compensation plans and other	—	—		(248)		—		—		(5)	303		—		55
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		3		3
Distributions attributable to noncontrolling interests	—	—		—		—		—		—	—		(25)		(25)
Balance at June 30, 2023	3,577	$	1,788	$	44,219	$	54,198	$	(4,900)	1,038	$	(56,612)	$	49	$	38,742

	Six Months Ended June 30,
	Common Stock			Other Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Non- controlling Interests		Total
($ and shares in millions except per share amounts)	Shares	Par Value								Shares	Cost
Balance at January 1, 2022	3,577	$	1,788	$	44,238	$	53,696	$	(4,429)	1,049	$	(57,109)	$	73	$	38,257
Net income attributable to Merck & Co., Inc.	—	—		—		8,254		—		—	—		—		8,254
Other comprehensive income, net of taxes	—	—		—		—		102		—	—		—		102
Cash dividends declared on common stock ($1.38 per share)	—	—		—		(3,513)		—		—	—		—		(3,513)
Share-based compensation plans and other	—	—		(123)		—		—		(5)	339		—		216
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		2		2
Balance at June 30, 2022	3,577	$	1,788	$	44,115	$	58,437	$	(4,327)	1,044	$	(56,770)	$	75	$	43,318
Balance at January 1, 2023	3,577	$	1,788	$	44,379	$	61,081	$	(4,768)	1,039	$	(56,489)	$	67	$	46,058
Net loss attributable to Merck & Co., Inc.	—	—		—		(3,154)		—		—	—		—		(3,154)
Other comprehensive loss, net of taxes	—	—		—		—		(132)		—	—		—		(132)
Cash dividends declared on common stock ($1.46 per share)	—	—		—		(3,729)		—		—	—		—		(3,729)
Treasury stock shares purchased	—	—		—		—		—		4	(487)		—		(487)
Share-based compensation plans and other	—	—		(160)		—		—		(5)	364		—		204
Net income attributable to noncontrolling interests	—	—		—		—		—		—	—		7		7
Distributions attributable to noncontrolling interests	—	—		—		—		—		—	—		(25)		(25)
Balance at June 30, 2023	3,577	$	1,788	$	44,219	$	54,198	$	(4,900)	1,038	$	(56,612)	$	49	$	38,742

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Pension and Other Postretirement Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2023

Pension Plans

Defined Benefit Plan Disclosure [Line Items]

Net Benefit Costs

The Company has defined benefit pension plans covering eligible employees in the U.S. and in certain of its international subsidiaries. The net periodic benefit cost (credit) of such plans consisted of the following components: 

	Three Months Ended June 30,								Six Months Ended June 30,
	2023				2022				2023				2022
($ in millions)	U.S.		International		U.S.		International		U.S.		International		U.S.		International
Service cost	$	76	$	50	$	99	$	72	$	152	$	99	$	198	$	147
Interest cost	133		75		103		37		266		149		206		75
Expected return on plan assets	(185)		(130)		(197)		(98)		(372)		(257)		(393)		(199)
Amortization of unrecognized prior service cost (credit)	—		16		(8)		(3)		(1)		12		(16)		(7)
Net (gain) loss amortization	—		(1)		56		25		—		(2)		112		50
Termination benefits	1		—		1		—		1		—		1		—
Curtailments	2		—		4		—		5		—		8		—
Settlements	5		—		101		—		26		—		101		—
	$	32	$	10	$	159	$	33	$	77	$	1	$	217	$	66

Other Postretirement Benefit Plans

Defined Benefit Plan Disclosure [Line Items]

Net Benefit Costs

The Company provides medical benefits, principally to its eligible U.S. retirees and similar benefits to their dependents, through its other postretirement benefit plans. The net credit of such plans consisted of the following components: 

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Service cost	$	8	$	12	$	17	$	25
Interest cost	16		11		31		23
Expected return on plan assets	(16)		(21)		(32)		(43)
Amortization of unrecognized prior service credit	(12)		(14)		(25)		(29)
Net gain amortization	(11)		(11)		(21)		(21)
	$	(15)	$	(23)	$	(30)	$	(45)

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Other (Income) Expense, Net (Tables)

6 Months Ended

Jun. 30, 2023

Other Income and Expenses [Abstract]

Other (Income) Expense, Net

Other (income) expense, net, consisted of: 

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Interest income	$	(109)	$	(15)	$	(221)	$	(22)
Interest expense	277		240		519		483
Exchange losses	62		86		122		124
Loss (income) from investments in equity securities, net (1)	175		284		(274)		991
Net periodic defined benefit plan (credit) cost other than service cost	(111)		(27)		(226)		(148)
Other, net	(122)		(130)		339		(280)
	$	172	$	438	$	259	$	1,148

(1)    Includes net realized and unrealized gains and losses from investments in equity securities either owned directly or through ownership interests in investment funds. Unrealized gains and losses from investments that are directly owned are determined at the end of the reporting period, while gains and losses from ownership interests in investment funds are accounted for on a one quarter lag.

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Calculations of (Loss) Earnings Per Share

The calculations of (loss) earnings per share are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ and shares in millions except per share amounts)	2023		2022		2023		2022
Net (Loss) Income Attributable to Merck & Co., Inc.	$	(5,975)	$	3,944	$	(3,154)	$	8,254
Average common shares outstanding	2,539		2,531		2,539		2,529
Common shares issuable (1)	—		9		—		9
Average common shares outstanding assuming dilution	2,539		2,540		2,539		2,538
Basic (Loss) Earnings per Common Share Attributable to Merck & Co., Inc. Common Shareholders	$	(2.35)	$	1.56	$	(1.24)	$	3.26
(Loss) Earnings per Common Share Assuming Dilution Attributable to Merck & Co., Inc. Common Shareholders	$	(2.35)	$	1.55	$	(1.24)	$	3.25

(1)    Issuable primarily under share-based compensation plans.

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Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Changes in AOCI by Component

Changes in each component of other comprehensive income (loss) are as follows:

	Three Months Ended June 30,
($ in millions)	Derivatives			Employee Benefit Plans			Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Loss
Balance April 1, 2022, net of taxes	$	207		$	(2,711)		$	(1,865)	$	(4,369)
Other comprehensive income (loss) before reclassification adjustments, pretax	403			168			(365)		206
Tax	(85)			(35)			(22)		(142)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	318			133			(387)		64
Reclassification adjustments, pretax	(171)		(1)	144		(2)	—		(27)
Tax	36			(31)			—		5
Reclassification adjustments, net of taxes	(135)			113			—		(22)
Other comprehensive income (loss), net of taxes	183			246			(387)		42
Balance June 30, 2022, net of taxes	$	390		$	(2,465)		$	(2,252)	$	(4,327)
Balance April 1, 2023, net of taxes	$	(60)		$	(2,458)		$	(2,365)	$	(4,883)
Other comprehensive income (loss) before reclassification adjustments, pretax	194			(6)			(115)		73
Tax	(41)			1			(22)		(62)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	153			(5)			(137)		11
Reclassification adjustments, pretax	(11)		(1)	(23)		(2)	—		(34)
Tax	3			3			—		6
Reclassification adjustments, net of taxes	(8)			(20)			—		(28)
Other comprehensive income (loss), net of taxes	145			(25)			(137)		(17)
Balance June 30, 2023, net of taxes	$	85		$	(2,483)		$	(2,502)	$	(4,900)

	Six Months Ended June 30,
($ in millions)	Derivatives			Employee Benefit Plans			Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Loss
Balance January 1, 2022, net of taxes	$	144		$	(2,743)		$	(1,830)	$	(4,429)
Other comprehensive income (loss) before reclassification adjustments, pretax	551			169			(383)		337
Tax	(116)			(37)			(39)		(192)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	435			132			(422)		145
Reclassification adjustments, pretax	(239)		(1)	189		(2)	—		(50)
Tax	50			(43)			—		7
Reclassification adjustments, net of taxes	(189)			146			—		(43)
Other comprehensive income (loss), net of taxes	246			278			(422)		102
Balance June 30, 2022, net of taxes	$	390		$	(2,465)		$	(2,252)	$	(4,327)
Balance January 1, 2023, net of taxes	$	73		$	(2,408)		$	(2,433)	$	(4,768)
Other comprehensive income (loss) before reclassification adjustments, pretax	128			(53)			(36)		39
Tax	(27)			3			(42)		(66)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	101			(50)			(78)		(27)
Reclassification adjustments, pretax	(113)		(1)	(30)		(2)	9		(134)
Tax	24			5			—		29
Reclassification adjustments, net of taxes	(89)			(25)			9		(105)
Other comprehensive income (loss), net of taxes	12			(75)			(69)		(132)
Balance June 30, 2023, net of taxes	$	85		$	(2,483)		$	(2,502)	$	(4,900)

(1)    Primarily relates to foreign currency cash flow hedges that were reclassified from AOCL to Sales.

(2)    Includes net amortization of prior service cost, actuarial gains and losses, settlements and curtailments included in net periodic benefit cost (see Note 11)

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Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Sales from Products

Sales of the Company’s products were as follows:

	Three Months Ended June 30,												Six Months Ended June 30,
	2023						2022						2023						2022
($ in millions)	U.S.		Int’l		Total		U.S.		Int’l		Total		U.S.		Int’l		Total		U.S.		Int’l		Total
Pharmaceutical:
Oncology
Keytruda	$	3,863	$	2,408	$	6,271	$	3,197	$	2,055	$	5,252	$	7,348	$	4,718	$	12,065	$	5,976	$	4,085	$	10,061
Alliance revenue-Lynparza (1)	144		166		310		143		132		275		286		299		585		283		257		541
Alliance revenue-Lenvima (1)	163		79		242		128		103		231		316		158		474		284		175		459
Welireg	49		2		50		27		—		27		90		3		92		45		—		45
Alliance revenue-Reblozyl (2)	36		11		47		28		5		33		66		24		90		55		30		86
Vaccines
Gardasil/Gardasil 9	464		1,994		2,458		428		1,245		1,674		880		3,550		4,430		846		2,287		3,133
ProQuad/M-M-R II/Varivax	447		135		582		434		143		578		868		242		1,109		805		243		1,047
RotaTeq	93		37		131		98		75		173		273		155		428		273		116		389
Vaxneuvance	147		20		168		11		—		12		241		33		274		16		1		16
Pneumovax 23	23		69		92		94		59		153		63		125		188		212		114		325
Vaqta	29		13		42		16		19		35		59		23		82		45		25		71
Hospital Acute Care
Bridion	299		203		502		237		190		426		576		413		989		432		389		821
Prevymis	61		82		143		47		56		103		116		157		273		87		110		197
Dificid	68		8		76		63		3		66		130		11		141		113		6		119
Primaxin	(2)		56		53		—		64		64		2		132		133		1		122		122
Noxafil	11		45		55		16		45		60		25		91		116		25		92		118
Zerbaxa	30		24		54		22		24		46		57		47		104		40		36		76
Cardiovascular
Alliance revenue-Adempas/Verquvo (3)	70		(2)		68		88		10		98		153		14		167		159		11		170
Adempas	—		65		65		—		63		63		—		125		125		—		124		124
Virology
Lagevrio	2		201		203		—		1,177		1,177		—		595		595		1,523		2,901		4,424
Isentress/Isentress HD	56		80		136		67		80		147		108		151		259		128		177		305
Neuroscience
Belsomra	21		42		63		19		50		69		37		82		119		39		98		137
Immunology
Simponi	—		180		180		—		181		181		—		359		359		—		366		366
Remicade	—		48		48		—		53		53		—		99		99		—		114		114
Diabetes
Januvia	243		267		511		301		455		756		514		548		1,062		626		909		1,535
Janumet	82		272		354		105		371		476		138		544		683		168		762		931
Other pharmaceutical (4)	171		382		553		157		372		528		342		793		1,138		317		814		1,131
Total Pharmaceutical segment sales	6,570		6,887		13,457		5,726		7,030		12,756		12,688		13,491		26,179		12,498		14,364		26,863
Animal Health:
Livestock	165		643		807		164		662		826		338		1,318		1,656		335		1,322		1,658
Companion Animal	310		339		649		313		328		641		618		673		1,291		616		676		1,291
Total Animal Health segment sales	475		982		1,456		477		990		1,467		956		1,991		2,947		951		1,998		2,949
Total segment sales	7,045		7,869		14,913		6,203		8,020		14,223		13,644		15,482		29,126		13,449		16,362		29,812
Other (5)	(27)		149		122		35		335		370		32		364		396		128		555		682
	$	7,018	$	8,018	$	15,035	$	6,238	$	8,355	$	14,593	$	13,676	$	15,846	$	29,522	$	13,577	$	16,917	$	30,494

U.S. plus international may not equal total due to rounding.

(1)    Alliance revenue for Lynparza and Lenvima represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs (see Note 3).

(2)    Alliance revenue for Reblozyl represents royalties and, for the first six months of 2022, also includes the receipt of a regulatory approval milestone payment (see Note 3).

(3)    Alliance revenue for Adempas/Verquvo 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 (see Note 3).

(4)    Other pharmaceutical primarily reflects sales of other human health pharmaceutical products, including products within the franchises not listed separately.

(5)    Other is primarily comprised of miscellaneous corporate revenue, including revenue hedging activities which increased sales by $128 million and $277 million for the six months ended June 30, 2023 and 2022, respectively, as well as revenue from third-party manufacturing arrangements (including sales to Organon). Other for the six months ended June 30, 2023 and 2022 also includes $54 million and $146 million, respectively, related to upfront and milestone payments received by Merck for out-licensing arrangements.

Consolidated Sales by Geographic Area

Consolidated sales by geographic area where derived are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
United States	$	7,018	$	6,238	$	13,676	$	13,577
Europe, Middle East and Africa	3,348		3,582		6,651		7,942
China	1,913		1,372		3,628		2,515
Asia Pacific (other than China and Japan)	848		1,008		1,694		1,938
Japan	675		1,114		1,434		2,103
Latin America	742		642		1,403		1,249
Other	491		637		1,036		1,170
	$	15,035	$	14,593	$	29,522	$	30,494

Reconciliation of Segment Profits to Income before Taxes

A reconciliation of segment profits to (Loss) Income Before Taxes is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Segment profits:
Pharmaceutical segment	$	9,854	$	9,173	$	18,993	$	18,673
Animal Health segment	467		571		1,032		1,156
Total segment profits	10,321		9,744		20,025		19,829
Other profits	19		260		184		454
Unallocated:
Interest income	109		15		221		22
Interest expense	(277)		(240)		(519)		(483)
Amortization	(477)		(463)		(1,020)		(1,163)
Depreciation	(376)		(431)		(775)		(809)
Research and development	(13,194)		(2,652)		(17,341)		(5,097)
Restructuring costs	(151)		(142)		(218)		(194)
Charge for Zetia antitrust litigation settlements	—		—		(573)		—
Other unallocated, net	(1,309)		(1,604)		(1,669)		(3,211)
	$	(5,335)	$	4,487	$	(1,685)	$	9,348

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Acquisitions, Research Collaborations and License Agreements (Details) - USD ($) $ in Millions		1 Months Ended				3 Months Ended		6 Months Ended		14 Months Ended	20 Months Ended
	Jan. 31, 2023	Jun. 30, 2023	Feb. 28, 2023	Jan. 31, 2023	May 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Dec. 31, 2023
Business Acquisition [Line Items]
Research and development						$ 13,321	$ 2,798	$ 17,597	$ 5,374
Prometheus Biosciences, Inc.
Business Acquisition [Line Items]
Consideration transferred, asset acquisition		$ 11,000
Consideration transferred, to settle share-based equity awards		1,200
Consideration transferred, to settle equity awards, unvested		700
Net assets acquired		877
Cash recorded for asset acquisition		368
Investments recorded for asset acquisition		296
Deferred tax assets recorded for asset acquisition		218
Other net liabilities recorded for asset acquisition		$ 5
Research and development						$ 10,200		10,200
Imago Bio Sciences, Inc.
Business Acquisition [Line Items]
Consideration transferred, asset acquisition				$ 1,350
Net assets acquired	$ 219
Research and development								$ 1,200
Asset acquisition costs				60
Sichuan Kelun-Biotech Biopharmaceutical Co., Ltd. | Collaborative Arrangement, Transaction with Party to Collaborative Arrangement
Business Acquisition [Line Items]
Upfront and milestone payments made to collaborative partner			$ 175				$ 30		$ 30
Eligible future contingent development-related payments (up to)			1,000
Eligible future contingent regulatory milestone payments (up to)			2,800
Eligible future contingent sales-based milestone payments (up to)			$ 5,500
Preferred stock investment in counterparty	$ 100			$ 100
Milestone payments to be made to a collaborative partner					$ 30
Milestone payment to be made to a collaborative partner					25
Research and development payments made to a collaborative partner										$ 81
Sichuan Kelun-Biotech Biopharmaceutical Co., Ltd. | Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | Development Milestones
Business Acquisition [Line Items]
Eligible future contingent development-related payments (up to)					90
Sichuan Kelun-Biotech Biopharmaceutical Co., Ltd. | Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | First Commercial Sale Milestones
Business Acquisition [Line Items]
Eligible future contingent sales-based milestone payments (up to)					290
Sichuan Kelun-Biotech Biopharmaceutical Co., Ltd. | Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | Sales-Based Milestones
Business Acquisition [Line Items]
Eligible future contingent sales-based milestone payments (up to)					$ 780
Sichuan Kelun-Biotech Biopharmaceutical Co., Ltd. | Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | Forecast
Business Acquisition [Line Items]
Research and development payments to be made to a collaborative partner											$ 111

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Collaborative Arrangements - Narrative (Details) - USD ($) $ in Millions	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Amortization					$ 1,020	$ 1,163
Sales	$ 15,035		$ 14,593		29,522	30,494
Operating Segments
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Sales	14,913		14,223		29,126	29,812
Operating Segments | Pharmaceutical
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Sales	13,457		12,756		26,179	26,863
Lynparza
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Amortization						250
Lynparza | Other Noncurrent Assets
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Finite-lived intangible assets	1,700				1,700
Lenvima
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Amortization					72
Lenvima | Operating Segments | Pharmaceutical
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Sales	242		231		474	459
Lenvima | Other Noncurrent Assets
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Finite-lived intangible assets	756				756
Verquvo | Other Intangible Assets
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Finite-lived intangible assets	55				55
Adempas | Operating Segments | Pharmaceutical
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Sales	65		63		125	124
Adempas | Other Intangible Assets
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Finite-lived intangible assets	586				586
Alliance Revenue - Reblozyl | Operating Segments | Pharmaceutical
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Sales	47		$ 33		90	86
AstraZeneca | Sales-Based Milestones | Lynparza
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Probable contingent payments				$ 600
Liabilities				$ 600
AstraZeneca | Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | Lynparza
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Sales-based milestone payments						400
Potential future sales-based milestone payments	2,100				2,100
Capitalized milestone payment	245	$ 105				175	$ 250
Potential future regulatory milestone payments	850				850
Eisai | Sales-Based Milestones | Lenvima
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Probable contingent payments		125
Liabilities		$ 125
Eisai | Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | Lenvima
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Sales-based milestone payments						600
Potential future sales-based milestone payments	$ 2,400				$ 2,400
Capitalized milestone payment						25	$ 50
Bayer AG | Collaborative Arrangement, Transaction with Party to Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Sales-based milestone payments						400
Bristol Myers Squibb Company | Licensing Agreements
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Royalty rate, deduction					0.50
Bristol Myers Squibb Company | Licensing Agreements | Sales-Based Milestones
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Contingent proceeds collaborative arrangement					$ 80
Bristol Myers Squibb Company | Licensing Agreements | Regulatory Milestones
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Proceeds from collaborators						$ 20
Bristol Myers Squibb Company | Licensing Agreements | Minimum
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Royalty rate					20.00%
Bristol Myers Squibb Company | Licensing Agreements | Maximum
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Royalty rate					24.00%

XML

Collaborative Arrangements - Financial Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Sales	$ 15,035	$ 14,593	$ 29,522	$ 30,494
Cost of sales	4,024	4,216	7,951	9,596
Selling, general and administrative	2,702	2,512	5,182	4,834
Research and development	13,321	2,798	17,597	5,374
Payables included in Accrued and other liabilities	23,394		23,394		$ 24,239
Amortization			1,020	1,163
Alliance revenue - Lenvima
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Amortization			72
Other current assets | AstraZeneca | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Receivables included in Other current assets	332		332		303
Other current assets | Eisai | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Receivables included in Other current assets	242		242		214
Other current assets | Bayer AG | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Receivables included in Other current assets	144		144		143
Other current assets | Ridgeback Biotherapeutics LP | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Receivables included in Other current assets	51		51		0
Accounts Payable and Accrued Liabilities | AstraZeneca | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Payables included in Accrued and other liabilities	260		260		123
Accounts Payable and Accrued Liabilities | Bayer AG | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Payables included in Accrued and other liabilities	82		82		80
Accounts Payable and Accrued Liabilities | Ridgeback Biotherapeutics LP | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Payables included in Accrued and other liabilities	30		30		348
Other Noncurrent Liabilities | AstraZeneca | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Payables included in Other Noncurrent Liabilities	600		600		$ 600
Revenue | AstraZeneca | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Alliance revenue - profit sharing	335	299	633	574
Revenue | AstraZeneca | Collaborative Arrangement | Alliance revenue - Lynparza
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Alliance revenue - profit sharing	310	275	585	541
Revenue | AstraZeneca | Collaborative Arrangement | Alliance revenue - Koselugo
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Alliance revenue - profit sharing	25	24	48	33
Revenue | Eisai | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Alliance revenue - profit sharing	242	231	474	459
Revenue | Bayer AG | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Alliance revenue - profit sharing	68	98	167	170
Sales	142	167	308	303
Revenue | Bayer AG | Collaborative Arrangement | Adempas
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Net sales by Merck	65	63	125	124
Revenue | Bayer AG | Collaborative Arrangement | Verquvo
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Net sales by Merck	9	6	16	9
Revenue | Ridgeback Biotherapeutics LP | Collaborative Arrangement | Lagevrio
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Sales	203	1,177	595	4,424
Cost of sales | AstraZeneca | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Cost of sales	78	62	148	361
Amortization of intangible assets				250
Cost of sales | Eisai | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Cost of sales	57	53	183	106
Cost of sales | Bayer AG | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Cost of sales	56	54	113	103
Cost of sales | Ridgeback Biotherapeutics LP | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Cost of sales	193	615	414	2,341
Selling, general and administrative | AstraZeneca | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Selling, general and administrative	51	46	98	90
Selling, general and administrative | Eisai | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Selling, general and administrative	48	42	99	73
Selling, general and administrative | Bayer AG | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Selling, general and administrative	34	42	67	65
Selling, general and administrative | Ridgeback Biotherapeutics LP | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Selling, general and administrative	24	34	51	69
Research and development | AstraZeneca | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Research and development	22	25	43	51
Research and development | Eisai | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Research and development	17	47	56	104
Research and development | Bayer AG | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Research and development	25	17	50	34
Research and development | Ridgeback Biotherapeutics LP | Collaborative Arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Research and development	$ 10	$ 30	$ 26	$ 56

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Spin-Off of Organon & Co. (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
	Jun. 02, 2021	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Sales		$ 15,035	$ 14,593	$ 29,522	$ 30,494
Cost of sales		4,024	4,216	7,951	9,596
Other current assets		6,639		6,639		$ 7,169
Accrued and other current liabilities		13,747		13,747		14,159
Related Party
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Other current assets		539		539		511
Accrued and other current liabilities		351		351		$ 345
Manufacturing and Supply Agreements | Related Party
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Sales		96	95	191	194
Cost of sales		$ 101	$ 103	$ 208	$ 208
Minimum | Transition Services Agreement | Related Party
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Period of continuing involvement after disposal	25 months
Minimum | Manufacturing and Supply Agreements | Related Party
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Period of continuing involvement after disposal	4 years
Maximum | Transition Services Agreement | Related Party
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Period of continuing involvement after disposal	35 months
Maximum | Manufacturing and Supply Agreements | Related Party
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Period of continuing involvement after disposal	10 years

XML

Restructuring - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2023
Restructuring Cost and Reserve [Line Items]
Expected restructuring and related cost	$ 3,900		$ 3,900
Estimate of cumulative pre tax costs that will result in cash outlays			70.00%
Estimate of cumulative pre tax costs that will be noncash			30.00%
Total pretax restructuring costs	236	$ 258	$ 333	$ 384
Cumulative costs since program inception	$ 3,700		$ 3,700
Forecast
Restructuring Cost and Reserve [Line Items]
Expected restructuring and related cost					$ 550

XML

Restructuring - Charges Activities by Type of Cost (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	$ 236	$ 258	$ 333	$ 384
Separation Costs
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	110	106	151	132
Accelerated Depreciation
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	22	47	43	76
Other
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	104	105	139	176
Cost of sales
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	32	67	61	113
Cost of sales | Separation Costs
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	0	0	0	0
Cost of sales | Accelerated Depreciation
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	22	17	43	35
Cost of sales | Other
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	10	50	18	78
Selling, general and administrative
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	52	27	53	48
Selling, general and administrative | Separation Costs
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	0	0	0	0
Selling, general and administrative | Accelerated Depreciation
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	0	8	0	12
Selling, general and administrative | Other
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	52	19	53	36
Research and development
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	1	22	1	29
Research and development | Separation Costs
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	0	0	0	0
Research and development | Accelerated Depreciation
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	0	22	0	29
Research and development | Other
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	1	0	1	0
Restructuring costs
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	151	142	218	194
Restructuring costs | Separation Costs
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	110	106	151	132
Restructuring costs | Accelerated Depreciation
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	0	0	0	0
Restructuring costs | Other
Restructuring Cost and Reserve [Line Items]
Total pretax restructuring costs	$ 41	$ 36	$ 67	$ 62

XML

Restructuring - Activities by Program (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance			$ 513
Expenses	$ 236	$ 258	333	$ 384
(Payments) receipts, net			(158)
Non-cash activity			(111)
Restructuring reserve, ending balance	577		577
Separation Costs
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance			479
Expenses	110	106	151	132
(Payments) receipts, net			(84)
Non-cash activity			0
Restructuring reserve, ending balance	546		546
Accelerated Depreciation
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance			0
Expenses	22	47	43	76
(Payments) receipts, net			0
Non-cash activity			(43)
Restructuring reserve, ending balance	0		0
Other
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance			34
Expenses	104	$ 105	139	$ 176
(Payments) receipts, net			(74)
Non-cash activity			(68)
Restructuring reserve, ending balance	$ 31		$ 31

XML

Financial Instruments - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Derivative [Line Items]
Pretax net unrealized gains on derivatives maturing within next 12 months estimated to be reclassified from AOCI to sales			$ 83
Equity investments without readily determinable fair values	$ 949	$ 671	949	$ 671
Unrealized gains recognized on investments in equity securities without readily determinable fair value			3	20
Unrealized losses recognized on investments in equity securities without readily determinable fair values			23	1
Cumulative unrealized gains on investments	287		287
Cumulative unrealized losses on investments	42		42
Equity securities, noncurrent	622	805	622	805
(Income) loss from investments in equity securities, net	175	284	(274)	991
Fair value of loans payable and long-term debt, including current portion	34,000		34,000		$ 26,700
Debt, carrying amount	36,900		36,900		30,700
Factored accounts receivable			2,900		2,500
Restricted cash	44		44		67
Cash collateral received from counterparties	102		102		66
Cash collateral advanced to counterparties					19
Equity Funds
Derivative [Line Items]
(Income) loss from investments in equity securities, net	105	$ 302	(27)	$ 811
Level 2
Derivative [Line Items]
Cash equivalents	$ 4,900		$ 4,900		$ 11,300
Maximum | Derivatives Designated as Hedging Instruments
Derivative [Line Items]
Maximum average period of maturities of contracts in years (less than)			2 years
Maximum | Derivatives Not Designated as Hedging Instruments
Derivative [Line Items]
Maximum average period of maturities of contracts in years (less than)			6 months

XML

Financial Instruments - Effect of Net Investment Hedges (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Pretax (Gain) Loss Recognized in Other Comprehensive Income	$ 0	$ (31)	$ 1	$ (46)
Foreign exchange contracts | Other (income) expense, net
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Pretax (Gain) Loss Recognized in Other (income) expense, net for Amounts Excluded from Effectiveness Testing	0	(1)	1	(2)
Euro-denominated notes
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Pretax (Gain) Loss Recognized in Other Comprehensive Income	21	(128)	73	(181)
Euro-denominated notes | Other (income) expense, net
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Pretax (Gain) Loss Recognized in Other (income) expense, net for Amounts Excluded from Effectiveness Testing	$ 0	$ 0	$ 0	$ 0

XML

Financial Instruments - Fair Value of Derivatives Segregated between those Derivatives that are Designated as Hedging Instruments and those that are Not Designated as Hedging Instruments (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Derivatives, Fair Value [Line Items]
Fair Value of Derivative, Asset	$ 465	$ 433
Fair Value of Derivative, Liability	244	409
U.S Dollar Notional Amount	29,249	28,681
Derivatives Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Fair Value of Derivative, Asset	243	247
Fair Value of Derivative, Liability	63	102
U.S Dollar Notional Amount	10,299	9,215
Derivatives Not Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Fair Value of Derivative, Asset	222	186
Fair Value of Derivative, Liability	181	307
U.S Dollar Notional Amount	18,950	19,466
Foreign exchange contracts | Derivatives Designated as Hedging Instruments | Other Assets
Derivatives, Fair Value [Line Items]
Fair Value of Derivative, Asset	$ 43	$ 27
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Other Assets	Other Assets
U.S Dollar Notional Amount	$ 1,750	$ 1,609
Foreign exchange contracts | Derivatives Designated as Hedging Instruments | Other Noncurrent Liabilities
Derivatives, Fair Value [Line Items]
Fair Value of Derivative, Liability	$ 1	$ 1
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Other Noncurrent Liabilities	Other Noncurrent Liabilities
U.S Dollar Notional Amount	$ 328	$ 91
Foreign exchange contracts | Derivatives Designated as Hedging Instruments | Other current assets
Derivatives, Fair Value [Line Items]
Fair Value of Derivative, Asset	$ 200	$ 220
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Other current assets	Other current assets
U.S Dollar Notional Amount	$ 5,976	$ 4,824
Foreign exchange contracts | Derivatives Designated as Hedging Instruments | Accrued and other current liabilities
Derivatives, Fair Value [Line Items]
Fair Value of Derivative, Liability	$ 62	$ 101
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Accrued and other current liabilities	Accrued and other current liabilities
U.S Dollar Notional Amount	$ 2,245	$ 2,691
Foreign exchange contracts | Derivatives Not Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Fair Value of Derivative, Asset	222	186
Fair Value of Derivative, Liability	181	307
Foreign exchange contracts | Derivatives Not Designated as Hedging Instruments | Other current assets
Derivatives, Fair Value [Line Items]
U.S Dollar Notional Amount	8,838	8,540
Foreign exchange contracts | Derivatives Not Designated as Hedging Instruments | Accrued and other current liabilities
Derivatives, Fair Value [Line Items]
U.S Dollar Notional Amount	$ 10,112	$ 10,926

XML

Financial Instruments - Information on Derivative Positions Subject to Master Netting Arrangements as if they were Presented on a Net Basis (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Gross amounts recognized in the consolidated balance sheet, asset	$ 465	$ 433
Gross amount subject to offset in master netting arrangements not offset in the condensed balance sheet, asset	(180)	(220)
Cash collateral received, asset	(102)	(66)
Net amounts, asset	183	147
Gross amounts recognized in the consolidated balance sheet, liability	244	409
Gross amount subject to offset in master netting arrangements not offset in the condensed balance sheet, liability	(180)	(220)
Cash collateral received, liability	0	(19)
Net amounts, liability	$ 64	$ 170

XML

Financial Instruments - Location and Amount of Pretax (Gains) Losses of Derivatives (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Derivative Instruments, Gain (Loss) [Line Items]
Sales	$ 15,035	$ 14,593	$ 29,522	$ 30,494
Other (income) expense, net	172	438	259	1,148
Other comprehensive income (loss)	(17)	42	(132)	102
Interest rate swap contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of gain (loss) recognized in OCI on derivatives	13	0	13	(1)
Amount of gain recognized in Other (income) expense, net on derivatives	0	0	(1)	(1)
Interest rate swap contracts | Other (income) expense, net
Derivative Instruments, Gain (Loss) [Line Items]
Hedged items	0	(4)	0	(14)
Derivatives designated as hedging instruments	0	1	0	4
Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of gain (loss) recognized in OCI on derivatives	194	403	128	551
Increase in Sales as a result of AOCL reclassifications	(24)	(172)	(125)	(239)
Foreign exchange contracts | Reclassification out of Accumulated Other Comprehensive Income | Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest
Derivative Instruments, Gain (Loss) [Line Items]
Sales	$ 24	$ 172	$ 125	$ 239

XML

Financial Instruments - Income Statement Effects on Derivatives Not Designated as Hedging Instruments (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Currency Swap | Other (income) expense, net
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Derivative Pretax (Gain) Loss Recognized in Income	$ (41)	$ (64)	$ (28)	$ (36)
Foreign Exchange Future | Sales
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Derivative Pretax (Gain) Loss Recognized in Income	$ (5)	$ (36)	$ (3)	$ (38)

XML

Financial Instruments - Information on Available-for-sale Investments (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Debt Securities, Available-for-sale [Line Items]
Debt securities, amortized cost	$ 821		$ 821		$ 569
Debt securities, unrealized gains	0		0		0
Debt securities, unrealized losses	0		0		0
Debt securities, fair value	821		821		569
Publicly traded equity securities, fair value	1,520		1,520		1,284
Total debt and publicly traded equity securities, fair value	2,341		2,341		1,853
Unrealized net (gains) losses	71	$ (25)	(267)	$ 194
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Debt securities, amortized cost	561		561		498
Debt securities, unrealized gains	0		0		0
Debt securities, unrealized losses	0		0		0
Debt securities, fair value	561		561		498
U.S. government and agency securities
Debt Securities, Available-for-sale [Line Items]
Debt securities, amortized cost	256		256		68
Debt securities, unrealized gains	0		0		0
Debt securities, unrealized losses	0		0		0
Debt securities, fair value	256		256		68
Corporate notes and bonds
Debt Securities, Available-for-sale [Line Items]
Debt securities, amortized cost	4		4		3
Debt securities, unrealized gains	0		0		0
Debt securities, unrealized losses	0		0		0
Debt securities, fair value	$ 4		$ 4		$ 3

XML

Financial Instruments - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
Assets
Investments	$ 821	$ 569
Publicly traded equity securities	1,520	1,284
Derivative assets	465	433
Liabilities
Contingent consideration	349	456	$ 542	$ 777
Derivative liabilities	244	409
Commercial paper
Assets
Investments	561	498
U.S. government and agency securities
Assets
Investments	256	68
Corporate notes and bonds
Assets
Investments	4	3
Fair Value, Measurements, Recurring
Assets
Investments	1,932	1,513
Other assets	409	340
Derivative assets	465	433
Total assets	2,806	2,286
Liabilities
Contingent consideration	349	456
Derivative liabilities	244	409
Total liabilities	593	865
Fair Value, Measurements, Recurring | Foreign exchange contracts
Assets
Derivative assets	316	218
Liabilities
Derivative liabilities	235	402
Fair Value, Measurements, Recurring | Currency options
Assets
Derivative assets	149	215
Liabilities
Derivative liabilities	9	7
Fair Value, Measurements, Recurring | Level 1
Assets
Investments	1,184	1,015
Other assets	409	340
Derivative assets	0	0
Total assets	1,593	1,355
Liabilities
Contingent consideration	0	0
Derivative liabilities	0	0
Total liabilities	0	0
Fair Value, Measurements, Recurring | Level 1 | Foreign exchange contracts
Assets
Derivative assets	0	0
Liabilities
Derivative liabilities	0	0
Fair Value, Measurements, Recurring | Level 1 | Currency options
Assets
Derivative assets	0	0
Liabilities
Derivative liabilities	0	0
Fair Value, Measurements, Recurring | Level 2
Assets
Investments	748	498
Other assets	0	0
Derivative assets	465	433
Total assets	1,213	931
Liabilities
Contingent consideration	0	0
Derivative liabilities	244	409
Total liabilities	244	409
Fair Value, Measurements, Recurring | Level 2 | Foreign exchange contracts
Assets
Derivative assets	316	218
Liabilities
Derivative liabilities	235	402
Fair Value, Measurements, Recurring | Level 2 | Currency options
Assets
Derivative assets	149	215
Liabilities
Derivative liabilities	9	7
Fair Value, Measurements, Recurring | Level 3
Assets
Investments	0	0
Other assets	0	0
Derivative assets	0	0
Total assets	0	0
Liabilities
Contingent consideration	349	456
Derivative liabilities	0	0
Total liabilities	349	456
Fair Value, Measurements, Recurring | Level 3 | Foreign exchange contracts
Assets
Derivative assets	0	0
Liabilities
Derivative liabilities	0	0
Fair Value, Measurements, Recurring | Level 3 | Currency options
Assets
Derivative assets	0	0
Liabilities
Derivative liabilities	0	0
Fair Value, Measurements, Recurring | Commercial paper
Assets
Investments	561	498
Fair Value, Measurements, Recurring | Commercial paper | Level 1
Assets
Investments	0	0
Fair Value, Measurements, Recurring | Commercial paper | Level 2
Assets
Investments	561	498
Fair Value, Measurements, Recurring | Commercial paper | Level 3
Assets
Investments	0	0
Fair Value, Measurements, Recurring | U.S. government and agency securities
Assets
Investments	187	0
Other assets	69	68
Fair Value, Measurements, Recurring | U.S. government and agency securities | Level 1
Assets
Investments	0	0
Other assets	69	68
Fair Value, Measurements, Recurring | U.S. government and agency securities | Level 2
Assets
Investments	187	0
Other assets	0	0
Fair Value, Measurements, Recurring | U.S. government and agency securities | Level 3
Assets
Investments	0	0
Other assets	0	0
Fair Value, Measurements, Recurring | Corporate notes and bonds
Assets
Other assets	4	3
Fair Value, Measurements, Recurring | Corporate notes and bonds | Level 1
Assets
Other assets	4	3
Fair Value, Measurements, Recurring | Corporate notes and bonds | Level 2
Assets
Other assets	0	0
Fair Value, Measurements, Recurring | Corporate notes and bonds | Level 3
Assets
Other assets	0	0
Fair Value, Measurements, Recurring | Publicly traded equity securities
Assets
Publicly traded equity securities	1,184	1,015
Other assets	336	269
Fair Value, Measurements, Recurring | Publicly traded equity securities | Level 1
Assets
Publicly traded equity securities	1,184	1,015
Other assets	336	269
Fair Value, Measurements, Recurring | Publicly traded equity securities | Level 2
Assets
Publicly traded equity securities	0	0
Other assets	0	0
Fair Value, Measurements, Recurring | Publicly traded equity securities | Level 3
Assets
Publicly traded equity securities	0	0
Other assets	$ 0	$ 0

XML

Financial Instruments - Information About Changes in Liabilities for Contingent Consideration (Details) $ in Millions	6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, beginning balance	$ 456	$ 777
Changes in estimated fair value	10	(114)
Payments	(117)	(119)
Other	0	(2)
Fair value, ending balance	349	542
Contingent consideration	349	$ 542
Current liability	130
Sanofi Pasteur
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, ending balance	262
Contingent consideration	$ 262
Contingent consideration, measurement input, discount rate	0.115

XML

Inventories - Schedule of Inventories (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Finished goods	$ 1,841	$ 1,841
Raw materials and work in process	7,453	7,063
Supplies	269	238
Total	9,563	9,142
Decrease to LIFO cost	(413)	(293)
Total current and noncurrent inventories	9,150	8,849
Recognized as:
Inventories	5,930	5,911
Other Assets	$ 3,220	$ 2,938

XML

Inventories - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Inventory [Line Items]
Inventories classified in Other assets	$ 3,220	$ 2,938
Inventories Not Expected to be Sold Within One Year
Inventory [Line Items]
Inventories classified in Other assets	2,600	2,400
Inventories Produced in Preparation for Product Launches
Inventory [Line Items]
Inventories classified in Other assets	$ 663	$ 516

XML

Long-Term Debt (Details) - Senior Notes	1 Months Ended
	May 31, 2023 USD ($)
Debt Instrument [Line Items]
Face amount of debt	$ 6,000,000,000
Proceeds from issuance of debt	5,900,000,000
4.05% Notes due 2028
Debt Instrument [Line Items]
Face amount of debt	$ 500,000,000
Stated interest rate	4.05%
4.30% notes due 2030
Debt Instrument [Line Items]
Face amount of debt	$ 750,000,000
Stated interest rate	4.30%
4.50% Notes Due 2033
Debt Instrument [Line Items]
Face amount of debt	$ 1,500,000,000
Stated interest rate	4.50%
4.90% Notes Due 2044
Debt Instrument [Line Items]
Face amount of debt	$ 750,000,000
Stated interest rate	4.90%
5.00% Notes Due 2053
Debt Instrument [Line Items]
Face amount of debt	$ 1,500,000,000
Stated interest rate	5.00%
5.15% Notes Due 2063
Debt Instrument [Line Items]
Face amount of debt	$ 1,000,000,000
Stated interest rate	5.15%

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Contingencies (Details) $ in Millions			6 Months Ended
	Apr. 13, 2023 patent	Dec. 19, 2022	Jun. 30, 2023 USD ($) company case Plaintiff	Jul. 27, 2023 motion_for_summary_judgment	Dec. 31, 2022 USD ($)
Commercial and Other Litigation
Loss Contingencies [Line Items]
Loss contingency, pending claims | case			2
Loss contingency, number of plaintiffs | Plaintiff			2
Commercial and Other Litigation | Subsequent Event
Loss Contingencies [Line Items]
Loss contingency, number of motion for summary judgments | motion_for_summary_judgment				2
Legal Defense Costs
Loss Contingencies [Line Items]
Legal defense costs reserve | $			$ 225.0		$ 230.0
Zetia antitrust litigation
Loss Contingencies [Line Items]
Loss related to litigation settlement | $			$ 572.5
Complaint Against The Johns Hopkins University | Pending Litigation
Loss Contingencies [Line Items]
Loss contingency, number of patents allegedly infringed | patent	5
Gardasil/Gardasil 9 | U.S.
Loss Contingencies [Line Items]
Loss contingency, pending claims | case			95
Gardasil/Gardasil 9 | Non-US
Loss Contingencies [Line Items]
Loss contingency, pending claims | case			15
Bridion | Patents
Loss Contingencies [Line Items]
Loss contingency, claims settled | company			5
Bridion | Patents | Pending Litigation
Loss Contingencies [Line Items]
Loss contingency, pending claims | company			2
Loss contingency, trial period		1 day
Januvia and Janumet | Patents
Loss Contingencies [Line Items]
Loss contingency, claims settled | company			25

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Equity (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock, beginning balance (in shares)			3,577,103,522
Treasury stock, beginning balance (in shares)			1,039,269,638
Equity, beginning balance	$ 46,905	$ 40,953	$ 46,058	$ 38,257
Net (loss) income attributable to Merck & Co., Inc.	(5,975)	3,944	(3,154)	8,254
Other comprehensive income (loss), net of taxes	(17)	42	(132)	102
Cash dividends declared on common stock	(1,866)	(1,759)	(3,729)	(3,513)
Treasury stock shares purchased	(338)		(487)
Share-based compensation plans and other	55	133	204	216
Net income attributable to noncontrolling interests	3	5	7	2
Distributions attributable to noncontrolling interests	$ (25)		$ (25)
Common stock, ending balance (in shares)	3,577,103,522		3,577,103,522
Treasury stock, ending balance (in shares)	1,037,678,033		1,037,678,033
Equity, ending balance	$ 38,742	$ 43,318	$ 38,742	$ 43,318
Cash dividends declared on common stock (in dollars per share)	$ 0.73	$ 0.69	$ 1.46	$ 1.38
Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock, beginning balance (in shares)	3,577,000,000	3,577,000,000	3,577,000,000	3,577,000,000
Equity, beginning balance	$ 1,788	$ 1,788	$ 1,788	$ 1,788
Common stock, ending balance (in shares)	3,577,000,000	3,577,000,000	3,577,000,000	3,577,000,000
Equity, ending balance	$ 1,788	$ 1,788	$ 1,788	$ 1,788
Other Paid-In Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity, beginning balance	44,467	44,275	44,379	44,238
Share-based compensation plans and other	(248)	(160)	(160)	(123)
Equity, ending balance	44,219	44,115	44,219	44,115
Retained Earnings
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity, beginning balance	62,039	56,252	61,081	53,696
Net (loss) income attributable to Merck & Co., Inc.	(5,975)	3,944	(3,154)	8,254
Cash dividends declared on common stock	(1,866)	(1,759)	(3,729)	(3,513)
Equity, ending balance	54,198	58,437	54,198	58,437
Accumulated Other Comprehensive Loss
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity, beginning balance	(4,883)	(4,369)	(4,768)	(4,429)
Other comprehensive income (loss), net of taxes	(17)	42	(132)	102
Equity, ending balance	$ (4,900)	$ (4,327)	$ (4,900)	$ (4,327)
Treasury Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock, beginning balance (in shares)	1,040,000,000	1,049,000,000	1,039,000,000	1,049,000,000
Equity, beginning balance	$ (56,577)	$ (57,063)	$ (56,489)	$ (57,109)
Treasury stock shares purchased (in shares)	3,000,000		4,000,000
Treasury stock shares purchased	$ (338)		$ (487)
Share-based compensation plans and other (in shares)	(5,000,000)	(5,000,000)	(5,000,000)	(5,000,000)
Share-based compensation plans and other	$ 303	$ 293	$ 364	$ 339
Treasury stock, ending balance (in shares)	1,038,000,000	1,044,000,000	1,038,000,000	1,044,000,000
Equity, ending balance	$ (56,612)	$ (56,770)	$ (56,612)	$ (56,770)
Non- controlling Interests
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity, beginning balance	71	70	67	73
Net income attributable to noncontrolling interests	3	5	7	2
Distributions attributable to noncontrolling interests	(25)		(25)
Equity, ending balance	$ 49	$ 75	$ 49	$ 75

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Pension and Other Postretirement Benefit Plans - Net Benefit Costs (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Other Postretirement Benefit Plans
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 8	$ 12	$ 17	$ 25
Interest cost	16	11	31	23
Expected return on plan assets	(16)	(21)	(32)	(43)
Amortization of unrecognized prior service cost (credit)	(12)	(14)	(25)	(29)
Net (gain) loss amortization	(11)	(11)	(21)	(21)
Net periodic benefit cost	(15)	(23)	(30)	(45)
U.S. | Pension Plans
Defined Benefit Plan Disclosure [Line Items]
Service cost	76	99	152	198
Interest cost	133	103	266	206
Expected return on plan assets	(185)	(197)	(372)	(393)
Amortization of unrecognized prior service cost (credit)	0	(8)	(1)	(16)
Net (gain) loss amortization	0	56	0	112
Termination benefits	1	1	1	1
Curtailments	2	4	5	8
Settlements	5	101	26	101
Net periodic benefit cost	32	159	77	217
International | Pension Plans
Defined Benefit Plan Disclosure [Line Items]
Service cost	50	72	99	147
Interest cost	75	37	149	75
Expected return on plan assets	(130)	(98)	(257)	(199)
Amortization of unrecognized prior service cost (credit)	16	(3)	12	(7)
Net (gain) loss amortization	(1)	25	(2)	50
Termination benefits	0	0	0	0
Curtailments	0	0	0	0
Settlements	0	0	0	0
Net periodic benefit cost	$ 10	$ 33	$ 1	$ 66

XML

Pension and Other Postretirement Benefit Plans - Narrative (Details) $ in Millions	6 Months Ended
	Jun. 30, 2023 USD ($)
Retirement Benefits [Abstract]
Increase to pension liabilities due to remeasurement	$ 47

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Other (Income) Expense, Net - Schedule of Other (Income) Expense, Net (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Other Income and Expenses [Abstract]
Interest income	$ (109)	$ (15)	$ (221)	$ (22)
Interest expense	277	240	519	483
Exchange losses	62	86	122	124
Loss (income) from investments in equity securities, net	175	284	(274)	991
Net periodic defined benefit plan (credit) cost other than service cost	(111)	(27)	(226)	(148)
Other, net	(122)	(130)	339	(280)
Other (income) expense, net	$ 172	$ 438	$ 259	$ 1,148

XML

Other (Income) Expense, Net - Narrative (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Loss Contingencies [Line Items]
Interest paid	$ 449.0	$ 449.0
Zetia antitrust litigation
Loss Contingencies [Line Items]
Loss related to litigation settlement	$ 572.5

XML

Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Income tax provision	$ 637,000,000	$ 538,000,000	$ 1,462,000,000	$ 1,092,000,000
Effective income tax rate	(11.90%)	12.00%	(86.80%)	11.70%
Tax benefit resulting from acquisition charge	$ 0		$ 0
Effective income tax rate, unfavorable impact	25.10%		101.90%

XML

Earnings Per Share - Calculations of (Loss) Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share [Abstract]
Net (loss) income attributable to Merck & Co., Inc., basic	$ (5,975)	$ 3,944	$ (3,154)	$ 8,254
Net (loss) income attributable to Merck & Co., Inc., diluted	$ (5,975)	$ 3,944	$ (3,154)	$ 8,254
Average common shares outstanding (in shares)	2,539	2,531	2,539	2,529
Common shares issuable (in shares)	0	9	0	9
Average common shares outstanding assuming dilution (in shares)	2,539	2,540	2,539	2,538
Basic (Loss) Earnings per Common Share Attributable to Merck & Co., Inc. Common Shareholders (in dollars per share)	$ (2.35)	$ 1.56	$ (1.24)	$ 3.26
(Loss) Earnings per Common Share Attributable to Merck & Co., Inc. Common Shareholders (in dollars per share)	$ (2.35)	$ 1.55	$ (1.24)	$ 3.25

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Earnings Per Share - Narrative (Details) - shares shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share [Abstract]
Antidilutive shares (in shares)	0	2	0	6

XML

Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Equity, beginning balance	$ 46,905	$ 40,953	$ 46,058	$ 38,257
Other comprehensive income (loss) before reclassification adjustments, pretax	73	206	39	337
Tax	(62)	(142)	(66)	(192)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	11	64	(27)	145
Reclassification adjustments, pretax	(34)	(27)	(134)	(50)
Tax	6	5	29	7
Reclassification adjustments, net of taxes	(28)	(22)	(105)	(43)
Other comprehensive income (loss), net of taxes	(17)	42	(132)	102
Equity, ending balance	38,742	43,318	38,742	43,318
Derivatives
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Equity, beginning balance	(60)	207	73	144
Other comprehensive income (loss) before reclassification adjustments, pretax	194	403	128	551
Tax	(41)	(85)	(27)	(116)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	153	318	101	435
Reclassification adjustments, pretax	(11)	(171)	(113)	(239)
Tax	3	36	24	50
Reclassification adjustments, net of taxes	(8)	(135)	(89)	(189)
Other comprehensive income (loss), net of taxes	145	183	12	246
Equity, ending balance	85	390	85	390
Employee Benefit Plans
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Equity, beginning balance	(2,458)	(2,711)	(2,408)	(2,743)
Other comprehensive income (loss) before reclassification adjustments, pretax	(6)	168	(53)	169
Tax	1	(35)	3	(37)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	(5)	133	(50)	132
Reclassification adjustments, pretax	(23)	144	(30)	189
Tax	3	(31)	5	(43)
Reclassification adjustments, net of taxes	(20)	113	(25)	146
Other comprehensive income (loss), net of taxes	(25)	246	(75)	278
Equity, ending balance	(2,483)	(2,465)	(2,483)	(2,465)
Foreign Currency Translation Adjustment
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Equity, beginning balance	(2,365)	(1,865)	(2,433)	(1,830)
Other comprehensive income (loss) before reclassification adjustments, pretax	(115)	(365)	(36)	(383)
Tax	(22)	(22)	(42)	(39)
Other comprehensive income (loss) before reclassification adjustments, net of taxes	(137)	(387)	(78)	(422)
Reclassification adjustments, pretax	0	0	9	0
Tax	0	0	0	0
Reclassification adjustments, net of taxes	0	0	9	0
Other comprehensive income (loss), net of taxes	(137)	(387)	(69)	(422)
Equity, ending balance	(2,502)	(2,252)	(2,502)	(2,252)
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Equity, beginning balance	(4,883)	(4,369)	(4,768)	(4,429)
Equity, ending balance	$ (4,900)	$ (4,327)	$ (4,900)	$ (4,327)

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Segment Reporting - Narrative (Details) $ in Billions	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) segment	Jun. 30, 2022 USD ($)
Segment Reporting [Abstract]
Number of operating segments | segment			2
Sales discounts | $	$ 3.2	$ 3.0	$ 6.3	$ 5.9

XML

Segment Reporting - Sales from Products (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Segment Reporting Information [Line Items]
Sales	$ 15,035	$ 14,593	$ 29,522	$ 30,494
Increase in hedge revenue			128	277
Revenue related to the sale of the marketing rights			54	146
U.S.
Segment Reporting Information [Line Items]
Sales	7,018	6,238	13,676	13,577
Int’l
Segment Reporting Information [Line Items]
Sales	8,018	8,355	15,846	16,917
Operating Segments
Segment Reporting Information [Line Items]
Sales	14,913	14,223	29,126	29,812
Operating Segments | U.S.
Segment Reporting Information [Line Items]
Sales	7,045	6,203	13,644	13,449
Operating Segments | Int’l
Segment Reporting Information [Line Items]
Sales	7,869	8,020	15,482	16,362
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Sales	122	370	396	682
Corporate, Non-Segment | U.S.
Segment Reporting Information [Line Items]
Sales	(27)	35	32	128
Corporate, Non-Segment | Int’l
Segment Reporting Information [Line Items]
Sales	149	335	364	555
Pharmaceutical | Operating Segments
Segment Reporting Information [Line Items]
Sales	13,457	12,756	26,179	26,863
Pharmaceutical | Operating Segments | U.S.
Segment Reporting Information [Line Items]
Sales	6,570	5,726	12,688	12,498
Pharmaceutical | Operating Segments | Int’l
Segment Reporting Information [Line Items]
Sales	6,887	7,030	13,491	14,364
Pharmaceutical | Operating Segments | Keytruda
Segment Reporting Information [Line Items]
Sales	6,271	5,252	12,065	10,061
Pharmaceutical | Operating Segments | Keytruda | U.S.
Segment Reporting Information [Line Items]
Sales	3,863	3,197	7,348	5,976
Pharmaceutical | Operating Segments | Keytruda | Int’l
Segment Reporting Information [Line Items]
Sales	2,408	2,055	4,718	4,085
Pharmaceutical | Operating Segments | Alliance revenue - Lynparza
Segment Reporting Information [Line Items]
Sales	310	275	585	541
Pharmaceutical | Operating Segments | Alliance revenue - Lynparza | U.S.
Segment Reporting Information [Line Items]
Sales	144	143	286	283
Pharmaceutical | Operating Segments | Alliance revenue - Lynparza | Int’l
Segment Reporting Information [Line Items]
Sales	166	132	299	257
Pharmaceutical | Operating Segments | Alliance revenue - Lenvima
Segment Reporting Information [Line Items]
Sales	242	231	474	459
Pharmaceutical | Operating Segments | Alliance revenue - Lenvima | U.S.
Segment Reporting Information [Line Items]
Sales	163	128	316	284
Pharmaceutical | Operating Segments | Alliance revenue - Lenvima | Int’l
Segment Reporting Information [Line Items]
Sales	79	103	158	175
Pharmaceutical | Operating Segments | Welireg
Segment Reporting Information [Line Items]
Sales	50	27	92	45
Pharmaceutical | Operating Segments | Welireg | U.S.
Segment Reporting Information [Line Items]
Sales	49	27	90	45
Pharmaceutical | Operating Segments | Welireg | Int’l
Segment Reporting Information [Line Items]
Sales	2	0	3	0
Pharmaceutical | Operating Segments | Alliance Revenue - Reblozyl
Segment Reporting Information [Line Items]
Sales	47	33	90	86
Pharmaceutical | Operating Segments | Alliance Revenue - Reblozyl | U.S.
Segment Reporting Information [Line Items]
Sales	36	28	66	55
Pharmaceutical | Operating Segments | Alliance Revenue - Reblozyl | Int’l
Segment Reporting Information [Line Items]
Sales	11	5	24	30
Pharmaceutical | Operating Segments | Gardasil/Gardasil 9
Segment Reporting Information [Line Items]
Sales	2,458	1,674	4,430	3,133
Pharmaceutical | Operating Segments | Gardasil/Gardasil 9 | U.S.
Segment Reporting Information [Line Items]
Sales	464	428	880	846
Pharmaceutical | Operating Segments | Gardasil/Gardasil 9 | Int’l
Segment Reporting Information [Line Items]
Sales	1,994	1,245	3,550	2,287
Pharmaceutical | Operating Segments | ProQuad/M-M-R II/Varivax
Segment Reporting Information [Line Items]
Sales	582	578	1,109	1,047
Pharmaceutical | Operating Segments | ProQuad/M-M-R II/Varivax | U.S.
Segment Reporting Information [Line Items]
Sales	447	434	868	805
Pharmaceutical | Operating Segments | ProQuad/M-M-R II/Varivax | Int’l
Segment Reporting Information [Line Items]
Sales	135	143	242	243
Pharmaceutical | Operating Segments | RotaTeq
Segment Reporting Information [Line Items]
Sales	131	173	428	389
Pharmaceutical | Operating Segments | RotaTeq | U.S.
Segment Reporting Information [Line Items]
Sales	93	98	273	273
Pharmaceutical | Operating Segments | RotaTeq | Int’l
Segment Reporting Information [Line Items]
Sales	37	75	155	116
Pharmaceutical | Operating Segments | Vaxneuvance
Segment Reporting Information [Line Items]
Sales	168	12	274	16
Pharmaceutical | Operating Segments | Vaxneuvance | U.S.
Segment Reporting Information [Line Items]
Sales	147	11	241	16
Pharmaceutical | Operating Segments | Vaxneuvance | Int’l
Segment Reporting Information [Line Items]
Sales	20	0	33	1
Pharmaceutical | Operating Segments | Pneumovax 23
Segment Reporting Information [Line Items]
Sales	92	153	188	325
Pharmaceutical | Operating Segments | Pneumovax 23 | U.S.
Segment Reporting Information [Line Items]
Sales	23	94	63	212
Pharmaceutical | Operating Segments | Pneumovax 23 | Int’l
Segment Reporting Information [Line Items]
Sales	69	59	125	114
Pharmaceutical | Operating Segments | Vaqta
Segment Reporting Information [Line Items]
Sales	42	35	82	71
Pharmaceutical | Operating Segments | Vaqta | U.S.
Segment Reporting Information [Line Items]
Sales	29	16	59	45
Pharmaceutical | Operating Segments | Vaqta | Int’l
Segment Reporting Information [Line Items]
Sales	13	19	23	25
Pharmaceutical | Operating Segments | Bridion
Segment Reporting Information [Line Items]
Sales	502	426	989	821
Pharmaceutical | Operating Segments | Bridion | U.S.
Segment Reporting Information [Line Items]
Sales	299	237	576	432
Pharmaceutical | Operating Segments | Bridion | Int’l
Segment Reporting Information [Line Items]
Sales	203	190	413	389
Pharmaceutical | Operating Segments | Prevymis
Segment Reporting Information [Line Items]
Sales	143	103	273	197
Pharmaceutical | Operating Segments | Prevymis | U.S.
Segment Reporting Information [Line Items]
Sales	61	47	116	87
Pharmaceutical | Operating Segments | Prevymis | Int’l
Segment Reporting Information [Line Items]
Sales	82	56	157	110
Pharmaceutical | Operating Segments | Dificid
Segment Reporting Information [Line Items]
Sales	76	66	141	119
Pharmaceutical | Operating Segments | Dificid | U.S.
Segment Reporting Information [Line Items]
Sales	68	63	130	113
Pharmaceutical | Operating Segments | Dificid | Int’l
Segment Reporting Information [Line Items]
Sales	8	3	11	6
Pharmaceutical | Operating Segments | Primaxin
Segment Reporting Information [Line Items]
Sales	53	64	133	122
Pharmaceutical | Operating Segments | Primaxin | U.S.
Segment Reporting Information [Line Items]
Sales	(2)	0	2	1
Pharmaceutical | Operating Segments | Primaxin | Int’l
Segment Reporting Information [Line Items]
Sales	56	64	132	122
Pharmaceutical | Operating Segments | Noxafil
Segment Reporting Information [Line Items]
Sales	55	60	116	118
Pharmaceutical | Operating Segments | Noxafil | U.S.
Segment Reporting Information [Line Items]
Sales	11	16	25	25
Pharmaceutical | Operating Segments | Noxafil | Int’l
Segment Reporting Information [Line Items]
Sales	45	45	91	92
Pharmaceutical | Operating Segments | Zerbaxa
Segment Reporting Information [Line Items]
Sales	54	46	104	76
Pharmaceutical | Operating Segments | Zerbaxa | U.S.
Segment Reporting Information [Line Items]
Sales	30	22	57	40
Pharmaceutical | Operating Segments | Zerbaxa | Int’l
Segment Reporting Information [Line Items]
Sales	24	24	47	36
Pharmaceutical | Operating Segments | Alliance revenue - Adempas/Verquvo
Segment Reporting Information [Line Items]
Sales	68	98	167	170
Pharmaceutical | Operating Segments | Alliance revenue - Adempas/Verquvo | U.S.
Segment Reporting Information [Line Items]
Sales	70	88	153	159
Pharmaceutical | Operating Segments | Alliance revenue - Adempas/Verquvo | Int’l
Segment Reporting Information [Line Items]
Sales	(2)	10	14	11
Pharmaceutical | Operating Segments | Adempas
Segment Reporting Information [Line Items]
Sales	65	63	125	124
Pharmaceutical | Operating Segments | Adempas | U.S.
Segment Reporting Information [Line Items]
Sales	0	0	0	0
Pharmaceutical | Operating Segments | Adempas | Int’l
Segment Reporting Information [Line Items]
Sales	65	63	125	124
Pharmaceutical | Operating Segments | Lagevrio
Segment Reporting Information [Line Items]
Sales	203	1,177	595	4,424
Pharmaceutical | Operating Segments | Lagevrio | U.S.
Segment Reporting Information [Line Items]
Sales	2	0	0	1,523
Pharmaceutical | Operating Segments | Lagevrio | Int’l
Segment Reporting Information [Line Items]
Sales	201	1,177	595	2,901
Pharmaceutical | Operating Segments | Isentress/Isentress HD
Segment Reporting Information [Line Items]
Sales	136	147	259	305
Pharmaceutical | Operating Segments | Isentress/Isentress HD | U.S.
Segment Reporting Information [Line Items]
Sales	56	67	108	128
Pharmaceutical | Operating Segments | Isentress/Isentress HD | Int’l
Segment Reporting Information [Line Items]
Sales	80	80	151	177
Pharmaceutical | Operating Segments | Belsomra
Segment Reporting Information [Line Items]
Sales	63	69	119	137
Pharmaceutical | Operating Segments | Belsomra | U.S.
Segment Reporting Information [Line Items]
Sales	21	19	37	39
Pharmaceutical | Operating Segments | Belsomra | Int’l
Segment Reporting Information [Line Items]
Sales	42	50	82	98
Pharmaceutical | Operating Segments | Simponi
Segment Reporting Information [Line Items]
Sales	180	181	359	366
Pharmaceutical | Operating Segments | Simponi | U.S.
Segment Reporting Information [Line Items]
Sales	0	0	0	0
Pharmaceutical | Operating Segments | Simponi | Int’l
Segment Reporting Information [Line Items]
Sales	180	181	359	366
Pharmaceutical | Operating Segments | Remicade
Segment Reporting Information [Line Items]
Sales	48	53	99	114
Pharmaceutical | Operating Segments | Remicade | U.S.
Segment Reporting Information [Line Items]
Sales	0	0	0	0
Pharmaceutical | Operating Segments | Remicade | Int’l
Segment Reporting Information [Line Items]
Sales	48	53	99	114
Pharmaceutical | Operating Segments | Januvia
Segment Reporting Information [Line Items]
Sales	511	756	1,062	1,535
Pharmaceutical | Operating Segments | Januvia | U.S.
Segment Reporting Information [Line Items]
Sales	243	301	514	626
Pharmaceutical | Operating Segments | Januvia | Int’l
Segment Reporting Information [Line Items]
Sales	267	455	548	909
Pharmaceutical | Operating Segments | Janumet
Segment Reporting Information [Line Items]
Sales	354	476	683	931
Pharmaceutical | Operating Segments | Janumet | U.S.
Segment Reporting Information [Line Items]
Sales	82	105	138	168
Pharmaceutical | Operating Segments | Janumet | Int’l
Segment Reporting Information [Line Items]
Sales	272	371	544	762
Pharmaceutical | Operating Segments | Other pharmaceutical
Segment Reporting Information [Line Items]
Sales	553	528	1,138	1,131
Pharmaceutical | Operating Segments | Other pharmaceutical | U.S.
Segment Reporting Information [Line Items]
Sales	171	157	342	317
Pharmaceutical | Operating Segments | Other pharmaceutical | Int’l
Segment Reporting Information [Line Items]
Sales	382	372	793	814
Animal Health | Operating Segments
Segment Reporting Information [Line Items]
Sales	1,456	1,467	2,947	2,949
Animal Health | Operating Segments | U.S.
Segment Reporting Information [Line Items]
Sales	475	477	956	951
Animal Health | Operating Segments | Int’l
Segment Reporting Information [Line Items]
Sales	982	990	1,991	1,998
Animal Health | Operating Segments | Livestock
Segment Reporting Information [Line Items]
Sales	807	826	1,656	1,658
Animal Health | Operating Segments | Livestock | U.S.
Segment Reporting Information [Line Items]
Sales	165	164	338	335
Animal Health | Operating Segments | Livestock | Int’l
Segment Reporting Information [Line Items]
Sales	643	662	1,318	1,322
Animal Health | Operating Segments | Companion Animal
Segment Reporting Information [Line Items]
Sales	649	641	1,291	1,291
Animal Health | Operating Segments | Companion Animal | U.S.
Segment Reporting Information [Line Items]
Sales	310	313	618	616
Animal Health | Operating Segments | Companion Animal | Int’l
Segment Reporting Information [Line Items]
Sales	$ 339	$ 328	$ 673	$ 676

XML

Segment Reporting - Consolidated Sales by Geographic Area (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue from External Customer [Line Items]
Sales	$ 15,035	$ 14,593	$ 29,522	$ 30,494
United States
Revenue from External Customer [Line Items]
Sales	7,018	6,238	13,676	13,577
Europe, Middle East and Africa
Revenue from External Customer [Line Items]
Sales	3,348	3,582	6,651	7,942
China
Revenue from External Customer [Line Items]
Sales	1,913	1,372	3,628	2,515
Asia Pacific (other than China and Japan)
Revenue from External Customer [Line Items]
Sales	848	1,008	1,694	1,938
Japan
Revenue from External Customer [Line Items]
Sales	675	1,114	1,434	2,103
Latin America
Revenue from External Customer [Line Items]
Sales	742	642	1,403	1,249
Other
Revenue from External Customer [Line Items]
Sales	$ 491	$ 637	$ 1,036	$ 1,170

XML

Segment Reporting - Reconciliation of Segment Profits to Income before Taxes (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Segment Reporting Information [Line Items]
Profits	$ (5,335)	$ 4,487	$ (1,685)	$ 9,348
Interest income	109	15	221	22
Interest expense	(277)	(240)	(519)	(483)
Amortization			(1,020)	(1,163)
Depreciation			(874)	(895)
Research and development	(13,321)	(2,798)	(17,597)	(5,374)
Restructuring costs	(151)	(142)	(218)	(194)
Operating Segments
Segment Reporting Information [Line Items]
Profits	10,321	9,744	20,025	19,829
Operating Segments | Pharmaceutical segment
Segment Reporting Information [Line Items]
Profits	9,854	9,173	18,993	18,673
Operating Segments | Animal Health segment
Segment Reporting Information [Line Items]
Profits	467	571	1,032	1,156
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Profits	19	260	184	454
Segment Reconciling Items
Segment Reporting Information [Line Items]
Interest income	109	15	221	22
Interest expense	(277)	(240)	(519)	(483)
Amortization	(477)	(463)	(1,020)	(1,163)
Depreciation	(376)	(431)	(775)	(809)
Research and development	(13,194)	(2,652)	(17,341)	(5,097)
Restructuring costs	(151)	(142)	(218)	(194)
Charge for Zetia antitrust litigation settlements	0	0	(573)	0
Other unallocated, net	$ (1,309)	$ (1,604)	$ (1,669)	$ (3,211)