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As filed with the Securities and Exchange Commission on February 27, 2019
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
_________________________________
FORM 10-K
(MARK ONE)


Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2018
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.
2000 Galloping Hill Road
Kenilworth, N. J. 07033
(908) 740-4000
Incorporated in New Jersey
I.R.S. Employer
Identification No. 22-1918501
Securities Registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock ($0.50 par value)
1.125% Notes due 2021
0.500% Notes due 2024
1.875% Notes due 2026
2.500% Notes due 2034
1.375% Notes due 2036
Name of Each Exchange on which Registered
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Number of shares of Common Stock ($0.50 par value) outstanding as of January 31, 2019: 2,581,220,308.
Aggregate market value of Common Stock ($0.50 par value) held by non-affiliates on June 30, 2018 based on closing price on June 30,
2018: $161,991,000,000.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒
No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
No ☒
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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer
Non-accelerated filer


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 ☐
Documents Incorporated by Reference:
Document
Proxy Statement for the Annual Meeting of Shareholders to be held May 28, 2019, to be filed with the
Securities and Exchange Commission within 120 days after the close of the fiscal year covered by this report
No ☒
Part of Form 10-K
Part III
Table of Contents
Table of Contents
Page
Part I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Business
Risk Factors
Cautionary Factors that May Affect Future Results
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Executive Officers of the Registrant
Part II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
(a) Financial Statements
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
(b) Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Management’s Report
Other Information
Part III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Part IV
Exhibits and Financial Statement Schedules
Form 10-K Summary
Signatures
1
20
30
31
31
31
31
32
33
35
36
67
68
68
72
127
129
130
130
130
131
132
132
133
133
133
134
137
138
Table of Contents
PART I
Item 1.
Business.
Merck & Co., Inc. (Merck or the Company) is a global health care company that delivers innovative health
solutions through its prescription medicines, vaccines, biologic therapies and animal health products. The Company’s
operations are principally managed on a products basis and include four operating segments, which are the
Pharmaceutical, Animal Health, Healthcare Services and Alliances 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, primarily administered at physician offices. The Company sells these human
health vaccines primarily to physicians, wholesalers, physician distributors and government entities.
The Animal Health segment discovers, develops, manufactures and markets animal health products,
including pharmaceutical and vaccine products, for the prevention, treatment and control of disease in all major livestock
and companion animal species, which the Company sells to veterinarians, distributors and animal producers.
The Healthcare Services segment provides services and solutions that focus on engagement, health analytics
and clinical services to improve the value of care delivered to patients.
The Alliances segment primarily includes results from the Company’s relationship with AstraZeneca LP
related to sales of Nexium and Prilosec, which concluded in 2018.
The Company was incorporated in New Jersey in 1970.
All product or service marks appearing in type form different from that of the surrounding text are trademarks
or service marks owned, licensed to, promoted or distributed by Merck, its subsidiaries or affiliates, except as noted.
All other trademarks or services marks are those of their respective owners.
Product Sales
Total Company sales, including sales of the Company’s top pharmaceutical products, as well as sales of
animal health products, were as follows:
($ in millions)
Total Sales
Pharmaceutical
$
Keytruda
Januvia/Janumet
Gardasil/Gardasil 9
ProQuad/M-M-R II/Varivax
Zetia/Vytorin
Isentress/Isentress HD
Bridion
Pneumovax 23
NuvaRing
Simponi
Animal Health
Livestock
Companion Animals
Other Revenues(1)
(1)
2018
42,294
37,689
7,171
5,914
3,151
1,798
1,355
1,140
917
907
902
893
4,212
2,630
1,582
393
$
2017
40,122
35,390
3,809
5,896
2,308
1,676
2,095
1,204
704
821
761
819
3,875
2,484
1,391
857
$
2016
39,807
35,151
1,402
6,109
2,173
1,640
3,701
1,387
482
641
777
766
3,478
2,287
1,191
1,178
Other revenues are primarily comprised of Healthcare Services segment revenue, third-party manufacturing sales, and miscellaneous corporate
revenues, including revenue hedging activities.
1
Table of Contents
Pharmaceutical
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. Human health vaccine products consist of preventive pediatric, adolescent and adult vaccines,
primarily administered at physician offices. Certain of the products within the Company’s franchises are as follows:
Oncology
Keytruda (pembrolizumab), the Company’s anti-PD-1 (programmed death receptor-1) therapy, as
monotherapy for the treatment of certain patients with non-small-cell lung cancer (NSCLC), melanoma, classical
Hodgkin Lymphoma (cHL), urothelial carcinoma, head and neck squamous cell carcinoma (HNSCC), gastric or
gastroesophageal junction adenocarcinoma, and microsatellite instability-high (MSI-H) or mismatch repair deficient
cancer, and in combination with chemotherapy in certain patients with NSCLC. Keytruda is also used in the United
States for monotherapy treatment of certain patients with cervical cancer, primary mediastinal large B-cell lymphoma
(PMBCL), hepatocellular carcinoma, and Merkel cell carcinoma, and in combination with chemotherapy for patients
with squamous NSCLC; Emend (aprepitant) for the prevention of chemotherapy-induced and post-operative nausea
and vomiting; and Temodar (temozolomide) (marketed as Temodal outside the United States), a treatment for certain
types of brain tumors. In addition, the Company recognizes alliance revenue related to sales of Lynparza (olaparib),
an oral poly (ADP-ribose) polymerase (PARP) inhibitor, for certain types of ovarian and breast cancer; and Lenvima
(lenvatinib) for certain types of thyroid cancer, hepatocellular carcinoma, and in combination for certain patients with
renal cell carcinoma.
Vaccines
Gardasil (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant)/Gardasil 9
(Human Papillomavirus 9-valent Vaccine, Recombinant), vaccines to help prevent certain diseases caused by certain
types of human papillomavirus (HPV); ProQuad (Measles, Mumps, Rubella and Varicella Virus Vaccine Live), a
pediatric combination vaccine to help protect against measles, mumps, rubella and varicella; M-M-R II (Measles, Mumps
and Rubella Virus Vaccine Live), a vaccine to help prevent measles, mumps and rubella; Varivax (Varicella Virus
Vaccine Live), a vaccine to help prevent chickenpox (varicella); Pneumovax 23 (pneumococcal vaccine polyvalent), a
vaccine to help prevent pneumococcal disease; RotaTeq (Rotavirus Vaccine, Live Oral, Pentavalent), a vaccine to help
protect against rotavirus gastroenteritis in infants and children; and Zostavax (Zoster Vaccine Live), a vaccine to help
prevent shingles (herpes zoster).
Hospital Acute Care
Bridion (sugammadex) Injection, a medication for the reversal of two types of neuromuscular blocking
agents used during surgery; Noxafil (posaconazole) for the prevention of invasive fungal infections; Invanz (ertapenem
sodium) for the treatment of certain infections; Cubicin (daptomycin for injection), an I.V. antibiotic for complicated
skin and skin structure infections or bacteremia, when caused by designated susceptible organisms; Cancidas
(caspofungin acetate), an anti-fungal product; Primaxin (imipenem and cilastatin sodium), an anti-bacterial product;
and Zerbaxa (ceftolozane and tazobactam) is currently approved in the United States for the treatment of adult patients
with complicated urinary tract infections caused by certain susceptible Gram-negative microorganisms, and is also
indicated, in combination with metronidazole, for the treatment of adult patients with complicated intra-abdominal
infections caused by certain susceptible Gram-negative and Gram-positive microorganisms.
Immunology
Simponi (golimumab), a once-monthly subcutaneous treatment for certain inflammatory diseases; and
Remicade (infliximab), a treatment for inflammatory diseases, which the Company markets in Europe, Russia and
Turkey.
Neuroscience
Belsomra (suvorexant), an orexin receptor antagonist indicated for the treatment of insomnia, characterized
by difficulties with sleep onset and/or sleep maintenance.
Virology
Isentress/Isentress HD (raltegravir), an HIV integrase inhibitor for use in combination with other
antiretroviral agents for the treatment of HIV-1 infection; and Zepatier (elbasvir and grazoprevir) for the treatment of
adult patients with chronic hepatitis C virus (HCV) genotype (GT) 1 or GT4 infection, with ribavirin in certain patient
populations.
2
Table of Contents
Cardiovascular
Zetia (ezetimibe) (marketed as Ezetrol in most countries outside the United States); Vytorin (ezetimibe/
simvastatin) (marketed as Inegy outside the United States); Atozet (ezetimibe and atorvastatin) (marketed in certain
countries outside of the United States) and Rosuzet (ezetimibe and rosuvastatin) (marketed in certain countries outside
of the United States), cholesterol modifying medicines; and Adempas (riociguat), a cardiovascular drug for the treatment
of pulmonary arterial hypertension.
Diabetes
Januvia (sitagliptin) and Janumet (sitagliptin/metformin HCl) for the treatment of type 2 diabetes.
Women’s Health
NuvaRing (etonogestrel/ethinyl estradiol vaginal ring), a vaginal contraceptive product; and Implanon
(etonogestrel implant), a single-rod subdermal contraceptive implant/Nexplanon (etonogestrel implant), a single,
radiopaque, rod-shaped subdermal contraceptive implant.
Animal Health
The Animal Health segment discovers, develops, manufactures and markets animal health products,
including pharmaceutical and vaccine products, for the prevention, treatment and control of disease in all major livestock
and companion animal species. Principal products in this segment include:
Livestock Products
Nuflor (Florfenicol) antibiotic range for use in cattle and swine; Bovilis/Vista vaccine lines for infectious
diseases in cattle; Banamine (Flunixin meglumine) bovine and swine anti-inflammatory; Estrumate (cloprostenol
sodium) for the treatment of fertility disorders in cattle; Matrix (altrenogest) fertility management for swine; Resflor
(florfenicol and flunixin meglumine), a combination broad-spectrum antibiotic and non-steroidal anti-inflammatory
drug for bovine respiratory disease; Zuprevo (Tildipirosin) for bovine respiratory disease; Zilmax (zilpaterol
hydrochloride) and Revalor (trenbolone acetate and estradiol) to improve production efficiencies in beef cattle; SafeGuard (fenbendazole) de-wormer for cattle; M+Pac (Mycoplasma Hyopneumoniae Bacterin) swine pneumonia
vaccine; Porcilis (Lawsonia intracellularis baterin) and Circumvent (Porcine Circovirus Vaccine, Type 2, Killed
Baculovirus Vector) vaccine lines for infectious diseases in swine; Nobilis/Innovax (Live Marek’s Disease Vector),
vaccine lines for poultry; Paracox and Coccivac coccidiosis vaccines; Exzolt, a systemic treatment for poultry red mite
infestations; Slice (Emamectin benzoate) parasiticide for sea lice in salmon; Aquavac (Avirulent Live Culture)/Norvax
vaccines against bacterial and viral disease in fish; Compact PD vaccine for salmon; and Aquaflor (Florfenicol) antibiotic
for farm-raised fish.
Companion Animal Products
Bravecto (fluralaner), a line of oral and topical products that kills fleas and ticks in dogs and cats for up to
12 weeks; Nobivac vaccine lines for flexible dog and cat vaccination; Otomax (Gentamicin sulfate, USP; Betamethasone
valerate USP; and Clotrimazole USP ointment)/Mometamax (Gentamicin sulfate, USP, Mometasone Furoate
Monohydrate and Clotrimazole, USP, Otic Suspension)/Posatex (Orbifloxacin, Mometasone Furoate Monohydrate and
Posaconazole, Suspension) ear ointments for acute and chronic otitis; Caninsulin/Vetsulin (porcine insulin zinc
suspension) diabetes mellitus treatment for dogs and cats; Panacur (fenbendazole)/Safeguard (fenbendazole) broadspectrum anthelmintic (de-wormer) for use in many animals; Regumate (altrenogest) fertility management for horses;
Prestige vaccine line for horses; and Scalibor (Deltamethrin)/Exspot for protecting against bites from fleas, ticks,
mosquitoes and sandflies.
For a further discussion of sales of the Company’s products, see Item 7. “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” below.
3
Table of Contents
2018 Product Approvals
Set forth below is a summary of significant product approvals received by the Company in 2018.
Product
Date
December 2018
December 2018
December 2018
November 2018
October 2018
September 2018
Keytruda
September 2018
August 2018
July 2018
June 2018
June 2018
December 2018
July 2018
Lynparza(1)
May 2018
January 2018
January 2018
Approval
The Japanese Ministry of Health, Labor and Welfare (JMHLW) approved
Keytruda for three expanded uses in unresectable, advanced or recurrent
NSCLC, one in malignant melanoma, as well as a new indication in high
microsatellite instability solid tumors.
The U.S. Food and Drug Administration (FDA) approved Keytruda for the
treatment of adult and pediatric patients with recurrent locally advanced or
metastatic Merkel cell carcinoma.
The European Commission (EC) approved Keytruda for the adjuvant
treatment of adults with stage III melanoma and lymph node involvement
who have undergone complete resection.
FDA approved Keytruda for the treatment of patients with hepatocellular
carcinoma who have been previously treated with sorafenib.
FDA approved Keytruda, in combination with carboplatin and either
paclitaxel or nab-paclitaxel, for the first-line treatment of patients with
metastatic squamous non-small cell lung cancer (NSCLC).
EC approved Keytruda in combination with pemetrexed and platinum
chemotherapy for the first-line treatment of metastatic nonsquamous
NSCLC in adults whose tumors have no EGFR or ALK positive mutations.
EC approved Keytruda for the treatment of recurrent or metastatic head and
neck squamous cell carcinoma (HNSCC) in adults whose tumors express
PD-L1 with a ≥ 50% TPS and progressing on or after platinum-containing
chemotherapy.
FDA approved Keytruda in combination with pemetrexed and platinum
chemotherapy for the first-line treatment of metastatic nonsquamous
NSCLC patients with no EGFR or ALK genomic tumor aberrations.
The China National Drug Administration (CNDA) approved Keytruda for
the treatment of adult patients with unresectable or metastatic melanoma
following failure of one prior line of therapy.
FDA approved Keytruda for the treatment of adult and pediatric patients
with refractory primary mediastinal large B-cell lymphoma (PMBCL), or
who have relapsed after two or more prior lines of therapy.
FDA approved Keytruda for the treatment of patients with recurrent or
metastatic cervical cancer with disease progression on or after
chemotherapy whose tumors express PD-L1 as determined by an FDAapproved test.
FDA approved Lynparza for use as maintenance treatment of certain
patients with advanced ovarian, fallopian tube or primary peritoneal cancer
who are in complete or partial response to first-line platinum-based
chemotherapy.
JMHLW approved Lynparza for use in patients with unresectable or
recurrent BRCA-mutated, human epidermal growth factor receptor 2
(HER2)-negative breast cancer who have received prior chemotherapy.
EC approved Lynparza for use as a maintenance therapy in patients with
platinum-sensitive relapsed …
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