Merck Announces Second-Quarter 2012 Financial Results

  • 2012 Second-Quarter Non-GAAP EPS Increased 11 Percent Over Prior Year to $1.05, Excluding Certain Items; GAAP EPS of $0.58
  • Worldwide Sales Up One Percent to $12.3 Billion, Five Percent Excluding Foreign Exchange; Pharmaceuticals, Animal Health and Consumer Care All Contributed to Growth
  • Double-Digit Global Growth for JANUVIA, JANUMET, VICTRELIS, ISENTRESS, GARDASIL and ZOSTAVAX
  • On Track for Six Major Filings in 2012-2013, Including Suvorexant and Odanacatib
  • Reaffirmed 2012 Full-Year Non-GAAP EPS Target of $3.75 to $3.85, Excluding Certain Items; GAAP EPS Range of $2.04 to $2.30

Category:

Friday, July 27, 2012 7:00 am EDT

Dateline:

WHITEHOUSE STATION, N.J.

Public Company Information:

NYSE:
MRK
"This quarter we delivered strong operational performance by focusing on growth and execution. We achieved top- and bottom-line growth by advancing our core strategy and maintaining momentum across our businesses"

WHITEHOUSE STATION, N.J.--(BUSINESS WIRE)--Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the second quarter of 2012.

   
$ in millions, except EPS amounts  

Second
Quarter
2012

 

Second
Quarter
2011

Sales   $12,311  

$12,151

GAAP EPS   0.58   0.65

Non-GAAP EPS that excludes items listed below1

  1.05   0.95

GAAP Net Income2

  1,793   2,024

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

  3,227   2,950

Non-GAAP (generally accepted accounting principles) earnings per share (EPS) for the second quarter of $1.05 exclude acquisition-related costs and restructuring costs.

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

   
Second Quarter 2012   Second Quarter 2011
$ in millions, except EPS amounts  

Net

Income2

  EPS   Net

Income2

  EPS
GAAP   $1,793   $0.58   $2,024   $0.65
Difference   1,434  

0.473

  926   0.303
Non-GAAP that excludes items listed below1   $3,227   $1.05   $2,950   $0.95
   

$ in millions

  Second

Quarter

2012

  Second

Quarter

2011

Acquisition-related costs4

  $1,417   $1,440
Restructuring costs   289   816
Other     7
Net decrease (increase) in income before taxes   1,706   2,263

Income tax (benefit) expense5

  (272)   (1,337)
Decrease (increase) in net income   $1,434   $926

"This quarter we delivered strong operational performance by focusing on growth and execution. We achieved top- and bottom-line growth by advancing our core strategy and maintaining momentum across our businesses," said Kenneth C. Frazier, chairman and chief executive officer of Merck. "The company remains focused on translating cutting-edge science into medically important products. We're seeing significant progress in the pipeline this year, and we expect six major filings over the next 18 months, including suvorexant for insomnia and odanacatib for osteoporosis. This focus on innovation and execution will drive long-term shareholder value."

Select Revenue Highlights

Worldwide sales were $12.3 billion for the second quarter of 2012, an increase of 1 percent, or 5 percent excluding foreign exchange, compared with the second quarter of 2011. Sales also were unfavorably impacted by the arbitration settlement agreement with Johnson & Johnson discussed below.

The following table reflects sales of the company's top pharmaceutical products, as well as total sales of animal health and consumer care products.

   

$ in millions

 

Second Quarter
2012

 

Second Quarter
2011

 

Change

Total Sales   $12,311   $12,151   1%
Pharmaceutical   10,560   10,360   2%
SINGULAIR   1,431   1,354   6%
JANUVIA   1,058   779   36%
ZETIA   632   592   7%
REMICADE   518   842   -38%
VYTORIN   445   459   -3%
JANUMET   411   321   28%
ISENTRESS   398   337   18%
COZAAR/HYZAAR   337   406   -17%
GARDASIL   324   277   17%
PROQUAD, M-M-R II and VARIVAX   316   291   9%
Animal Health   865   802   8%
Consumer Care   552   541   2%
Other Revenues   333   448   -26%

Pharmaceutical Revenue Performance

Second-quarter pharmaceutical sales grew 2 percent to $10.6 billion, including a 3 percent negative impact due to foreign exchange. Adjusting pharmaceutical sales in the second quarter of 2011 to exclude sales of REMICADE (infliximab) and SIMPONI (golimumab) from the territories transferred to Johnson & Johnson through the settlement agreement, pharmaceutical sales would have increased 5 percent in the second quarter of 2012.6 The revenue increases largely reflect strong sales growth for JANUVIA (sitagliptin), VICTRELIS (boceprevir), JANUMET (sitagliptin/metformin hydrochloride), SINGULAIR (montelukast sodium), ISENTRESS (raltegravir) and GARDASIL [Human Papillomavirus Quadrivalent (Types 6, 11, 16 and 18) Vaccine, Recombinant]. These increases were partially offset by expected declines in sales of COZAAR (losartan potassium) and HYZAAR (losartan potassium and hydrochlorothiazide) as well as European austerity measures.

Sales from emerging markets accounted for approximately 18 percent of pharmaceutical sales in the second quarter. Growth in the emerging markets is being driven by diversified brands and core products like JANUVIA, JANUMET and ISENTRESS. China continues to be a key driver with 27 percent growth for the second quarter, including a 4 percent benefit from foreign exchange.

Worldwide sales of the combined diabetes franchise of JANUVIA/JANUMET, medicines that help lower blood sugar levels in adults with type 2 diabetes, grew 33 percent to $1.5 billion in the second quarter of 2012 driven by growth in all regions.

Worldwide sales of SINGULAIR, a once-a-day oral medicine for the chronic treatment of asthma and the relief of symptoms of allergic rhinitis, grew 6 percent to $1.4 billion in the second quarter of 2012. The patent for SINGULAIR will expire in the U.S. in Aug. 2012 and in major European markets in Feb. 2013. The company expects a significant and rapid reduction in sales thereafter in those markets. SINGULAIR will retain marketing exclusivity in Japan until 2016.

Sales of ZETIA (ezetimibe) and VYTORIN (ezetimibe/simvastatin), medicines for lowering LDL cholesterol, grew 2 percent to $1.1 billion in the second quarter driven by growth of ZETIA in the United States and VYTORIN outside of the United States.

Combined sales of REMICADE and SIMPONI, treatments for inflammatory diseases, declined 35 percent to $594 million for the second quarter of 2012. In Europe, Russia and Turkey, where Merck retained exclusive marketing rights, the combined sales of REMICADE and SIMPONI declined 3 percent for the second quarter of 2012, but excluding the impact of foreign exchange grew 6 percent. In July 2011, the company transferred exclusive marketing rights for REMICADE and SIMPONI to Johnson & Johnson in Canada, Central and South America, the Middle East, Africa and Asia Pacific.

ISENTRESS, an HIV integrase inhibitor for use in combination with other antiretroviral agents for the treatment of HIV-1 infection, grew 18 percent to $398 million in the second quarter driven by strong growth in the emerging markets and the United States.

Global sales of Merck's antihypertensive medicines COZAAR and HYZAAR were down 17 percent to $337 million in the second quarter of 2012 due to the loss of marketing exclusivity in the United States and major European markets in 2010.

Sales recorded by Merck for GARDASIL, a vaccine to help prevent certain diseases caused by four types of human papillomavirus (HPV), increased 17 percent to $324 million for the quarter driven by vaccinations of males in the United States and the launch in Japan.

Sales of ZOSTAVAX (zoster vaccine live), a vaccine for the prevention of herpes zoster, grew 22 percent to $148 million in the quarter. The company continues to increase its promotional efforts for ZOSTAVAX in the United States.

Sales of VICTRELIS, the company's oral hepatitis C virus NS3/4A protease inhibitor, were $126 million in the quarter. VICTRELIS is approved in 43 countries and has launched in 23 of those markets.

Animal Health Revenue Performance

Animal Health sales totaled $865 million for the second quarter of 2012, an 8 percent increase over the second quarter of 2011, including a 6 percent negative impact due to foreign exchange. Animal Health had strong performance in the United States and Asia Pacific, with growth led by increased sales of cattle and swine products. The division's products include pharmaceutical and vaccine products for the prevention, treatment and control of disease in all major farm and companion animal species.

Consumer Care Revenue Performance

Second-quarter global sales of Consumer Care were $552 million, an increase of 2 percent compared to the second quarter of 2011, including a 1 percent negative impact due to foreign exchange. The sales increase was primarily due to MiraLAX, CLARITIN and COPPERTONE.

Other Revenue Performance

Other revenues – primarily comprised of alliance revenue, miscellaneous corporate revenues and third-party manufacturing sales – declined 26 percent to $333 million. The change was driven largely by lower revenue from AstraZeneca LP (AZLP) recorded by Merck, which declined 27 percent to $223 million, as well as by lower third-party manufacturing sales.

Second-Quarter Expense and Other Information

The costs detailed below totaled $9.7 billion on a GAAP basis during the second quarter of 2012 and include $1.7 billion of acquisition-related costs and restructuring costs.

   
$ in millions Included in expenses for the period
Second Quarter 2012  

 

GAAP

 

Acquisition-
Related
Costs4

 

Restructuring
Costs

 

 

Non-GAAP1

Materials and production   $4,112   $1,226   $83   $2,803
Marketing and administrative   3,249   64   21   3,164
Research and development   2,165   127   41   1,997
Restructuring costs   144   –-   144  
     
Second Quarter 2011                
Materials and production   $4,284   $1,344   $109   $2,831
Marketing and administrative   3,525   77   23   3,425
Research and development   1,936   19   16   1,901
Restructuring costs   668     668  

The gross margin was 66.6 percent for the second quarter of 2012 and 64.7 percent for the second quarter of 2011, reflecting 10.6 and 12.0 percentage point unfavorable impacts, respectively, from the acquisition-related costs and restructuring costs noted above.

Marketing and administrative expenses, on a non-GAAP basis, were $3.2 billion in the second quarter of 2012, a decrease from $3.4 billion in the second quarter of 2011. The decrease was primarily due to ongoing productivity measures.

Research and development (R&D) expenses, on a non-GAAP basis, were $2.0 billion in the second quarter of 2012, an increase from $1.9 billion in the second quarter of 2011. The increase primarily reflects the $120 million upfront payment as part of the Endocyte Inc. transaction.

Equity income from affiliates was $142 million for the second quarter, which primarily reflects the performance of AZLP and Sanofi Pasteur MSD.

Other (income) expense, net was $103 million of expense in the second quarter of 2012, compared to $121 million of expense in the second quarter of 2011.

Key Developments

The company noted the following developments:

  • Pivotal Phase III data were presented that showed suvorexant, an investigational treatment for insomnia, improved patients' ability to fall asleep and stay asleep, achieving significance on 15 of 16 primary endpoints. Merck anticipates filing regulatory applications for approval by the end of 2012;
  • Primary efficacy outcomes were met in the Phase III trial of odanacatib, Merck's investigational cathepsin-K inhibitor for osteoporosis, and Merck announced that the study is being concluded early. Merck expects to file regulatory applications for approval in the United States and Europe in the first half of 2013 and Japan in the third quarter of 2013;
  • Merck continued to advance plans for four additional major regulatory filings by end of 2013 including: BRIDION (sugammadex), a neuromuscular blocker reversal agent; V503, a nine-valent vaccine for HPV; TREDAPTIVE (extended-release niacin/laropiprant), a novel candidate for multiple lipid parameters; and vintafolide, a small molecule drug conjugate for ovarian and other cancers (European Union filing);
  • Merck previously announced in late March 2012 that the independent Data Safety Monitoring Board of the IMPROVE-IT study planned to review data from the study again in approximately nine months. That review has been scheduled for March 2013, at which point nine months of additional data will have been adjudicated;
  • Five-year data were presented from the STARTMRK study, in which the regimen including ISENTRESS demonstrated better efficacy and long-term safety and tolerability versus the regimen including efavirenz; and
  • Merck and AstraZeneca amended their option agreement related to AZLP. As a result, AstraZeneca will not acquire Merck's stake in AZLP in 2012 and has a new option to acquire Merck's interest in June 2014.

Financial Targets

Merck continues to expect full-year 2012 non-GAAP EPS to be between $3.75 and $3.85 and the 2012 GAAP EPS range to be $2.04 to $2.30. The 2012 non-GAAP range excludes acquisition-related costs and costs related to restructuring programs.

Merck continues to expect full-year 2012 revenues to be at or near 2011 levels on a constant currency basis. At current exchange rates, sales would be affected unfavorably by approximately 6 percent for the third quarter and more than 3 percent for the full year.

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

A reconciliation of anticipated 2012 EPS as reported in accordance with GAAP to non-GAAP EPS that excludes certain items is provided in the table below.

   

$ in millions, except EPS amounts

 

Full-Year 2012

GAAP EPS   $2.04 to $2.30

Difference3

  1.71 to 1.55
Non-GAAP EPS that excludes items listed below   $3.75 to $3.85
 
     
Acquisition-related costs4   $5,200 to $4,900
Restructuring costs   1,100 to 800
Net decrease (increase) in income before taxes   6,300 to 5,700
Estimated income tax (benefit) expense   (1,110) to (985)
Decrease (increase) in net income   $5,190 to $4,715

Total Employees

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

Earnings Conference Call

Investors are invited to a live audio webcast of Merck's second-quarter earnings conference call today at 8:00 a.m. EDT by visiting Merck's Internet site, www.merck.com/investors/events-and-presentations/home.html. Institutional investors and analysts can participate in the call by dialing (706) 758-9927 or (877) 381-5782. Journalists are invited to monitor the call by dialing (706) 758-9928 or (800) 399-7917. A replay of the call will be available starting at 11 a.m. EDT today for approximately one week. To listen to the replay, dial (404) 537-3406 or (855) 859-2056 and enter ID No. 91089609.

About Merck

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

Forward-Looking Statement

This news release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, statements about the benefits of the merger between Merck and Schering-Plough, including future financial and operating results, the combined company’s plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of Merck’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements.

The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the possibility that all of the expected synergies from the merger of Merck and Schering-Plough will not be realized, or will not be realized within the expected time period; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; Merck’s ability to accurately predict future market conditions; dependence on the effectiveness of Merck’s patents and other protections for innovative products; and the exposure to litigation and/or regulatory actions.

Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in Merck’s 2011 Annual Report on Form 10-K and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (www.sec.gov).

1 Merck is providing certain 2012 and 2011 non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors' understanding of the company's performance. This information should be considered in addition to, but not in lieu of, information prepared in accordance with GAAP. For a description of the items, see Table 2a including the related footnotes, attached to this release.

2 Net income attributable to Merck & Co., Inc.

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

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

5 Includes an estimated income tax (benefit) expense on the reconciling items. The second quarter of 2011 also includes the net favorable impact of approximately $700 million relating to the settlement of a federal income tax audit, as well as the favorable impact of certain foreign and state tax rate changes that resulted in a net $230 million reduction of deferred tax liabilities on intangibles established in purchase accounting.

6

   

$ in millions

 

Second
Quarter
2012

 

Second
Quarter
2011

 

Change

Pharmaceutical sales as reported   $10,560   $10,360   2%
Sales of REMICADE and SIMPONI in the territories transferred     (306)    
Pharmaceutical sales as adjusted   $10,560   $10,054   5%
 
 
 

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

 

               
       
GAAP % Change GAAP % Change
2Q12   2Q11 YTD 2012   YTD 2011
Sales $ 12,311   $ 12,151 1% $ 24,041   $ 23,732 1%
 
Costs, Expenses and Other
Materials and production (1) 4,112 4,284 -4% 8,150 8,343 -2%
Marketing and administrative (1) 3,249 3,525 -8% 6,322 6,689 -5%
Research and development (1) 2,165 1,936 12% 4,026 4,094 -2%
Restructuring costs (2) 144 668 -78% 363 654 -44%
Equity income from affiliates (3) (142 ) (55 ) * (253 ) (193 ) 31%
Other (income) expense, net (1) / (4) 103 121 -15% 247 744 -67%
 
Income Before Taxes 2,680 1,672 60% 5,186 3,401 52%
Income Tax Provision (Benefit) 860 (382 ) 1,599 276
Net Income 1,820 2,054 -11% 3,587 3,125 15%
Less: Net Income Attributable to Noncontrolling Interests 27 30 56 58
Net Income Attributable to Merck & Co., Inc. $ 1,793 $ 2,024 -11% $ 3,531 $ 3,067 15%
Earnings per Common Share Assuming Dilution (5) $ 0.58     $ 0.65   -11% $ 1.15     $ 0.98   17%
           
Average Shares Outstanding Assuming Dilution 3,072       3,110 3,074       3,106
Tax Rate (6)   32.1 %     -22.8 %   30.8 %     8.1 %
 
 
*100% or greater
(1) Amounts include the impact of acquisition-related costs and restructuring costs. See accompanying tables for details.
 
(2) Represents separation and other related costs associated with restructuring activities under the company's formal restructuring programs.
 
(3) Primarily reflects equity income from the AstraZeneca LP and Sanofi Pasteur MSD partnerships.
 
(4) Other (income) expense, net in the first six months of 2011 includes a charge of $500 million related to the resolution of the arbitration proceeding with Johnson & Johnson and a $127 million gain on the sale of certain manufacturing facilities and related assets.
 
(5) The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. Net income attributable to Merck & Co., Inc. common shareholders used to calculate earnings per common share assuming dilution was $1,792 million and $2,020 million for the second quarter of 2012 and 2011, respectively, and was $3,528 million and $3,059 million for the first six months of 2012 and 2011, respectively.
 
(6) The GAAP effective tax rates for the second quarter and first six months of 2012 were 32.1% and 30.8%, respectively. Excluding the impact of the non-GAAP reconciling items detailed in the accompanying tables, the effective tax rates were 25.8% and 25.3% for the second quarter and first six months of 2012, respectively. The GAAP effective tax rates for the second quarter and first six months of 2011 were (22.8)% and 8.1%, respectively. Excluding the impact of the non-GAAP reconciling items detailed in the accompanying tables, the effective tax rates were 24.3% and 24.9% for the second quarter and first six months of 2011, respectively.
 
 

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

                             
GAAP

Acquisition-
Related Costs(1)

Restructuring
Costs (2)

Adjustment
Subtotal

Non-GAAP
Sales $ 12,311 $ - $ 12,311
 
Costs, Expenses and Other
Materials and production 4,112

 

1,226

 

83

1,309 2,803
 
Marketing and administrative 3,249 64 21 85 3,164
 
Research and development 2,165 127 41 168 1,997
 
Restructuring costs 144 144 144 -
 
Equity income from affiliates (142 ) - (142 )
 
Other (income) expense, net 103 - 103
 
Income Before Taxes 2,680 (1,417 ) (289 ) (1,706 ) 4,386
 
Taxes on Income 860 (272 )

(3)

1,132
 
Net Income 1,820 (1,434 ) 3,254
 
Less: Net Income Attributable to Noncontrolling Interests 27 - 27
 
Net Income Attributable to Merck & Co., Inc. $ 1,793 $ (1,434 ) $ 3,227
 
Earnings per Common Share Assuming Dilution $ 0.58   $ 1.05  

(4)

   
Average Shares Outstanding Assuming Dilution 3,072 3,072
Tax Rate   32.1 %   25.8 %
Merck is providing non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors' understanding of the company's performance. This information should be considered in addition to, but not in lieu of, information prepared in accordance with GAAP.
 
(1) Amounts included in materials and production costs reflect expenses for the amortization of intangible assets recognized as a result of mergers and acquisitions. Amounts included in marketing and administrative expenses reflect merger integration costs. Amounts included in research and development expenses represent in-process research and development (“IPR&D”) impairment charges.
 
(2) Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to actions under the company's formal restructuring programs.
 
(3) Represents the estimated tax impact on the reconciling items.
 
(4) The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. Net income attributable to Merck & Co., Inc. common shareholders used to calculate non-GAAP earnings per common share assuming dilution was $3,226 million for the second quarter of 2012.
 
 

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

 
                           
GAAP

Acquisition-
Related Costs (1)

Restructuring
Costs (2)

Adjustment
Subtotal

Non-GAAP
   
Sales $ 24,041 $ - $ 24,041
 
Costs, Expenses and Other
Materials and production 8,150

 

2,455

 

88

2,543 5,607
 
Marketing and administrative 6,322 115 45 160 6,162
 
Research and development 4,026 136 86 222 3,804
 
Restructuring costs 363 363 363 -
 
Equity income from affiliates (253 ) - (253 )
 
Other (income) expense, net 247 - 247
 
Income Before Taxes 5,186 (2,706 ) (582 ) (3,288 ) 8,474
 
Taxes on Income 1,599 (548 )

(3)

2,147
 
Net Income 3,587 (2,740 ) 6,327
 
Less: Net Income Attributable to Noncontrolling Interests 56 - 56
 
Net Income Attributable to Merck & Co., Inc. $ 3,531 $ (2,740 ) $ 6,271
 
Earnings per Common Share Assuming Dilution $ 1.15   $ 2.04  

(4)

   
Average Shares Outstanding Assuming Dilution 3,074 3,074
Tax Rate   30.8 %   25.3 %
Merck is providing non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors' understanding of the company's performance. This information should be considered in addition to, but not in lieu of, information prepared in accordance with GAAP.
 
(1) Amounts included in materials and production costs reflect expenses for the amortization of intangible assets recognized as a result of mergers and acquisitions. Amounts included in marketing and administrative expenses reflect merger integration costs. Amounts included in research and development expenses represent in-process research and development (“IPR&D”) impairment charges.
 
(2) Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to actions under the company's formal restructuring programs.
 
(3) Represents the estimated tax impact on the reconciling items.
 
(4) The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders. Net income attributable to Merck & Co., Inc. common shareholders used to calculate non-GAAP earnings per common share assuming dilution was $6,266 million for the first six months of 2012.
 
     

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

 
     
2012 2011 % Change   % Change
             
1Q   2Q   Jun YTD 1Q   2Q   Jun YTD   3Q   4Q   Full Year 2Q   Jun YTD
TOTAL SALES (1) $11,731   $12,311   $24,041 $11,580   $12,151   $23,732   $12,022   $12,294   $48,047 1   1
PHARMACEUTICAL 10,082 10,560 20,642 9,820 10,360 20,179 10,354 10,755 41,289 2 2
 
Primary Care and Women's Health
Cardiovascular
Zetia 614 632 1,246 582 592 1,174 614 640 2,428 7 6
Vytorin 444 445 889 480 459 939 469 475 1,882 -3 -5
 
Diabetes & Obesity
Januvia 919 1,058 1,977 739 779 1,518 846 960 3,324 36 30
Janumet 392 411 802 305 321 626 350 386 1,363 28 28
 
Respiratory
Singulair 1,340 1,431 2,771 1,328 1,354 2,682 1,336 1,461 5,479 6 3
Nasonex 375 293 668 373 323 696 266 325 1,286 -9 -4
Clarinex 134 140 273 155 209 364 128 129 621 -33 -25
Asmanex 48 51 99 60 47 107 42 57 206 8 -8
Dulera 39 50 89 13 25 37 22 37 96 * *
 
Women's Health & Endocrine
Fosamax 184 186 370 208 221 429 215 211 855 -16 -14
NuvaRing 146 157 303 142 154 297 159 168 623 2 2
Follistim AQ 116 125 241 133 143 276 129 126 530 -12 -13
Implanon 76 85 161 60 81 141 80 74 294 5 14
Cerazette 67 72 139 59 66 125 74 69 268 9 11
 
Other
Maxalt 156 154 310 173 131 304 156 178 639 17 2
Arcoxia 112 117 229 114 100 214 108 110 431 17 7
Avelox 73 44 117 106 61 167 59 95 322 -28 -30
 
Hospital and Specialty
 
Immunology
Remicade 519 518 1,037 753 842 1,595 561 511 2,667 -38 -35
Simponi 74 76 150 54 75 129 74 61 264 1 16
 
Infectious Disease
Isentress 337 398 735 292 337 629 343 387 1,359 18 17
PegIntron 162 183 345 166 154 319 163 175 657 19 8
Cancidas 145 166 311 158 168 326 150 164 640 -1 -4
Victrelis 111 126 238 1 21 22 31 87 140 * *
Invanz 101 110 211 87 103 189 107 110 406 7 12
Primaxin 88 104 192 136 136 272 124 119 515 -24 -30
Noxafil 59 66 125 55 56 110 61 59 230 19 13
 
Oncology
Temodar 237 225 461 248 234 481 223 230 935 -4 -4
Emend 102 145 247 87 120 207 98 114 419 21 19
 
Other
Cosopt / Trusopt 124 105 229 114 122 236 124 117 477 -14 -3
Bridion 58 60 118 41 47 89 52 60 201 27 33
Integrilin 53 60 113 64 56 120 53 57 230 7 -6
 
Diversified Brands
Cozaar / Hyzaar 336 337 674 426 406 832 404 427 1,663 -17 -19
Propecia 108 100 208 106 112 218 112 117 447 -11 -5
Zocor 103 96 199 127 107 234 110 111 456 -10 -15
Claritin Rx 87 48 134 120 65 186 55 74 314 -27 -28
Remeron 57 66 123 60 57 117 65 59 241 16 5
Proscar 51 55 106 60 53 113 58 52 223 4 -6
Vasotec / Vaseretic 53 49 102 57 59 116 57 58 231 -18 -12
 
Vaccines
Gardasil 284 324 608 214 277 490 445 274 1,209 17 24
ProQuad, M-M-R II and Varivax 255 316 571 244 291 535 391 276 1,202 9 7
RotaTeq 142 142 284 125 148 272 184 195 651 -4 4
Zostavax 76 148 224 24 122 146 108 78 332 22 54
Pneumovax 112 101 213 79 64 143 133 222 498 57 49
 
Other Pharmaceutical (2) 1,013 985 2,000 892 1,064 1,957 1,018 1,064 4,038 -7 2
 
 
ANIMAL HEALTH 821 865 1,686 758 802 1,560 826 868 3,253 8 8
 
CONSUMER CARE 554 552 1,106 517 541 1,058 421 361 1,840 2 5
Claritin OTC 169 145 314 167 134 301 118 92 511 8 4
 
Other Revenues (3) 274 333 608 486 448 935 421 310 1,666 -26 -35
Astra 186   223   409 322   306   628   299   256   1,184 -27   -35
 
* 100% or greater
Sum of quarterly amounts may not equal year-to-date amounts due to rounding.
(1) Only select products are shown.
(2) Includes Pharmaceutical products not individually shown above. Other Vaccines sales included in Other Pharmaceutical were $60 million and $75 million for the first and second quarters of 2012, respectively. Other Vaccines sales included in Other Pharmaceutical were $54 million, $67 million, $100 million and $62 million for the first, second, third and fourth quarters of 2011, respectively.

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

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