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Segment Reporting | 9 Months Ended
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Sep. 30, 2018
Segment Reporting [Abstract] |
Segment Reporting | Segment Reporting 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 and Animal Health segments are the only reportable segments. The Animal Health segment met the criteria for separate reporting and became a reportable segment in the first quarter of 2018. 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. 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. 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 animal health products, including vaccines, 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. Sales of the Company’s products were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
($ 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 | $ | 1,109 |  |  | $ | 780 |  |  | $ | 1,889 |  |  | $ | 604 |  |  | $ | 442 |  |  | $ | 1,047 |  |  | $ | 2,906 |  |  | $ | 2,114 |  |  | $ | 5,020 |  |  | $ | 1,522 |  |  | $ | 990 |  |  | $ | 2,512 |
Emend | 71 |  |  | 52 |  |  | 123 |  |  | 88 |  |  | 49 |  |  | 137 |  |  | 239 |  |  | 157 |  |  | 396 |  |  | 257 |  |  | 156 |  |  | 413 |
Temodar | — |  |  | 46 |  |  | 46 |  |  | — |  |  | 68 |  |  | 68 |  |  | 3 |  |  | 156 |  |  | 159 |  |  | 4 |  |  | 194 |  |  | 198 |
Alliance revenue - Lynparza | 33 |  |  | 15 |  |  | 49 |  |  | — |  |  | 5 |  |  | 5 |  |  | 88 |  |  | 37 |  |  | 125 |  |  | — |  |  | 5 |  |  | 5 |
Alliance revenue - Lenvima | 30 |  |  | 13 |  |  | 43 |  |  | — |  |  | — |  |  | — |  |  | 49 |  |  | 29 |  |  | 78 |  |  | — |  |  | — |  |  | — |
Vaccines |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gardasil/Gardasil 9 | 740 |  |  | 308 |  |  | 1,048 |  |  | 484 |  |  | 191 |  |  | 675 |  |  | 1,422 |  |  | 894 |  |  | 2,317 |  |  | 1,195 |  |  | 481 |  |  | 1,675 |
ProQuad/M-M-R II/Varivax | 429 |  |  | 96 |  |  | 525 |  |  | 419 |  |  | 100 |  |  | 519 |  |  | 1,097 |  |  | 246 |  |  | 1,343 |  |  | 1,058 |  |  | 215 |  |  | 1,273 |
Pneumovax 23 | 160 |  |  | 54 |  |  | 214 |  |  | 174 |  |  | 56 |  |  | 229 |  |  | 394 |  |  | 192 |  |  | 586 |  |  | 392 |  |  | 166 |  |  | 558 |
RotaTeq | 134 |  |  | 57 |  |  | 191 |  |  | 127 |  |  | 52 |  |  | 179 |  |  | 384 |  |  | 156 |  |  | 540 |  |  | 377 |  |  | 148 |  |  | 525 |
Zostavax | (1 | ) |  | 56 |  |  | 54 |  |  | 139 |  |  | 94 |  |  | 234 |  |  | 16 |  |  | 147 |  |  | 163 |  |  | 356 |  |  | 191 |  |  | 547 |
Hospital Acute Care |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bridion | 96 |  |  | 120 |  |  | 217 |  |  | 63 |  |  | 122 |  |  | 185 |  |  | 272 |  |  | 389 |  |  | 661 |  |  | 162 |  |  | 333 |  |  | 495 |
Noxafil | 89 |  |  | 99 |  |  | 188 |  |  | 78 |  |  | 83 |  |  | 162 |  |  | 257 |  |  | 294 |  |  | 551 |  |  | 220 |  |  | 237 |  |  | 458 |
Invanz | 74 |  |  | 62 |  |  | 137 |  |  | 93 |  |  | 66 |  |  | 159 |  |  | 252 |  |  | 185 |  |  | 437 |  |  | 268 |  |  | 177 |  |  | 445 |
Cubicin | 55 |  |  | 40 |  |  | 95 |  |  | 41 |  |  | 50 |  |  | 91 |  |  | 150 |  |  | 137 |  |  | 287 |  |  | 148 |  |  | 141 |  |  | 290 |
Cancidas | 2 |  |  | 77 |  |  | 79 |  |  | 6 |  |  | 88 |  |  | 94 |  |  | 10 |  |  | 247 |  |  | 257 |  |  | 17 |  |  | 310 |  |  | 327 |
Primaxin | 1 |  |  | 71 |  |  | 72 |  |  | 5 |  |  | 68 |  |  | 73 |  |  | 6 |  |  | 206 |  |  | 212 |  |  | 7 |  |  | 199 |  |  | 206 |
Immunology |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Simponi | — |  |  | 210 |  |  | 210 |  |  | — |  |  | 219 |  |  | 219 |  |  | — |  |  | 673 |  |  | 673 |  |  | — |  |  | 602 |  |  | 602 |
Remicade | — |  |  | 135 |  |  | 135 |  |  | — |  |  | 214 |  |  | 214 |  |  | — |  |  | 459 |  |  | 459 |  |  | — |  |  | 651 |  |  | 651 |
Neuroscience |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Belsomra | 23 |  |  | 43 |  |  | 66 |  |  | 27 |  |  | 30 |  |  | 56 |  |  | 76 |  |  | 115 |  |  | 191 |  |  | 72 |  |  | 78 |  |  | 150 |
Virology |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Isentress/Isentress HD | 123 |  |  | 151 |  |  | 275 |  |  | 143 |  |  | 167 |  |  | 310 |  |  | 383 |  |  | 477 |  |  | 860 |  |  | 422 |  |  | 474 |  |  | 896 |
Zepatier | 18 |  |  | 86 |  |  | 104 |  |  | 228 |  |  | 241 |  |  | 468 |  |  | 8 |  |  | 339 |  |  | 347 |  |  | 683 |  |  | 680 |  |  | 1,363 |
Cardiovascular |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Zetia | 9 |  |  | 157 |  |  | 165 |  |  | 65 |  |  | 255 |  |  | 320 |  |  | 34 |  |  | 662 |  |  | 696 |  |  | 298 |  |  | 723 |  |  | 1,021 |
Vytorin | — |  |  | 92 |  |  | 92 |  |  | (6 | ) |  | 148 |  |  | 142 |  |  | 11 |  |  | 402 |  |  | 414 |  |  | 114 |  |  | 451 |  |  | 565 |
Atozet | — |  |  | 84 |  |  | 84 |  |  | — |  |  | 59 |  |  | 59 |  |  | — |  |  | 258 |  |  | 258 |  |  | — |  |  | 171 |  |  | 171 |
Adempas | — |  |  | 94 |  |  | 94 |  |  | — |  |  | 70 |  |  | 70 |  |  | — |  |  | 238 |  |  | 238 |  |  | — |  |  | 221 |  |  | 221 |
Diabetes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Januvia | 498 |  |  | 429 |  |  | 927 |  |  | 598 |  |  | 414 |  |  | 1,012 |  |  | 1,466 |  |  | 1,291 |  |  | 2,756 |  |  | 1,646 |  |  | 1,153 |  |  | 2,799 |
Janumet | 225 |  |  | 339 |  |  | 563 |  |  | 197 |  |  | 316 |  |  | 513 |  |  | 625 |  |  | 1,067 |  |  | 1,693 |  |  | 640 |  |  | 933 |  |  | 1,572 |
Women’s Health |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
NuvaRing | 193 |  |  | 41 |  |  | 234 |  |  | 160 |  |  | 54 |  |  | 214 |  |  | 550 |  |  | 135 |  |  | 686 |  |  | 425 |  |  | 148 |  |  | 573 |
Implanon/Nexplanon | 133 |  |  | 53 |  |  | 186 |  |  | 110 |  |  | 45 |  |  | 155 |  |  | 375 |  |  | 160 |  |  | 535 |  |  | 367 |  |  | 137 |  |  | 503 |
Diversified Brands |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Singulair | 5 |  |  | 156 |  |  | 161 |  |  | 16 |  |  | 145 |  |  | 161 |  |  | 16 |  |  | 505 |  |  | 521 |  |  | 28 |  |  | 522 |  |  | 550 |
Cozaar/Hyzaar | 4 |  |  | 99 |  |  | 103 |  |  | 9 |  |  | 119 |  |  | 128 |  |  | 18 |  |  | 330 |  |  | 348 |  |  | 15 |  |  | 345 |  |  | 360 |
Nasonex | 7 |  |  | 64 |  |  | 71 |  |  | (23 | ) |  | 65 |  |  | 42 |  |  | 8 |  |  | 266 |  |  | 274 |  |  | 16 |  |  | 250 |  |  | 266 |
Arcoxia | — |  |  | 83 |  |  | 83 |  |  | — |  |  | 80 |  |  | 80 |  |  | — |  |  | 249 |  |  | 249 |  |  | — |  |  | 272 |  |  | 272 |
Follistim AQ | 26 |  |  | 34 |  |  | 60 |  |  | 30 |  |  | 41 |  |  | 72 |  |  | 83 |  |  | 115 |  |  | 198 |  |  | 104 |  |  | 128 |  |  | 232 |
Fosamax | 2 |  |  | 42 |  |  | 45 |  |  | 4 |  |  | 48 |  |  | 53 |  |  | 3 |  |  | 155 |  |  | 159 |  |  | 7 |  |  | 173 |  |  | 180 |
Dulera | 44 |  |  | 6 |  |  | 50 |  |  | 52 |  |  | 7 |  |  | 59 |  |  | 128 |  |  | 21 |  |  | 149 |  |  | 191 |  |  | 19 |  |  | 210 |
Other pharmaceutical (1) | 317 |  |  | 666 |  |  | 980 |  |  | 266 |  |  | 688 |  |  | 952 |  |  | 877 |  |  | 2,150 |  |  | 3,023 |  |  | 876 |  |  | 2,140 |  |  | 3,017 |
Total Pharmaceutical segment sales | 4,649 |  |  | 5,010 |  |  | 9,658 |  |  | 4,197 |  |  | 4,959 |  |  | 9,156 |  |  | 12,206 |  |  | 15,653 |  |  | 27,859 |  |  | 11,887 |  |  | 14,214 |  |  | 26,101 |
Animal Health: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Livestock | 153 |  |  | 508 |  |  | 660 |  |  | 137 |  |  | 518 |  |  | 655 |  |  | 383 |  |  | 1,563 |  |  | 1,946 |  |  | 359 |  |  | 1,457 |  |  | 1,816 |
Companion Animals | 153 |  |  | 207 |  |  | 361 |  |  | 153 |  |  | 192 |  |  | 345 |  |  | 541 |  |  | 689 |  |  | 1,230 |  |  | 483 |  |  | 595 |  |  | 1,078 |
Total Animal Health segment sales | 306 |  |  | 715 |  |  | 1,021 |  |  | 290 |  |  | 710 |  |  | 1,000 |  |  | 924 |  |  | 2,252 |  |  | 3,176 |  |  | 842 |  |  | 2,052 |  |  | 2,894 |
Other segment sales (2) | 55 |  |  | — |  |  | 55 |  |  | 100 |  |  | — |  |  | 100 |  |  | 194 |  |  | 1 |  |  | 195 |  |  | 294 |  |  | — |  |  | 294 |
Total segment sales | 5,010 |  |  | 5,725 |  |  | 10,734 |  |  | 4,587 |  |  | 5,669 |  |  | 10,256 |  |  | 13,324 |  |  | 17,906 |  |  | 31,230 |  |  | 13,023 |  |  | 16,266 |  |  | 29,289 |
Other (3) | 20 |  |  | 39 |  |  | 60 |  |  | 7 |  |  | 63 |  |  | 69 |  |  | 101 |  |  | (35 | ) |  | 66 |  |  | 73 |  |  | 327 |  |  | 400 |
| $ | 5,030 |  |  | $ | 5,764 |  |  | $ | 10,794 |  |  | $ | 4,594 |  |  | $ | 5,732 |  |  | $ | 10,325 |  |  | $ | 13,425 |  |  | $ | 17,871 |  |  | $ | 31,296 |  |  | $ | 13,096 |  |  | $ | 16,593 |  |  | $ | 29,689 |
U.S. plus international may not equal total due to rounding.
(1) | Other pharmaceutical primarily reflects sales of other human health pharmaceutical products, including products within the franchises not listed separately.
(2) | Represents the non-reportable segments of Healthcare Services and Alliances.
(3) | Other is primarily comprised of miscellaneous corporate revenues, including revenue hedging activities, as well as third-party manufacturing sales. Other in the first nine months of 2018 and 2017 also includes $81 million and $60 million, respectively, related to the sale of the marketing rights to certain products.
Consolidated revenues by geographic area where derived are as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
($ in millions) | 2018 |  | 2017 |  | 2018 |  | 2017
United States | $ | 5,030 |  |  | $ | 4,594 |  |  | $ | 13,425 |  |  | $ | 13,096 |
Europe, Middle East and Africa | 2,884 |  |  | 2,941 |  |  | 9,218 |  |  | 8,374 |
Asia Pacific | 1,178 |  |  | 1,112 |  |  | 3,766 |  |  | 3,164 |
Japan | 761 |  |  | 775 |  |  | 2,353 |  |  | 2,320 |
Latin America | 622 |  |  | 585 |  |  | 1,748 |  |  | 1,654 |
Other | 319 |  |  | 318 |  |  | 786 |  |  | 1,081 |
| $ | 10,794 |  |  | $ | 10,325 |  |  | $ | 31,296 |  |  | $ | 29,689 |
A reconciliation of segment profits to Income before taxes is as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
($ in millions) | 2018 |  | 2017 |  | 2018 |  | 2017
Segment profits: |  |  |  |  |  |  |
Pharmaceutical segment | $ | 6,479 |  |  | $ | 5,906 |  |  | $ | 18,109 |  |  | $ | 16,657 |
Animal Health segment | 409 |  |  | 389 |  |  | 1,273 |  |  | 1,202 |
Other segments | 5 |  |  | 93 |  |  | 94 |  |  | 234 |
Total segment profits | 6,893 |  |  | 6,388 |  |  | 19,476 |  |  | 18,093 |
Other profits (losses) | 55 |  |  | (78 | ) |  | (35 | ) |  | 107 |
Unallocated: |  |  |  |  |  |  |
Interest income | 92 |  |  | 90 |  |  | 257 |  |  | 284 |
Interest expense | (190 | ) |  | (189 | ) |  | (569 | ) |  | (564 | )
Equity income from affiliates | 85 |  |  | 23 |  |  | 101 |  |  | 16 |
Depreciation and amortization | (324 | ) |  | (334 | ) |  | (1,006 | ) |  | (1,036 | )
Research and development | (1,855 | ) |  | (4,208 | ) |  | (6,878 | ) |  | (7,399 | )
Amortization of purchase accounting adjustments | (679 | ) |  | (765 | ) |  | (2,144 | ) |  | (2,322 | )
Restructuring costs | (171 | ) |  | (153 | ) |  | (494 | ) |  | (470 | )
Aggregate charge related to termination of collaboration agreement with Samsung | (420 | ) |  | — |  |  | (420 | ) |  | — |
Other unallocated, net | (821 | ) |  | (574 | ) |  | (2,191 | ) |  | (2,067 | )
| $ | 2,665 |  |  | $ | 200 |  |  | $ | 6,097 |  |  | $ | 4,642 |
Pharmaceutical segment profits are comprised of segment sales less standard costs, as well as marketing and administrative expenses and research and development costs directly incurred by the segment. Animal Health segment profits are comprised of segment sales, less all materials and production costs, as well as marketing 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 materials and production costs 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 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 sales. Other unallocated, net includes expenses from corporate and manufacturing cost centers, goodwill and other intangible asset impairment charges, gains or losses on sales of businesses, expense or income related to changes in the estimated fair value of contingent consideration, and other miscellaneous income or expense items. In the first quarter of 2018, the Company adopted a new accounting standard related to the classification of certain defined benefit plan costs (see Note 1), which resulted in a change to the measurement of segment profits. Net periodic benefit cost (credit) other than service cost is no longer included as a component of segment profits. Prior period amounts have been recast to conform to the new presentation.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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