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Segment Reporting
 3 Months Ended
Mar. 31, 2022
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
The Company’s operations are principally managed on a product basis and include two operating segments, which are the Pharmaceutical and Animal Health segments, 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 and animal producers.
Sales of the Company’s products were as follows:
Three Months Ended March 31,
20222021
 ($ in millions)U.S.Int’lTotalU.S.Int’lTotal
Pharmaceutical:
Oncology
Keytruda$2,779 $2,030 $4,809 $2,181 $1,718 $3,899 
Alliance revenue - Lynparza (1)
141 125 266 118 110 228 
Alliance revenue - Lenvima (1)
156 71 227 85 44 130 
Alliance revenue - Reblozyl (2)
27 25 52 — — — 
Vaccines
Gardasil/Gardasil 9
418 1,042 1,460 313 604 917 
ProQuad/M-M-R II/Varivax
371 99 470 333 117 449 
RotaTeq175 41 216 118 41 158 
Pneumovax 23
118 55 173 73 99 171 
Vaqta29 7 36 25 9 34 
Hospital Acute Care
Bridion195 199 395 167 173 340 
Prevymis40 54 94 35 47 82 
Primaxin1 58 58 — 65 65 
Noxafil10 48 57 15 52 67 
Cancidas1 52 53 3 55 57 
Dificid49 3 52 25 2 27 
Invanz1 52 52 4 52 57 
Zerbaxa18 12 30 (2)(6)(8)
Cardiovascular
Alliance revenue - Adempas/Verquvo (3)
71 1 72 68 6 74 
Adempas— 61 61 — 55 55 
Virology
Lagevrio1,523 1,723 3,247 — — — 
Isentress/Isentress HD
61 97 158 71 138 209 
Neuroscience
Belsomra20 48 69 18 61 79 
Immunology
Simponi— 186 186 — 214 214 
Remicade— 61 61 — 85 85 
Diabetes
Januvia325 454 779 348 461 809 
Janumet63 391 454 84 401 486 
Other pharmaceutical (4)
181 339 520 212 341 554 
Total Pharmaceutical segment sales6,773 7,334 14,107 4,294 4,944 9,238 
Animal Health:
Livestock171 661 832 157 662 819 
Companion Animals302 348 650 280 319 599 
Total Animal Health segment sales473 1,009 1,482 437 981 1,418 
Total segment sales7,246 8,343 15,589 4,731 5,925 10,656 
Other (5)
93 220 312 59 (88)(29)
 $7,339 $8,563 $15,901 $4,790 $5,837 $10,627 
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 4).
(2)    Alliance revenue for Reblozyl represents royalties and a payment received related to the achievement of a regulatory milestone (see Note 4).
(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 4).
(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 revenues, including revenue hedging activities, as well as third-party manufacturing sales (including sales to Organon). Other for the three months ended March 31, 2022 and 2021 also includes $114 million and $56 million, respectively, related to upfront and contingent 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 $2.9 billion and $2.8 billion for the three months ended March 31, 2022 and 2021, respectively.
Consolidated sales by geographic area where derived are as follows:
Three Months Ended
March 31,
($ in millions)20222021
United States$7,339 $4,790 
Europe, Middle East and Africa4,359 3,237 
China1,143 721 
Japan989 629 
Asia Pacific (other than China and Japan)930 575 
Latin America607 500 
Other534 175 
 $15,901 $10,627 
A reconciliation of segment profits to Income from Continuing Operations Before Taxes is as follows:
 Three Months Ended
March 31,
($ in millions)20222021
Segment profits:
Pharmaceutical segment$9,501 $6,589 
Animal Health segment585 572 
Total segment profits10,086 7,161 
Other profits194 (50)
Unallocated:
Interest income7 11 
Interest expense(243)(200)
Amortization(699)(514)
Depreciation(378)(340)
Research and development(2,446)(2,305)
Restructuring costs(53)(297)
Other unallocated, net(1,607)(479)
 $4,861 $2,987 
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 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 measurement of liabilities for contingent consideration, and other miscellaneous income or expense items.