Restructuring

12 Months Ended

Dec. 31, 2023

Restructuring and Related Activities [Abstract]

2024 Restructuring Program

In January 2024, the Company approved a new restructuring program (2024 Restructuring Program) intended to continue the optimization of the Company’s Human Health global manufacturing network as the future pipeline shifts to new modalities and also optimize the Animal Health global manufacturing network to improve supply reliability and increase efficiency. The actions contemplated under the 2024 Restructuring Program are expected to be substantially completed by the end of 2031, with the cumulative pretax costs to be incurred by the Company to implement the program estimated to be approximately $4.0 billion. Approximately 60% of the cumulative pretax costs will be non-cash, relating primarily to the accelerated depreciation of facilities to be closed or divested. The remainder of the costs will result in cash outlays, relating primarily to facility shut-down costs. The Company recorded total pretax costs of $190 million in 2023 related to the 2024 Restructuring Program.

2019 Restructuring Program

In 2019, Merck approved a global restructuring program (2019 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 Company recorded total pretax costs of $743 million in 2023, $666 million in 2022 and $868 million in 2021 related to the 2019 Restructuring Program. Since inception of the 2019 Restructuring Program through December 31, 2023, Merck recorded total pretax accumulated costs of approximately $4.1 billion. Approximately 70% of the cumulative pretax costs were cash outlays, primarily related to employee separation expense and facility shut-down costs. Approximately 30% of the cumulative pretax costs were non-cash, relating primarily to the accelerated depreciation of facilities to be closed or divested. The actions under the 2019 Restructuring Program are substantially complete.

For segment reporting, restructuring charges are unallocated expenses.

The following table summarizes the charges related to the restructuring programs by type of cost:


	Separation Costs		Accelerated Depreciation		Other Exit Costs		Total
Year Ended December 31, 2023
2024 Restructuring Program
Cost of sales	$	—	$	—	$	62	$	62
Restructuring costs	115		—		13		128
	115		—		75		190
2019 Restructuring Program
Cost of sales	—		131		18		149
Selling, general and administrative	—		9		113		122
Research and development	—		—		1		1
Restructuring costs	339		—		132		471
	339		140		264		743
	$	454	$	140	$	339	$	933
Year Ended December 31, 2022
2019 Restructuring Program
Cost of sales	$	—	$	72	$	133	$	205
Selling, general and administrative	—		19		75		94
Research and development	—		29		1		30
Restructuring costs	212		—		125		337
	$	212	$	120	$	334	$	666
Year Ended December 31, 2021
2019 Restructuring Program
Cost of sales	$	—	$	52	$	108	$	160
Selling, general and administrative	—		12		7		19
Research and development	—		27		1		28
Restructuring costs	451		—		210		661
	$	451	$	91	$	326	$	868

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 programs. 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 exit costs in 2023, 2022 and 2021 include 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 14) and share-based compensation.

The following table summarizes the charges and spending relating to restructuring program activities by program:


	Separation Costs		Accelerated Depreciation		Other Exit Costs		Total
2024 Restructuring Program
Restructuring reserves January 1, 2023	$	—	$	—	$	—	$	—
Expenses	115		—		75		190
(Payments) receipts, net	—		—		(13)		(13)
Non-cash activity	—		—		(62)		(62)
Restructuring reserves December 31, 2023	$	115	$	—	$	—	$	115
2019 Restructuring Program
Restructuring reserves January 1, 2022	$	596	$	—	$	41	$	637
Expenses	212		120		334		666
(Payments) receipts, net	(329)		—		(120)		(449)
Non-cash activity	—		(120)		(221)		(341)
Restructuring reserves December 31, 2022	479		—		34		513
Expenses	339		140		264		743
(Payments) receipts, net	(252)		—		(145)		(397)
Non-cash activity	—		(140)		(122)		(262)
Restructuring reserves December 31, 2023	$	566	$	—	$	31	$	597