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Segment Reporting
 3 Months Ended
Mar. 31, 2025
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
The Company’s operations are principally managed on a product basis and include two operating segments, Pharmaceutical and Animal Health, 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, 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, animal producers, farmers and pet owners.
Sales of the Company’s products were as follows:
Three Months Ended March 31,
20252024
 ($ in millions)U.S.Int’lTotalU.S.Int’lTotal
Pharmaceutical:
Oncology
Keytruda$4,308 $2,897 $7,205 $4,119 $2,828 $6,947 
Alliance revenue-Lynparza (1)
145 168 312 135 157 292 
Alliance revenue-Lenvima (1)
186 72 258 173 82 255 
Welireg123 15 137 77 7 85 
Alliance revenue-Reblozyl (2)
101 18 119 58 12 71 
Vaccines
Gardasil/Gardasil 9
536 790 1,327 488 1,761 2,249 
ProQuad/M-M-R II/Varivax
423 116 539 438 133 570 
Vaxneuvance139 92 230 161 58 219 
RotaTeq164 64 228 149 67 216 
Capvaxive
106 1 107 — — — 
Pneumovax 23
(2)42 41 6 55 61 
Hospital Acute Care
Bridion378 63 441 329 111 440 
Prevymis102 106 208 74 100 174 
Dificid72 11 83 68 5 73 
Zerbaxa42 28 70 33 23 56 
Cardiovascular
Winrevair
268 12 280 — — — 
Alliance revenue-Adempas/Verquvo (3)
97 9 106 90 8 98 
Adempas— 68 68 — 70 70 
Virology
Lagevrio35 67 102 45 305 350 
Isentress/Isentress HD
51 39 90 50 61 111 
Delstrigo
15 52 67 12 44 56 
Pifeltro
32 13 45 29 13 42 
Neuroscience
Belsomra13 37 50 15 32 46 
Immunology
Simponi— — — — 184 184 
Remicade— — — — 39 39 
Diabetes
Januvia344 204 549 183 236 419 
Janumet65 182 247 39 212 251 
Other pharmaceutical (4)
184 545 729 165 467 632 
Total Pharmaceutical segment sales7,927 5,711 13,638 6,936 7,070 14,006 
Animal Health:
Livestock194 730 924 166 683 850 
Companion Animal308 356 664 308 354 661 
Total Animal Health segment sales502 1,086 1,588 474 1,037 1,511 
Total segment sales8,429 6,797 15,226 7,410 8,107 15,517 
Other (5)
93 210 303 68 190 258 
 $8,522 $7,007 $15,529 $7,478 $8,297 $15,775 
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 3).
(2)    Alliance revenue for Reblozyl represents royalties (see Note 3).
(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 3).
(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 revenue, including revenue hedging activities which increased sales by $58 million and $54 million for the three months ended March 31, 2025 and 2024, respectively, as well as revenue from third-party manufacturing arrangements (including sales to Organon & Co.). Other for the three months ended March 31, 2025 and 2024 also includes $95 million and $61 million, respectively, related to upfront and 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 $2.1 billion and $3.2 billion for the three months ended March 31, 2025 and 2024, respectively.
Consolidated sales by geographic area where derived are as follows:
Three Months Ended
March 31,
($ in millions)20252024
United States$8,522 $7,478 
Europe, Middle East and Africa3,454 3,563 
Latin America792 796 
China702 1,772 
Asia Pacific (other than China and Japan)689 724 
Japan669 821 
Other701 621 
 $15,529 $15,775 
A reconciliation of segment profits to Income Before Taxes is as follows:
Three Months Ended March 31,
20252024
($ in millions)
Pharmaceutical
Animal HealthTotal
Pharmaceutical
Animal HealthTotal
Segment sales$13,638 $1,588 $15,226 $14,006 $1,511 $15,517 
Less segment costs: (1)
Cost of sales1,573 600 1,706 613 
Selling, general and administrative1,402 260 1,429 252 
Research and development (2)
— 95 — 90 
Other segment items (3)
(49)(1)(33)1 
Total segment profits10,712 634 11,346 10,904 555 11,459 
Other profits202 146 
Unallocated:
Interest income109 73 
Interest expense(313)(303)
Amortization(597)(473)
Depreciation(441)(452)
Research and development(3,477)(3,851)
Restructuring costs(69)(123)
Other unallocated, net(857)(806)
$5,903 $5,670 
(1)    The significant expense categories and amounts align with the segment level information that is regularly provided to the chief operating decision maker.
(2)    Human health-related research and development expenses incurred by Merck Research Laboratories are not allocated to segment profits as noted below.
(3)    Includes equity (income) loss from affiliates and other miscellaneous non-operating expenses.
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. The chief operating decision maker (Merck’s Chief Executive Officer) uses segment profit to allocate resources predominately during the planning and forecasting process. 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 by Merck Research Laboratories, the Company’s research and development division that focuses on human health-related activities, or general and administrative expenses not directly incurred by the segments, 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 amortization of purchase accounting adjustments are not allocated to segments.
Other profits are primarily comprised of miscellaneous corporate profits, as well as operating profits (losses) related to third-party manufacturing arrangements.
Other unallocated, net, includes expenses from corporate and manufacturing cost centers, 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.
Equity income from affiliates and depreciation included in segment profits is as follows:
Three Months Ended March 31,
20252024
($ in millions)PharmaceuticalAnimal HealthTotalPharmaceuticalAnimal HealthTotal
Equity income from affiliates
$58 $— $58 $48 $— $48 
Depreciation
1 60 61 1 58 59 
Property, plant and equipment, net, by geographic area where located is as follows:
($ in millions)
March 31, 2025December 31, 2024
United States$14,891 $14,724 
Europe, Middle East and Africa8,402 7,548 
Asia Pacific (other than China and Japan)
973 982 
China198 202 
Japan145 143 
Latin America135 133 
Other49 47 
$24,793 $23,779 
The Company does not disaggregate assets on a products and services basis for internal management reporting and, therefore, such information is not presented.