Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 31, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | MRK | |
Entity Registrant Name | Merck & Co., Inc. | |
Entity Central Index Key | 310,158 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 2,793,543,137 |
INTERIM CONSOLIDATED STATEMENT
INTERIM CONSOLIDATED STATEMENT OF INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | ||||
Sales | $ 10,073 | $ 10,557 | $ 29,283 | $ 31,755 |
Costs, Expenses and Other | ||||
Materials and production | 3,761 | 4,223 | 11,084 | 13,019 |
Marketing and administrative | 2,472 | 2,975 | 7,698 | 8,681 |
Research and development | 1,500 | 1,659 | 4,906 | 4,897 |
Restructuring costs | 113 | 376 | 386 | 664 |
Other (income) expense, net | (170) | (166) | 624 | (978) |
Total Costs, Expenses and Other | 7,676 | 9,067 | 24,698 | 26,283 |
Income Before Taxes | 2,397 | 1,490 | 4,585 | 5,472 |
Income Tax Provision | 566 | 648 | 1,108 | 865 |
Net Income | 1,831 | 842 | 3,477 | 4,607 |
Less: Net Income (Loss) Attributable to Noncontrolling Interests | 5 | (53) | 12 | 3 |
Net Income Attributable to Merck & Co., Inc. | $ 1,826 | $ 895 | $ 3,465 | $ 4,604 |
Basic Earnings per Common Share Attributable to Merck & Co., Inc. Common Shareholders, in dollars per share | $ 0.65 | $ 0.31 | $ 1.23 | $ 1.58 |
Earnings per Common Share Assuming Dilution Attributable to Merck & Co., Inc. Common Shareholders, in dollars per share | 0.64 | 0.31 | 1.22 | 1.57 |
Dividends Declared per Common Share, in dollars per share | $ 0.45 | $ 0.44 | $ 1.35 | $ 1.32 |
INTERIM CONSOLIDATED STATEMENT3
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income Attributable to Merck & Co., Inc. | $ 1,826 | $ 895 | $ 3,465 | $ 4,604 |
Other Comprehensive Income (Loss) Net of Taxes: | ||||
Net unrealized (loss) gain on derivatives, net of reclassifications | (118) | 254 | (42) | 149 |
Net unrealized (loss) gain on investments, net of reclassifications | (67) | (29) | (35) | 33 |
Benefit plan net gain (loss) and prior service credit (cost), net of amortization | 29 | (463) | 106 | (795) |
Cumulative translation adjustment | (85) | (316) | (279) | (188) |
Other comprehensive income (loss), net of taxes | (241) | (554) | (250) | (801) |
Comprehensive Income Attributable to Merck & Co., Inc. | $ 1,585 | $ 341 | $ 3,215 | $ 3,803 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash and cash equivalents | $ 7,548 | $ 7,441 |
Short-term investments | 4,541 | 8,278 |
Accounts receivable (net of allowance for doubtful accounts of $163 in 2015 and $153 in 2014) (excludes accounts receivable of $30 in 2015 and $80 in 2014 classified in Other assets) | 6,414 | 6,626 |
Inventories (excludes inventories of $1,534 in 2015 and $1,664 in 2014 classified in Other assets) | 5,123 | 5,571 |
Deferred income taxes and other current assets | 4,941 | 5,257 |
Total current assets | 28,567 | 33,173 |
Investments | 13,080 | 13,515 |
Property, Plant and Equipment, at cost, net of accumulated depreciation of $16,043 in 2015 and $18,004 in 2014 | 12,482 | 13,136 |
Goodwill | 17,761 | 12,992 |
Other Intangibles, Net | 23,724 | 20,386 |
Other Assets | 5,618 | 5,133 |
Total Assets | 101,232 | 98,335 |
Current Liabilities | ||
Loans payable and current portion of long-term debt | 2,543 | 2,704 |
Trade accounts payable | 2,023 | 2,625 |
Accrued and other current liabilities | 9,610 | 10,523 |
Income taxes payable | 2,119 | 1,606 |
Dividends payable | 1,288 | 1,308 |
Total current liabilities | 17,583 | 18,766 |
Long-Term Debt | 24,124 | 18,699 |
Deferred Income Taxes | 5,959 | 4,266 |
Other Noncurrent Liabilities | 7,887 | 7,813 |
Merck & Co., Inc. Stockholders’ Equity | ||
Common stock, $0.50 par value Authorized - 6,500,000,000 shares Issued - 3,577,103,522 shares in 2015 and 2014 | 1,788 | 1,788 |
Other paid-in capital | 40,139 | 40,423 |
Retained earnings | 45,660 | 46,021 |
Accumulated other comprehensive loss | (4,573) | (4,323) |
Stockholders' equity before deduction for treasury stock | 83,014 | 83,909 |
Less treasury stock, at cost: 774,869,058 shares in 2015 and 738,963,326 shares in 2014 | 37,427 | 35,262 |
Total Merck & Co., Inc. stockholders’ equity | 45,587 | 48,647 |
Noncontrolling Interests | 92 | 144 |
Total equity | 45,679 | 48,791 |
Liabilities and Equity | $ 101,232 | $ 98,335 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 163 | $ 153 |
Accounts receivable classified in Other assets | 30 | 80 |
Inventories classified in Other assets | 1,534 | 1,664 |
Accumulated depreciation | $ 16,043 | $ 18,004 |
Common stock, par value (in dollars per share) | $ 0.50 | $ 0.50 |
Common stock, shares authorized | 6,500,000,000 | 6,500,000,000 |
Common stock, shares issued | 3,577,103,522 | 3,577,103,522 |
Treasury stock, shares | 774,869,058 | 738,963,326 |
INTERIM CONSOLIDATED STATEMENT6
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash Flows from Operating Activities | ||
Net income | $ 3,477 | $ 4,607 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 4,815 | 5,118 |
Intangible asset impairment charges | 80 | 1,209 |
Foreign currency devaluation related to Venezuela | 715 | 0 |
Gain on AstraZeneca option exercise | 0 | (741) |
Equity income from affiliates | (210) | (241) |
Dividends and distributions from equity affiliates | 12 | 132 |
Deferred income taxes | (846) | (1,773) |
Share-based compensation | 221 | 209 |
Other | 697 | (446) |
Net changes in assets and liabilities | (787) | 950 |
Net Cash Provided by Operating Activities | 8,174 | 9,024 |
Cash Flows from Investing Activities | ||
Capital expenditures | (790) | (827) |
Purchases of securities and other investments | (12,425) | (16,231) |
Proceeds from sales of securities and other investments | 16,531 | 11,807 |
Acquisition of Cubist Pharmaceuticals, Inc., net of cash acquired | (7,598) | 0 |
Acquisition of Idenix Pharmaceuticals, Inc., net of cash acquired | 0 | (3,700) |
Acquisitions of other businesses, net of cash acquired | (110) | 0 |
Dispositions of businesses, net of cash divested | 151 | 1,048 |
Proceeds from AstraZeneca option exercise | 0 | 419 |
Other | 100 | (94) |
Net Cash Used in Investing Activities | (4,141) | (7,578) |
Cash Flows from Financing Activities | ||
Net change in short-term borrowings | (1,526) | 3,077 |
Proceeds from issuance of debt | 7,938 | 1 |
Payments on debt | (2,905) | (7) |
Purchases of treasury stock | (3,005) | (6,083) |
Dividends paid to stockholders | (3,854) | (3,911) |
Proceeds from exercise of stock options | 434 | 1,381 |
Other | 55 | 72 |
Net Cash Used in Financing Activities | (2,863) | (5,470) |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (1,063) | (227) |
Net Increase (Decrease) in Cash and Cash Equivalents | 107 | (4,251) |
Cash and Cash Equivalents at Beginning of Year | 7,441 | 15,621 |
Cash and Cash Equivalents at End of Period | $ 7,548 | $ 11,370 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim consolidated financial statements of Merck & Co., Inc. (Merck or the Company) have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements are not included herein. These interim statements should be read in conjunction with the audited financial statements and notes thereto included in Merck’s Form 10-K filed on February 27, 2015. On January 21, 2015, the Company acquired Cubist Pharmaceuticals, Inc. (Cubist) and, on July 31, 2015, Merck acquired cCAM Biotherapeutics Ltd. (cCAM). The results of Cubist’s and cCAM’s businesses have been included in Merck’s financial statements subsequent to their respective acquisition dates. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. In the Company’s opinion, all adjustments necessary for a fair presentation of these interim statements have been included and are of a normal and recurring nature. Certain reclassifications have been made to prior year amounts to conform to the current presentation. Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued amended accounting guidance on revenue recognition that will be applied to all contracts with customers. The objective of the new guidance is to improve comparability of revenue recognition practices across entities and to provide more useful information to users of financial statements through improved disclosure requirements. In August 2015, the FASB approved a one-year deferral of the effective date making this guidance effective for annual and interim periods beginning in 2018. Reporting entities may choose to adopt the standard as of the original effective date. The Company is currently assessing the impact of adoption on its consolidated financial statements. |
Restructuring
Restructuring | 9 Months Ended |
Sep. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring 2013 Restructuring Program In 2013, the Company initiated actions under a global restructuring program (2013 Restructuring Program) as part of a global initiative to sharpen its commercial and research and development focus. As part of the program, the Company expects to reduce its total workforce by approximately 8,500 positions. These workforce reductions will primarily come from the elimination of positions in sales, administrative and headquarters organizations, as well as research and development. The Company will also reduce its global real estate footprint and continue to improve the efficiency of its manufacturing and supply network. The Company will continue to hire employees in strategic growth areas of the business as necessary. The Company recorded total pretax costs of $102 million and $437 million in the third quarter of 2015 and 2014 , respectively, and $318 million and $826 million in the first nine months of 2015 and 2014 , respectively, related to this restructuring program. Since inception of the 2013 Restructuring Program through September 30, 2015 , Merck has recorded total pretax accumulated costs of approximately $2.8 billion and eliminated approximately 7,715 positions comprised of employee separations, as well as the elimination of contractors and vacant positions. The actions under the 2013 Restructuring Program are expected to be substantially completed by the end of 2015 with the cumulative pretax costs estimated to be approximately $3.0 billion . The Company estimates that approximately two-thirds of the cumulative pretax costs will result in cash outlays, primarily related to employee separation expense. Approximately one-third of the cumulative pretax costs are non-cash, relating primarily to the accelerated depreciation of facilities to be closed or divested. Merger Restructuring Program In 2010, subsequent to the Merck and Schering-Plough Corporation (Schering-Plough) merger (Merger), the Company commenced actions under a global restructuring program (Merger Restructuring Program) designed to streamline the cost structure of the combined company. Further actions under this program were initiated in 2011. The actions under this program primarily reflect the elimination of positions in sales, administrative and headquarters organizations, as well as from the sale or closure of certain manufacturing and research and development sites and the consolidation of office facilities. The Company recorded total pretax costs of $115 million and $175 million in the third quarter of 2015 and 2014 , respectively, and $452 million and $533 million in the first nine months of 2015 and 2014 , respectively, related to this restructuring program. Since inception of the Merger Restructuring Program through September 30, 2015 , Merck has recorded total pretax accumulated costs of approximately $8.3 billion and eliminated approximately 29,420 positions comprised of employee separations, as well as the elimination of contractors and vacant positions. Approximately 2,050 position eliminations remain pending under this program as of September 30, 2015 . The non-manufacturing related restructuring actions under the Merger Restructuring Program were substantially completed by the end of 2013. The remaining actions under this program primarily relate to ongoing manufacturing facility rationalizations, which are expected to be substantially completed by the end of 2016. The Company expects the estimated total cumulative pretax costs for this program to be approximately $8.5 billion . The Company estimates that approximately two-thirds of the cumulative pretax costs relate to cash outlays, primarily related to employee separation expense. Approximately one-third of the cumulative pretax costs are non-cash, relating primarily to the accelerated depreciation of facilities to be closed or divested. For segment reporting, restructuring charges are unallocated expenses. The following tables summarize the charges related to restructuring program activities by type of cost: Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 ($ in millions) Separation Costs Accelerated Depreciation Other Total Separation Costs Accelerated Depreciation Other Total 2013 Restructuring Program Materials and production $ — $ 13 $ (12 ) $ 1 $ — $ 27 $ 2 $ 29 Marketing and administrative — 2 12 14 — 46 17 63 Research and development — 8 8 16 — 24 9 33 Restructuring costs 36 — 35 71 105 — 88 193 36 23 43 102 105 97 116 318 Merger Restructuring Program Materials and production — 4 65 69 — 20 231 251 Marketing and administrative — 3 — 3 — 7 — 7 Research and development — 1 — 1 — 1 — 1 Restructuring costs (24 ) — 66 42 (5 ) — 198 193 (24 ) 8 131 115 (5 ) 28 429 452 $ 12 $ 31 $ 174 $ 217 $ 100 $ 125 $ 545 $ 770 Three Months Ended September 30, 2014 Nine Months Ended September 30, 2014 ($ in millions) Separation Costs Accelerated Depreciation Other Total Separation Costs Accelerated Depreciation Other Total 2013 Restructuring Program Materials and production $ — $ 5 $ — $ 5 $ — $ 189 $ 17 $ 206 Marketing and administrative — 45 — 45 — 92 — 92 Research and development — 75 6 81 — 160 14 174 Restructuring costs 310 — (4 ) 306 387 — (33 ) 354 310 125 2 437 387 441 (2 ) 826 Merger Restructuring Program Materials and production — 67 15 82 — 219 (48 ) 171 Marketing and administrative — 29 (6 ) 23 — 54 (3 ) 51 Research and development — — — — — — 1 1 Restructuring costs 5 — 65 70 104 — 206 310 5 96 74 175 104 273 156 533 $ 315 $ 221 $ 76 $ 612 $ 491 $ 714 $ 154 $ 1,359 Separation costs are associated with actual headcount reductions, as well as those headcount reductions which were probable and could be reasonably estimated. In the third quarter of 2015 and 2014, approximately 425 positions and 830 positions, respectively, and in the first nine months of 2015 and 2014 , approximately 1,620 positions and 3,425 positions, respectively, were eliminated under the 2013 Restructuring Program. In the third quarter of 2015 and 2014 , approximately 260 positions and 185 positions, respectively, and in the first nine months of 2015 and 2014 , approximately 1,015 positions and 975 positions, respectively, were eliminated under the Merger Restructuring Program. These position eliminations were comprised of actual headcount reductions and the elimination of contractors and vacant positions. 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 site, based upon the anticipated date the site will be closed or divested, and depreciation expense as determined utilizing the useful life prior to the restructuring actions. All of the sites have and will continue to operate up through the respective closure dates and, since future undiscounted cash flows were sufficient to recover the respective book values, Merck was required to accelerate depreciation of the site assets rather than record an impairment charge. 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 activity in 2015 and 2014 includes pretax gains and losses resulting from sales of facilities and related assets, as well as asset abandonment, shut-down and other related costs. Additionally, other activity includes certain employee-related costs associated with pension and other postretirement benefit plans (see Note 12) and share-based compensation. The following table summarizes the charges and spending relating to restructuring activities by program for the nine months ended September 30, 2015 : ($ in millions) Separation Costs Accelerated Depreciation Other Total 2013 Restructuring Program Restructuring reserves January 1, 2015 $ 495 $ — $ 14 $ 509 Expense 105 97 116 318 (Payments) receipts, net (308 ) — (127 ) (435 ) Non-cash activity — (97 ) 1 (96 ) Restructuring reserves September 30, 2015 (1) $ 292 $ — $ 4 $ 296 Merger Restructuring Program Restructuring reserves January 1, 2015 $ 536 $ — $ 6 $ 542 Expense (5 ) 28 429 452 (Payments) receipts, net (224 ) — (163 ) (387 ) Non-cash activity — (28 ) (216 ) (244 ) Restructuring reserves September 30, 2015 (1) $ 307 $ — $ 56 $ 363 (1) The cash outlays associated with the 2013 Restructuring Program are expected to be substantially completed by the end of 2015. The non-manufacturing cash outlays associated with the Merger Restructuring Program were substantially completed by the end of 2013; the remaining cash outlays are expected to be substantially completed by the end of 2016. |
Acquisitions, Divestitures, Res
Acquisitions, Divestitures, Research Collaborations and License Agreements | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Acquisitions, Divestitures, Research Collaborations and License Agreements | Acquisitions, Divestitures, Research Collaborations and License Agreements The Company continues its strategy of establishing external alliances to complement its substantial internal research capabilities, including research collaborations, licensing preclinical and clinical compounds to drive both near- and long-term growth. The Company supplements its internal research with a licensing and external alliance strategy focused on the entire spectrum of collaborations from early research to late-stage compounds, as well as access to new technologies. These arrangements often include upfront payments, as well as expense reimbursements or payments to the third party, and milestone, royalty or profit share payments, contingent upon the occurrence of certain future events linked to the success of the asset in development. The Company also reviews its pipeline to examine candidates which may provide more value through out-licensing and, as part of its portfolio assessment process, may also divest certain products. Acquisition of Cubist Pharmaceuticals, Inc. In January 2015, Merck acquired Cubist, a leader in the development of therapies to treat serious infections caused by a broad range of bacteria. The acquisition complements Merck’s existing hospital acute care business, which is a priority area for the Company. Total consideration transferred of $8.3 billion includes cash paid for outstanding Cubist shares of $7.8 billion , as well as share-based compensation payments to settle equity awards attributable to precombination service and cash paid for transaction costs on behalf of Cubist. Share-based compensation payments to settle non-vested equity awards attributable to postcombination service were recognized as transaction expense in 2015. In addition, the Company assumed all of the outstanding convertible debt of Cubist, which had a fair value of approximately $1.9 billion at the acquisition date. Merck redeemed this debt in February 2015. The transaction was accounted for as an acquisition of a business; accordingly, the assets acquired and liabilities assumed were recorded at their respective fair values as of the acquisition date. A preliminary allocation of the fair value of assets acquired and liabilities assumed from Cubist was made as of the acquisition date. The Company subsequently adjusted the preliminary values assigned to certain assets and liabilities in order to reflect additional information obtained since the preliminary allocation that pertained to facts and circumstances that existed as of the acquisition date. These measurement period adjustments have been reflected in the opening balance sheet; however, since the adjustments did not have a significant impact on the Company’s consolidated statements of income or cash flows in any period, the interim financial statements were not retrospectively adjusted. The revised allocation is as follows: ($ millions) Cash and cash equivalents $ 733 Accounts receivable 123 Inventories 216 Other current assets 55 Property, plant and equipment 151 Identifiable intangible assets: Products and product rights (11 year weighted-average useful life) 6,923 In-process research and development (IPR&D) 50 Other noncurrent assets 184 Current liabilities (1) (233 ) Deferred income tax liabilities (2,518 ) Long-term debt (1,900 ) Other noncurrent liabilities (1) (122 ) Total identifiable net assets 3,662 Goodwill (2) 4,669 Consideration transferred $ 8,331 (1) Included in current liabilities and other noncurrent liabilities is contingent consideration of $73 million and $50 million , respectively. (2) The goodwill recognized is largely attributable to anticipated synergies expected to arise after the acquisition and was allocated to the Pharmaceutical segment. The goodwill is not deductible for tax purposes. The estimated fair values of identifiable intangible assets related to currently marketed products were determined using an “income approach” through which fair value is estimated based on market participant expectations of each asset’s discounted projected net cash flows. The Company’s estimates of projected net cash flows considered historical and projected pricing, margins and expense levels; the performance of competing products where applicable; relevant industry and therapeutic area growth drivers and factors; current and expected trends in technology and product life cycles; the extent and timing of potential new product introductions by the Company’s competitors; and the life of each asset’s underlying patent. The net cash flows were then probability-adjusted where appropriate to consider the uncertainties associated with the underlying assumptions, as well as the risk profile of the net cash flows utilized in the valuation. The probability-adjusted future net cash flows of each product were then discounted to present value utilizing a discount rate of 8% . Actual cash flows are likely to be different than those assumed. The most significant intangible assets relate to Zerbaxa (ceftolozane and tazobactam), Cubicin (daptomycin for injection) and Sivextro (tedizolid phosphate). The Company recorded the fair value of incomplete research project surotomycin (MK-4261) which, at the time of acquisition, had not reached technological feasibility and had no alternative future use. The amount was capitalized and accounted for as an indefinite-lived intangible asset, subject to impairment testing until completion or abandonment of the project. The fair value of surotomycin was determined by using an income approach, through which fair value is estimated based on the asset’s probability-adjusted future net cash flows, which reflects the stage of development of the project and the associated probability of successful completion. The net cash flows were then discounted to present value using a discount rate of 9% . During the second quarter of 2015, the Company received unfavorable efficacy data from a clinical trial for surotomycin. The evaluation of this data, combined with an assessment of the commercial opportunity of surotomycin, resulted in an IPR&D impairment charge (see Note 6). In connection with the Cubist acquisition, liabilities were recorded for the potential for future consideration that is contingent upon the achievement of future sales-based milestones. The fair value of contingent consideration liabilities was determined at the acquisition date using unobservable inputs. These inputs include the estimated amount and timing of projected cash flows, the probability of success (achievement of the contingent event) and a risk-adjusted discount rate of 8% used to present value the probability-weighted cash flows. Changes in the inputs could result in a different fair value measurement. This transaction closed on January 21, 2015; accordingly, the results of operations of the acquired business have been included in the Company’s results of operations beginning after that date. Cubist contributed sales of $362 million and $899 million in the third quarter and first nine months of 2015, respectively, to Merck’s results. The Company is no longer able to provide the results of operations attributable to Cubist during the period as the operations of Cubist have been largely integrated. During the first nine months of 2015, the Company incurred $324 million of transaction costs directly related to the acquisition of Cubist including share-based compensation costs, severance costs and legal and advisory fees which are reflected in Marketing and administrative expenses. The following unaudited supplemental pro forma data presents consolidated information as if the acquisition of Cubist had been completed on January 1, 2014: Three Months Ended Nine Months Ended ($ in millions) 2015 2014 2015 2014 Sales $ 10,073 $ 10,866 $ 29,369 $ 32,620 Net income attributable to Merck & Co., Inc. 1,833 703 3,645 3,789 Basic earnings per common share attributable to Merck & Co., Inc. common shareholders 0.65 0.24 1.29 1.30 Earnings per common share assuming dilution attributable to Merck & Co., Inc. common shareholders 0.65 0.24 1.28 1.29 The unaudited supplemental pro forma data reflects the historical information of Merck and Cubist adjusted to include additional amortization expense based on the fair value of assets acquired, additional interest expense that would have been incurred on borrowings used to fund the acquisition, transaction costs associated with the acquisition, and the related tax effects of these adjustments. The pro forma data should not be considered indicative of the results that would have occurred if the acquisition had been consummated on January 1, 2014, nor are they indicative of future results. Other transactions In July 2015, Merck acquired cCAM, a privately held biopharmaceutical company focused on the discovery and development of novel cancer immunotherapies. The acquisition provides Merck with cCAM’s lead pipeline candidate, CM-24, a novel monoclonal antibody targeting the immune checkpoint protein CEACAM1 that is currently being evaluated in a Phase 1 study for the treatment of advanced or recurrent malignancies, including melanoma, non-small-cell lung, bladder, gastric, colorectal, and ovarian cancers. Total purchase consideration in the transaction of $201 million included an upfront payment of $96 million in cash and future additional payments of up to $510 million associated with the attainment of certain clinical development, regulatory and commercial milestones, which the Company determined had a fair value of $105 million at the acquisition date. The transaction was accounted for as an acquisition of a business; accordingly, the assets acquired and liabilities assumed were recorded at their respective fair values as of the acquisition date. The determination of fair value requires management to make significant estimates and assumptions. Merck recognized an intangible asset for IPR&D of $180 million and other net assets of $7 million . The excess of the consideration transferred over the fair value of net assets acquired of $14 million was recorded as goodwill that was allocated to the Pharmaceutical segment and is not deductible for tax purposes. The fair value of the identifiable intangible asset related to IPR&D was determined using an income approach, through which fair value is estimated based upon the asset’s probability-adjusted future net cash flows, which reflects the stage of development of the project and the associated probability of successful completion. The net cash flows were then discounted to present value using a discount rate of 10.5% . The fair value of the contingent consideration was determined utilizing a probability weighted estimated cash flow stream adjusted for the expected timing of each payment also utilizing a discount rate of 10.5% . Actual cash flows are likely to be different than those assumed. This transaction closed on July 31, 2015; accordingly, the results of operations of the acquired business have been included in the Company’s results of operations beginning after that date. Pro forma financial information has not been included because cCAM’s historical financial results are not significant when compared with the Company’s financial results. Also in July 2015, Merck and Allergan plc (Allergan) entered into an agreement pursuant to which Allergan acquired the exclusive worldwide rights to MK-1602 and MK-8031, Merck’s investigational small molecule oral calcitonin gene-related peptide (CGRP) receptor antagonists, which are being developed for the treatment and prevention of migraine. Under the terms of the agreement, Allergan acquired these rights for upfront payments of $250 million , $125 million of which was paid in August 2015 upon closing of the transaction and $125 million of which is payable in April of 2016. Merck will additionally be entitled to receive potential development and commercial milestone payments and tiered double-digit royalties based on commercialization of the programs. Allergan will be fully responsible for development of the CGRP programs, as well as manufacturing and commercialization upon approval and launch of the products. The Company recorded a gain of $250 million within Other (income) expense, net in the third quarter and first nine months of 2015 related to the transaction. In February 2015, Merck and NGM Biopharmaceuticals, Inc. (NGM), a privately held biotechnology company, entered into a multi-year collaboration to research, discover, develop and commercialize novel biologic therapies across a wide range of therapeutic areas. The collaboration includes multiple drug candidates currently in preclinical development at NGM, including NP201, which is being evaluated for the treatment of diabetes, obesity and nonalcoholic steatohepatitis. NGM will lead the research and development of the existing preclinical candidates and have the autonomy to identify and pursue other discovery stage programs at its discretion. Merck will have the option to license all resulting NGM programs following human proof of concept trials. If Merck exercises this option, Merck will lead global product development and commercialization for the resulting products, if approved. Under the terms of the agreement, Merck made an upfront payment to NGM of $94 million , which is included in Research and development expenses, and purchased a 15% equity stake in NGM for $106 million . Merck committed up to $250 million to fund all of NGM’s efforts under the initial five -year term of the collaboration, with the potential for additional funding if certain conditions are met. Prior to Merck initiating a Phase 3 study for a licensed program, NGM may elect to either receive milestone and royalty payments or, in certain cases, to co-fund development and participate in a global cost and revenue share arrangement of up to 50% . The agreement also provides NGM with the option to participate in the co-promotion of any co-funded program in the United States. Merck will have the option to extend the research agreement for two additional two -year terms. Each party has certain termination rights under the agreement in the event of an uncured material breach by the other party. Additionally, Merck has certain termination rights in the event of the occurrence of certain defined conditions. Upon a termination event, depending on the circumstances, the parties have varying rights and obligations with respect to the continued development and commercialization of compounds discovered under the agreement and certain related payment obligations. In August 2014, Merck completed the acquisition of Idenix Pharmaceuticals, Inc. (Idenix) for approximately $3.9 billion in cash ( $3.7 billion net of cash acquired). Idenix was a biopharmaceutical company engaged in the discovery and development of medicines for the treatment of human viral diseases, whose primary focus was on the development of next-generation oral antiviral therapeutics to treat hepatitis C virus (HCV) infection. The transaction was accounted for as an acquisition of a business; accordingly, the assets acquired and liabilities assumed were recorded at their respective fair values as of the acquisition date. The determination of fair value requires management to make significant estimates and assumptions. Merck recognized an intangible asset for IPR&D of $3.2 billion related to MK-3682 (formerly IDX21437), net deferred tax liabilities of $951 million and other net liabilities of approximately $12 million . MK-3682 is a nucleotide prodrug in Phase 2 clinical development being evaluated for potential inclusion in the development of all oral, pan-genotypic fixed-dose combination regimens. The excess of the consideration transferred over the fair value of net assets acquired of $1.5 billion was recorded as goodwill that was allocated to the Pharmaceutical segment and is not deductible for tax purposes. The fair value of the identifiable intangible asset related to IPR&D was determined using an income approach, through which fair value is estimated based upon the asset’s probability-adjusted future net cash flows, which reflects the stage of development of the project and the associated probability of successful completion. The net cash flows were then discounted to present value using a discount rate of 11.5% . Actual cash flows are likely to be different than those assumed. This transaction closed on August 5, 2014; accordingly, the results of operations of the acquired business have been included in the Company’s results of operations beginning after that date. Pro forma financial information has not been included because Idenix’s historical financial results are not significant when compared with the Company’s financial results. In May 2014, Merck entered into an agreement to sell certain ophthalmic products to Santen Pharmaceutical Co., Ltd. (Santen) in Japan and markets in Europe and Asia Pacific. The agreement provided that Santen make upfront payments and additional payments based on defined sales milestones. Santen will also purchase supply of ophthalmology products covered by the agreement for a two - to five -year period. Upon closing of the transaction in most markets on July 1, 2014, the Company received $515 million of upfront payments from Santen, net of certain adjustments, and an additional $50 million upon closing of the remaining markets on October 1, 2014. Merck recognized gains of $396 million and $84 million on the transaction in the third and fourth quarters of 2014, respectively, included in Other (income) expense, net . In March 2014, Merck divested its Sirna Therapeutics, Inc. (Sirna) subsidiary to Alnylam Pharmaceuticals, Inc. (Alnylam) for consideration of $25 million and 2,520,044 shares of Alnylam common stock. Merck is eligible to receive future payments associated with the achievement of certain regulatory and commercial milestones, as well as royalties on future sales. Under the terms of the agreement, Merck received 85% of the Alnylam shares in the first quarter of 2014 (valued at $172 million at the time of closing) and the remaining 15% of the shares in the second quarter of 2014 (valued at $22 million at the time the shares were received). Merck recorded a gain of $204 million in Other (income) expense, net in the first nine months of 2014 related to this transaction. The excess of Merck’s tax basis in its investment in Sirna over the value received resulted in an approximate $300 million tax benefit recorded in the first nine months of 2014. In January 2014, Merck sold the U.S. marketing rights to Saphris (asenapine), an antipsychotic indicated for the treatment of schizophrenia and bipolar I disorder in adults to Forest Laboratories, Inc. (Forest). Under the terms of the agreement, Forest made upfront payments of $232 million , which were recorded in Sales in the first nine months of 2014, and will make additional payments to Merck based on defined sales milestones. In addition, as part of this transaction, Merck agreed to supply product to Forest (subsequently acquired by Allergan) until patent expiry. Remicade/Simponi In 1998, a subsidiary of Schering-Plough entered into a licensing agreement with Centocor Ortho Biotech Inc. (Centocor), a Johnson & Johnson (J&J) company, to market Remicade (infliximab) , which is prescribed for the treatment of inflammatory diseases. In 2005, Schering-Plough’s subsidiary exercised an option under its contract with Centocor for license rights to develop and commercialize Simponi (golimumab), a fully human monoclonal antibody. The Company has marketing rights to both products throughout Europe, Russia and Turkey. In December 2007, Schering-Plough and Centocor revised their distribution agreement regarding the development, commercialization and distribution of both Remicade and Simponi , extending the Company’s rights to exclusively market Remicade to match the duration of the Company’s exclusive marketing rights for Simponi . In addition, Schering-Plough and Centocor agreed to share certain development costs relating to Simponi’s auto-injector delivery system. On October 6, 2009, the European Commission approved Simponi as a treatment for rheumatoid arthritis and other immune system disorders in two presentations – a novel auto-injector and a prefilled syringe. As a result, the Company’s marketing rights for both products extend for 15 years from the first commercial sale of Simponi in the European Union (EU) following the receipt of pricing and reimbursement approval within the EU. Remicade lost market exclusivity in major European markets in February 2015 and no longer has market exclusivity in any of its marketing territories . The Company continues to have market exclusivity for Simponi in all of its marketing territories. All profits derived from Merck’s exclusive distribution of the two products in these countries are equally divided between Merck and J&J. |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Financial Instruments | Financial Instruments Derivative Instruments and Hedging Activities The Company manages the impact of foreign exchange rate movements and interest rate movements on its earnings, cash flows and fair values of assets and liabilities through operational means and through the use of various financial instruments, including derivative instruments. A significant portion of the Company’s revenues and earnings in foreign affiliates is exposed to changes in foreign exchange rates. The objectives and accounting related to the Company’s foreign currency risk management program, as well as its interest rate risk management activities are discussed below. Foreign Currency Risk Management The Company has established revenue hedging, balance sheet risk management and net investment hedging programs to protect against volatility of future foreign currency cash flows and changes in fair value caused by volatility in foreign exchange rates. The objective of the revenue hedging program is to reduce the potential for longer-term unfavorable changes in foreign exchange rates to decrease the U.S. dollar value of future cash flows derived from foreign currency denominated sales, primarily the euro and Japanese yen. To achieve this objective, the Company will hedge a portion of its forecasted foreign currency denominated third-party and intercompany distributor entity sales that are expected to occur over its planning cycle, typically no more than three years into the future. The Company will layer in hedges over time, increasing the portion of third-party and intercompany distributor entity sales hedged as it gets closer to the expected date of the forecasted foreign currency denominated sales. The portion of sales hedged is based on assessments of cost-benefit profiles that consider natural offsetting exposures, revenue and exchange rate volatilities and correlations, and the cost of hedging instruments. The hedged anticipated sales are a specified component of a portfolio of similarly denominated foreign currency-based sales transactions, each of which responds to the hedged currency risk in the same manner. The Company manages its anticipated transaction exposure principally with purchased local currency put options, which provide the Company with a right, but not an obligation, to sell foreign currencies in the future at a predetermined price. If the U.S. dollar strengthens relative to the currency of the hedged anticipated sales, total changes in the options’ cash flows offset the decline in the expected future U.S. dollar equivalent cash flows of the hedged foreign currency sales. Conversely, if the U.S. dollar weakens, the options’ value reduces to zero, but the Company benefits from the increase in the U.S. dollar equivalent value of the anticipated foreign currency cash flows. In connection with the Company’s revenue hedging program, a purchased collar option strategy may be utilized. With a purchased collar option strategy, the Company writes a local currency call option and purchases a local currency put option. As compared to a purchased put option strategy alone, a purchased collar strategy reduces the upfront costs associated with purchasing puts through the collection of premiums by writing call options. If the U.S. dollar weakens relative to the currency of the hedged anticipated sales, the purchased put option value of the collar strategy reduces to zero and the Company benefits from the increase in the U.S. dollar equivalent value of its anticipated foreign currency cash flows; however, this benefit would be capped at the strike level of the written call. If the U.S. dollar strengthens relative to the currency of the hedged anticipated sales, the written call option value of the collar strategy reduces to zero and the changes in the purchased put cash flows of the collar strategy would offset the decline in the expected future U.S. dollar equivalent cash flows of the hedged foreign currency sales. The Company may also utilize forward contracts in its revenue hedging program. If the U.S. dollar strengthens relative to the currency of the hedged anticipated sales, the increase in the fair value of the forward contracts offsets the decrease in the expected future U.S. dollar cash flows of the hedged foreign currency sales. Conversely, if the U.S. dollar weakens, the decrease in the fair value of the forward contracts offsets the increase in the value of the anticipated foreign currency cash flows. The fair values of these derivative contracts are recorded as either assets (gain positions) or liabilities (loss positions) in the Consolidated Balance Sheet. Changes in the fair value of derivative contracts are recorded each period in either current earnings or Other comprehensive income ( OCI ), depending on whether the derivative is designated as part of a hedge transaction and, if so, the type of hedge transaction. For derivatives that are designated as cash flow hedges, the effective portion of the unrealized gains or losses on these contracts is recorded in Accumulated other comprehensive income ( AOCI ) and reclassified into Sales when the hedged anticipated revenue is recognized. The hedge relationship is highly effective and hedge ineffectiveness has been de minimis . For those derivatives which are not designated as cash flow hedges, but serve as economic hedges of forecasted sales, unrealized gains or losses are recorded in Sales each period. The cash flows from both designated and non-designated contracts are reported as operating activities in the Consolidated Statement of Cash Flows. The Company does not enter into derivatives for trading or speculative purposes. The primary objective of the balance sheet risk management program is to mitigate the exposure of foreign currency denominated net monetary assets of foreign subsidiaries where the U.S. dollar is the functional currency from the effects of volatility in foreign exchange. In these instances, Merck principally utilizes forward exchange contracts, which enable the Company to buy and sell foreign currencies in the future at fixed exchange rates and economically offset the consequences of changes in foreign exchange from the monetary assets. Merck routinely enters into contracts to offset the effects of exchange on exposures denominated in developed country currencies, primarily the euro. For exposures in developing country currencies, the Company will enter into forward contracts to partially offset the effects of exchange on exposures when it is deemed economical to do so based on a cost-benefit analysis that considers the magnitude of the exposure, the volatility of the exchange rate and the cost of the hedging instrument. The Company will also minimize the effect of exchange on monetary assets and liabilities by managing operating activities and net asset positions at the local level. The cash flows from these contracts are reported as operating activities in the Consolidated Statement of Cash Flows. Monetary assets and liabilities denominated in a currency other than the functional currency of a given subsidiary are remeasured at spot rates in effect on the balance sheet date with the effects of changes in spot rates reported in Other (income) expense, net . The forward contracts are not designated as hedges and are marked to market through Other (income) expense, net . Accordingly, fair value changes in the forward contracts help mitigate the changes in the value of the remeasured assets and liabilities attributable to changes in foreign currency exchange rates, except to the extent of the spot-forward differences. These differences are not significant due to the short-term nature of the contracts, which typically have average maturities at inception of less than one year . The Company also uses forward exchange contracts to hedge its net investment in foreign operations against movements in exchange rates. The forward contracts are designated as hedges of the net investment in a foreign operation. The Company hedges a portion of the net investment in certain of its foreign operations and measures ineffectiveness based upon changes in spot foreign exchange rates. The effective portion of the unrealized gains or losses on these contracts is recorded in foreign currency translation adjustment within OCI , and remains in AOCI until either the sale or complete or substantially complete liquidation of the subsidiary. The cash flows from these contracts are reported as investing activities in the Consolidated Statement of Cash Flows. Foreign exchange risk is also managed through the use of foreign currency debt. The Company’s senior unsecured euro-denominated notes have been designated as, and are effective as, economic hedges of the net investment in a foreign operation. Accordingly, foreign currency transaction gains or losses due to spot rate fluctuations on the euro-denominated debt instruments are included in foreign currency translation adjustment within OCI . Included in the cumulative translation adjustment are pretax gains of $255 million and $166 million for the first nine months of 2015 and 2014 , respectively, from the euro-denominated notes. Interest Rate Risk Management The Company may use interest rate swap contracts on certain investing and borrowing transactions to manage its net exposure to interest rate changes and to reduce its overall cost of borrowing. The Company does not use leveraged swaps and, in general, does not leverage any of its investment activities that would put principal capital at risk. At September 30, 2015 , the Company was a party to 30 pay-floating, receive-fixed interest rate swap contracts designated as fair value hedges of fixed-rate notes in which the notional amounts match the amount of the hedged fixed-rate notes as detailed in the table below. September 30, 2015 Debt Instrument Par Value of Debt Number of Interest Rate Swaps Held Total Swap Notional Amount 0.70% notes due 2016 $ 1,000 4 $ 1,000 1.30% notes due 2018 1,000 4 1,000 5.00% notes due 2019 1,250 3 550 1.85% notes due 2020 1,250 5 1,250 3.875% notes due 2021 1,150 5 1,150 2.40% notes due 2022 1,000 4 1,000 2.35% notes due 2022 1,250 5 1,250 The interest rate swap contracts are designated hedges of the fair value changes in the notes attributable to changes in the benchmark London Interbank Offered Rate (LIBOR) swap rate. The fair value changes in the notes attributable to changes in the LIBOR are recorded in interest expense and offset by the fair value changes in the swap contracts. The cash flows from these contracts are reported as operating activities in the Consolidated Statement of Cash Flows. Presented in the table below is the fair value of derivatives on a gross basis segregated between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments: September 30, 2015 December 31, 2014 Fair Value of Derivative U.S. Dollar Notional Fair Value of Derivative U.S. Dollar Notional ($ in millions) Balance Sheet Caption Asset Liability Asset Liability Derivatives Designated as Hedging Instruments Interest rate swap contracts (current) Deferred income taxes and other current assets $ 1 $ — $ 1,000 $ — $ — $ — Interest rate swap contracts (non-current) Other assets 101 — 6,200 19 — 1,950 Interest rate swap contracts (non-current) Other noncurrent liabilities — — — — 15 2,000 Foreign exchange contracts (current) Deferred income taxes and other current assets 710 — 4,876 772 — 5,513 Foreign exchange contracts (non-current) Other assets 491 — 4,854 691 — 6,253 Foreign exchange contracts (current) Accrued and other current liabilities — 1 34 — — — $ 1,303 $ 1 $ 16,964 $ 1,482 $ 15 $ 15,716 Derivatives Not Designated as Hedging Instruments Foreign exchange contracts (current) Deferred income taxes and other current assets $ 154 $ — $ 4,615 $ 365 $ — $ 6,966 Foreign exchange contracts (non-current) Other assets 18 — 179 — — — Foreign exchange contracts (current) Accrued and other current liabilities — 55 4,192 — 88 3,386 $ 172 $ 55 $ 8,986 $ 365 $ 88 $ 10,352 $ 1,475 $ 56 $ 25,950 $ 1,847 $ 103 $ 26,068 As noted above, the Company records its derivatives on a gross basis in the Consolidated Balance Sheet. The Company has master netting agreements with several of its financial institution counterparties (see Concentrations of Credit Risk below). The following table provides information on the Company’s derivative positions subject to these master netting arrangements as if they were presented on a net basis, allowing for the right of offset by counterparty and cash collateral exchanged per the master agreements and related credit support annexes: September 30, 2015 December 31, 2014 ($ in millions) Asset Liability Asset Liability Gross amounts recognized in the consolidated balance sheet $ 1,475 $ 56 $ 1,847 $ 103 Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet (31 ) (31 ) (97 ) (97 ) Cash collateral (received) posted (1,054 ) — (1,410 ) — Net amounts $ 390 $ 25 $ 340 $ 6 The table below provides information on the location and pretax gain or loss amounts for derivatives that are: (i) designated in a fair value hedging relationship, (ii) designated in a foreign currency cash flow hedging relationship, (iii) designated in a foreign currency net investment hedging relationship and (iv) not designated in a hedging relationship: Three Months Ended Nine Months Ended ($ in millions) 2015 2014 2015 2014 Derivatives designated in a fair value hedging relationship Interest rate swap contracts Amount of (gain) loss recognized in Other (income) expense, net on derivatives (1) $ (130 ) $ 23 $ (97 ) $ 2 Amount of loss (gain) recognized in Other (income) expense, net on hedged item (1) 125 (23 ) 91 (3 ) Derivatives designated in foreign currency cash flow hedging relationships Foreign exchange contracts Amount of gain reclassified from AOCI to Sales (170 ) (42 ) (528 ) (45 ) Amount of loss (gain) recognized in OCI on derivatives 17 (433 ) (464 ) (276 ) Derivatives designated in foreign currency net investment hedging relationships Foreign exchange contracts Amount of gain recognized in Other (income) expense, net on derivatives (2) (1 ) (1 ) (4 ) (3 ) Amount of loss (gain) recognized in OCI on derivatives 13 (116 ) (5 ) (67 ) Derivatives not designated in a hedging relationship Foreign exchange contracts Amount of gain recognized in Other (income) expense, net on derivatives (3) (155 ) (290 ) (360 ) (314 ) Amount of loss (gain) recognized in Sales — 5 (1 ) 5 (1) There was $5 million and $6 million of ineffectiveness on the hedge during the third quarter and first nine months of 2015, respectively. (2) There was no ineffectiveness on the hedge. Represents the amount excluded from hedge effectiveness testing. (3) These derivative contracts mitigate changes in the value of remeasured foreign currency denominated monetary assets and liabilities attributable to changes in foreign currency exchange rates. At September 30, 2015 , the Company estimates $497 million of pretax net unrealized gains on derivatives maturing within the next 12 months that hedge foreign currency denominated sales over that same period will be reclassified from AOCI to Sales . The amount ultimately reclassified to Sales may differ as foreign exchange rates change. Realized gains and losses are ultimately determined by actual exchange rates at maturity. Investments in Debt and Equity Securities Information on available-for-sale investments is as follows: September 30, 2015 December 31, 2014 Fair Value Amortized Cost Gross Unrealized Fair Value Amortized Cost Gross Unrealized ($ in millions) Gains Losses Gains Losses Corporate notes and bonds $ 10,806 $ 10,805 $ 30 $ (29 ) $ 10,107 $ 10,102 $ 22 $ (17 ) Commercial paper 2,448 2,448 — — 6,970 6,970 — — Asset-backed securities 1,384 1,383 2 (1 ) 1,460 1,462 1 (3 ) U.S. government and agency securities 1,272 1,268 4 — 1,774 1,775 1 (2 ) Mortgage-backed securities 737 734 4 (1 ) 602 604 2 (4 ) Foreign government bonds 638 636 2 — 385 385 — — Equity securities 528 428 100 — 730 557 173 — $ 17,813 $ 17,702 $ 142 $ (31 ) $ 22,028 $ 21,855 $ 199 $ (26 ) Available-for-sale debt securities included in Short-term investments totaled $4.5 billion at September 30, 2015 . Of the remaining debt securities, $11.8 billion mature within five years. At September 30, 2015 and December 31, 2014 , there were no debt securities pledged as collateral. Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses a fair value hierarchy which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. There are three levels of inputs used to measure fair value with Level 1 having the highest priority and Level 3 having the lowest: Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity. Level 3 assets or liabilities are those whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques with significant unobservable inputs, as well as assets or liabilities for which the determination of fair value requires significant judgment or estimation. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis Financial assets and liabilities measured at fair value on a recurring basis are summarized below: Fair Value Measurements Using Fair Value Measurements Using Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total ($ in millions) September 30, 2015 December 31, 2014 Assets Investments Corporate notes and bonds $ — $ 10,806 $ — $ 10,806 $ — $ 10,107 $ — $ 10,107 Commercial paper — 2,448 — 2,448 — 6,970 — 6,970 Asset-backed securities (1) — 1,384 — 1,384 — 1,460 — 1,460 U.S. government and agency securities — 1,272 — 1,272 — 1,774 — 1,774 Mortgage-backed securities (1) — 737 — 737 — 602 — 602 Foreign government bonds — 638 — 638 — 385 — 385 Equity securities 336 — — 336 495 — — 495 336 17,285 — 17,621 495 21,298 — 21,793 Other assets Securities held for employee compensation 174 18 — 192 181 54 — 235 Derivative assets (2) Purchased currency options — 1,161 — 1,161 — 1,252 — 1,252 Forward exchange contracts — 212 — 212 — 576 — 576 Interest rate swaps — 102 — 102 — 19 — 19 — 1,475 — 1,475 — 1,847 — 1,847 Total assets $ 510 $ 18,778 $ — $ 19,288 $ 676 $ 23,199 $ — $ 23,875 Liabilities Other liabilities Contingent consideration $ — $ — $ 614 $ 614 $ — $ — $ 428 $ 428 Derivative liabilities (2) Forward exchange contracts — 56 — 56 — 46 — 46 Written currency options — — — — — 42 — 42 Interest rate swaps — — — — — 15 — 15 — 56 — 56 — 103 — 103 Total liabilities $ — $ 56 $ 614 $ 670 $ — $ 103 $ 428 $ 531 (1) Primarily all of the asset-backed securities are highly-rated (Standard & Poor’s rating of AAA and Moody’s Investors Service rating of Aaa), secured primarily by credit card, auto loan, and home equity receivables, with weighted-average lives of primarily 5 years or less. Mortgage-backed securities represent AAA-rated securities issued or unconditionally guaranteed as to payment of principal and interest by U.S. government agencies. (2) The fair value determination of derivatives includes the impact of the credit risk of counterparties to the derivatives and the Company’s own credit risk, the effects of which were not significant. There were no transfers between Level 1 and Level 2 during the first nine months of 2015 . As of September 30, 2015 , Cash and cash equivalents of $7.5 billion included $6.5 billion of cash equivalents (considered Level 2 in the fair value hierarchy). Contingent Consideration Summarized information about the changes in liabilities for contingent consideration is as follows: Nine Months Ended September 30, ($ in millions) 2015 2014 Fair value January 1 $ 428 $ 69 Changes in fair value (1) 8 6 Additions 228 — Payments (50 ) — Fair value September 30 $ 614 $ 75 (1) Recorded in Research and development expenses and Materials and production costs. In the first nine months of 2015, the Company recognized liabilities for contingent consideration of $123 million related to the acquisition of Cubist and $105 million related to the acquisition of cCAM (see Note 3). In addition, in the first nine months of 2015, the Company paid $50 million of contingent consideration related to the first commercial sale of Zerbaxa in the United States. Other Fair Value Measurements Some of the Company’s financial instruments, such as cash and cash equivalents, receivables and payables, are reflected in the balance sheet at carrying value, which approximates fair value due to their short-term nature. The estimated fair value of loans payable and long-term debt (including current portion) at September 30, 2015 , was $27.2 billion compared with a carrying value of $26.7 billion and at December 31, 2014 , was $22.5 billion compared with a carrying value of $21.4 billion . Fair value was estimated using recent observable market prices and would be considered Level 2 in the fair value hierarchy. Concentrations of Credit Risk On an ongoing basis, the Company monitors concentrations of credit risk associated with corporate and government issuers of securities and financial institutions with which it conducts business. Credit exposure limits are established to limit a concentration with any single issuer or institution. Cash and investments are placed in instruments that meet high credit quality standards as specified in the Company’s investment policy guidelines. The majority of the Company’s accounts receivable arise from product sales in the United States and Europe and are primarily due from drug wholesalers and retailers, hospitals, government agencies, managed health care providers and pharmacy benefit managers. The Company monitors the financial performance and creditworthiness of its customers so that it can properly assess and respond to changes in their credit profile. The Company also continues to monitor economic conditions, including the volatility associated with international sovereign economies, and associated impacts on the financial markets and its business, taking into consideration global economic conditions and the ongoing sovereign debt issues in certain European countries. At September 30, 2015 and December 31, 2014 , Other assets included $30 million and $80 million , respectively, of accounts receivable not expected to be collected within one year. At September 30, 2015 , the Company’s total net accounts receivable outstanding for more than one year were approximately $130 million . The Company does not expect to have write-offs or adjustments to accounts receivable which would have a material adverse effect on its financial position, liquidity or results of operations. Additionally, the Company continues to expand in the emerging markets. Payment terms in these markets tend to be longer, resulting in an increase in accounts receivable balances in certain of these markets. Derivative financial instruments are executed under International Swaps and Derivatives Association master agreements. The master agreements with several of the Company’s financial institution counterparties also include credit support annexes. These annexes contain provisions that require collateral to be exchanged depending on the value of the derivative assets and liabilities, the Company’s credit rating, and the credit rating of the counterparty. As of September 30, 2015 and December 31, 2014 , the Company had received cash collateral of $1.1 billion and $1.4 billion , respectively, from various counterparties and the obligation to return such collateral is recorded in Accrued and other current liabilities . The Company had not advanced any cash collateral to counterparties as of September 30, 2015 or December 31, 2014 . |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of: ($ in millions) September 30, 2015 December 31, 2014 Finished goods $ 1,528 $ 1,588 Raw materials and work in process 4,586 5,141 Supplies 177 197 Total (approximates current cost) 6,291 6,926 Increase to LIFO costs 366 309 $ 6,657 $ 7,235 Recognized as: Inventories $ 5,123 $ 5,571 Other assets 1,534 1,664 Amounts recognized as Other assets are comprised almost entirely of raw materials and work in process inventories. At September 30, 2015 and December 31, 2014 , these amounts included $1.5 billion and $1.6 billion , respectively, of inventories not expected to be sold within one year. In addition, these amounts included $67 million and $74 million at September 30, 2015 and December 31, 2014 , respectively, of inventories produced in preparation for product launches. |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangibles | Goodwill and Other Intangibles In connection with acquisitions, the Company measures the fair value of marketed products and research and development pipeline programs and capitalizes these amounts. As a result of the acquisition of Cubist in January 2015, the Company recorded $6.9 billion of intangible assets for currently marketed products, $50 million of IPR&D (related to surotomycin) and $4.7 billion of goodwill (see Note 3). In addition, as a result of the acquisition of cCAM in July 2015, the Company recorded $180 million of IPR&D (see Note 3). During the first nine months of 2015, the Company recorded $62 million of IPR&D impairment charges within Research and development expenses. Of this amount, $50 million relates to the surotomycin clinical development program obtained in connection with the acquisition of Cubist. During the second quarter of 2015, the Company received unfavorable efficacy data from a clinical trial for surotomycin. The evaluation of this data, combined with an assessment of the commercial opportunity of surotomycin, resulted in the IPR&D impairment charge noted above. During the third quarter and first nine months of 2014, the Company recorded $36 million of IPR&D impairment charges primarily as a result of changes in cash flow assumptions for certain compounds obtained in connection with the Supera joint venture. The changes in cash flow assumptions for the Supera compounds, as well as for certain currently marketed products of Supera, also resulted in the write-off of the goodwill balance related to the joint venture with Supera, which was $93 million at existing exchange rates. Also, during the first nine months of 2015 , the Company recorded an intangible asset impairment charge of $12 million within Materials and production costs related to Rebetol (ribavirin USP), a product marketed by the Company for the treatment of chronic HCV infection. Sales of Rebetol are being adversely affected by loss of market share as a result of the availability of newer therapeutic options, which led to changes in the cash flow assumptions for Rebetol that indicated that the Rebetol intangible asset value was not recoverable on an undiscounted cash flows basis. The Company utilized market participant assumptions to determine its best estimate of the fair value of the intangible asset related to Rebetol that, when compared with its related carrying value, resulted in the impairment charge noted above. During the third quarter and first nine months of 2014, the Company recorded intangible asset impairment charges of $412 million and $1.1 billion , respectively, within Materials and Production costs related to certain products marketed by the Company for the treatment of chronic HCV infection, including PegIntron (peginterferon alpha-2b), Victrelis (boceprevir) and Rebetol (ribavirin USP). Rapid developments in the competitive HCV treatment market led to market share losses that were greater than the Company had predicted, causing deterioration in cash flow projections. These revisions to cash flows indicated that the intangible asset values associated with these products were not recoverable on an undiscounted cash flows basis. The Company utilized market participant assumptions to determine its best estimate of the fair values of the intangible assets related to PegIntron, Victrelis and Rebetol that, when compared with their related carrying values, resulted in the impairment charges noted above. The Company may recognize additional non-cash impairment charges in the future related to other pipeline programs or marketed products and such charges could be material. |
Joint Ventures and Other Equity
Joint Ventures and Other Equity Method Affiliates | 9 Months Ended |
Sep. 30, 2015 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Joint Ventures and Other Equity Method Affiliates | Joint Ventures and Other Equity Method Affiliates Equity income from affiliates reflects the performance of the Company’s joint ventures and other equity method affiliates including Sanofi Pasteur MSD, certain investments funds, as well as AstraZeneca LP (AZLP) until the termination of the Company’s relationship with AZLP on June 30, 2014 as discussed below. Equity income from affiliates was $63 million and $24 million for the third quarter of 2015 and 2014 , respectively, and $210 million and $241 million for the first nine months of 2015 and 2014 , respectively, and is included in Other (income) expense, net (see Note 13). AstraZeneca LP In 1998, Merck and Astra completed the restructuring of the ownership and operations of their existing joint venture whereby Merck acquired Astra’s interest in KBI Inc. (KBI) and contributed KBI’s operating assets to a new U.S. limited partnership, Astra Pharmaceuticals L.P. (Partnership), in exchange for a 1% limited partner interest. Astra contributed the net assets of its wholly owned subsidiary, Astra USA, Inc., to the Partnership in exchange for a 99% general partner interest. The Partnership, renamed AZLP upon Astra’s 1999 merger with Zeneca Group Plc, became the exclusive distributor of the products for which KBI retained rights. On June 30, 2014, AstraZeneca exercised its option to purchase Merck’s interest in KBI for $419 million in cash. Of this amount, $327 million reflects an estimate of the fair value of Merck’s interest in Nexium and Prilosec. This portion of the exercise price, which is subject to a true-up in 2018 based on actual sales from closing in 2014 to June 2018, was deferred and is being recognized over time in Other (income) expense, net as the contingency is eliminated as sales occur. During the third quarter and first nine months of 2015, $50 million and $153 million , respectively, of the deferred income was recognized in Other (income) expense, net bringing the total deferred income recognized through September 30, 2015 to $293 million . The remaining exercise price of $91 million primarily represents a multiple of ten times Merck’s average 1% annual profit allocation in the partnership for the three years prior to exercise. Merck recognized the $91 million as a gain in the first nine months of 2014 within Other (income) expense, net . As a result of AstraZeneca’s option exercise, the Company’s remaining interest in AZLP was redeemed. Accordingly, the Company also recognized a non-cash gain of approximately $650 million in the first nine months of 2014 within Other (income) expense, net resulting from the retirement of $2.4 billion of KBI preferred stock (see Note 10), the elimination of the Company’s $1.4 billion investment in AZLP and a $340 million reduction of goodwill. This transaction resulted in a net tax benefit of $517 million in the first nine months of 2014 primarily reflecting the reversal of deferred taxes on the AZLP investment balance. As a result of AstraZeneca exercising its option, as of July 1, 2014, the Company no longer records equity income from AZLP and supply sales to AZLP have terminated. Equity income from AZLP was $192 million in 2014 through the June 30 termination date. Summarized financial information for AZLP through the June 30, 2014 termination date is as follows: Six Months Ended June 30, ($ in millions) 2014 Sales $ 2,205 Materials and production costs 1,044 Other expense, net 604 Income before taxes (1) $ 557 (1) Merck’s partnership returns from AZLP were generally contractually determined as noted above and were not based on a percentage of income from AZLP, other than with respect to Merck’s 1% limited partnership interest. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt In February 2015, Merck issued $8.0 billion aggregate principal amount of senior unsecured notes consisting of $ 300 million principal amount of floating rate notes due 2017, $700 million principal amount of floating rate notes due 2020, $1.25 billion principal amount of 1.85% notes due 2020, $1.25 billion aggregate principal amount of 2.35% notes due 2022, $2.5 billion aggregate principal amount of 2.75% notes due 2025 and $2.0 billion aggregate principal amount of 3.70% notes due 2045. The Company used a portion of the net proceeds of the offering of $7.9 billion to repay commercial paper issued to substantially finance the Company’s acquisition of Cubist. Any remaining net proceeds were used for general corporate purposes, including for repurchases of the Company’s common stock, and the repayment of outstanding commercial paper borrowings and debt maturities. Also, in February 2015, the Company redeemed $1.9 billion of legacy Cubist debt acquired in the acquisition (see Note 3). |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies The Company is involved in various claims and legal proceedings of a nature considered normal to its business, including product liability, intellectual property, and commercial litigation, as well as certain additional matters including environmental matters. Except for the Vioxx Litigation (as defined below) for which a separate assessment is provided in this Note, in the opinion of the Company, it is unlikely that the resolution of these matters will be material to the Company’s financial position, results of operations or cash flows. Given the nature of the litigation discussed below, including the Vioxx Litigation, and the complexities involved in these matters, the Company is unable to reasonably estimate a possible loss or range of possible loss for such matters until the Company knows, among other factors, (i) what claims, if any, will survive dispositive motion practice, (ii) the extent of the claims, including the size of any potential class, particularly when damages are not specified or are indeterminate, (iii) how the discovery process will affect the litigation, (iv) the settlement posture of the other parties to the litigation and (v) any other factors that may have a material effect on the litigation. The Company records accruals for contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available. For product liability claims, a portion of the overall accrual is actuarially determined and considers such factors as past experience, number of claims reported and estimates of claims incurred but not yet reported. Individually significant contingent losses are accrued when probable and reasonably estimable. Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable. The Company’s decision to obtain insurance coverage is dependent on market conditions, including cost and availability, existing at the time such decisions are made. The Company has evaluated its risks and has determined that the cost of obtaining product liability insurance outweighs the likely benefits of the coverage that is available and, as such, has no insurance for most product liabilities effective August 1, 2004. Vioxx Litigation Product Liability Lawsuits As previously disclosed, Merck is a defendant in approximately 20 active federal and state lawsuits ( Vioxx Product Liability Lawsuits) alleging personal injury as a result of the use of Vioxx . Most of these cases are coordinated in a multidistrict litigation in the U.S. District Court for the Eastern District of Louisiana ( Vioxx MDL) before Judge Eldon E. Fallon. As previously disclosed, Merck is also a defendant in approximately 30 putative class action lawsuits alleging economic injury as a result of the purchase of Vioxx . All but one of those cases are in the Vioxx MDL. Merck has reached a resolution, approved by Judge Fallon, of these class actions in the Vioxx MDL. Under the settlement, Merck will pay up to $23 million to resolve all properly documented claims submitted by class members, approved attorneys’ fees and expenses, and approved settlement notice costs and certain other administrative expenses. The court entered an order approving the settlement in January 2014 and the claims review process was recently completed. Merck is also a defendant in lawsuits brought by state Attorneys General of three states — Alaska, Montana and Utah. The lawsuits are pending in state courts. These actions allege that Merck misrepresented the safety of Vioxx and seek recovery for expenditures on Vioxx by government-funded health care programs, such as Medicaid, and/or penalties for alleged Consumer Fraud Act violations. Trial has been scheduled in the Montana case for September 12, 2016, and trial has been set in the Alaska case for January 2, 2017. Motions for judgment on the pleadings in the Alaska and Montana cases are currently pending. Shareholder Lawsuits As previously disclosed, in addition to the Vioxx Product Liability Lawsuits, various putative class actions and individual lawsuits have been filed against Merck and certain former employees alleging that the defendants violated federal securities laws by making alleged material misstatements and omissions with respect to the cardiovascular safety of Vioxx ( Vioxx Securities Lawsuits). The Vioxx Securities Lawsuits are coordinated in a multidistrict litigation in the U.S. District Court for the District of New Jersey before Judge Stanley R. Chesler, and have been consolidated for all purposes. In August 2011, Judge Chesler granted in part and denied in part Merck’s motion to dismiss the Fifth Amended Class Action Complaint in the consolidated securities action. Among other things, the court dismissed certain defendants from the case, and also dismissed claims based on statements made on or after the voluntary withdrawal of Vioxx on September 30, 2004. In October 2011,the remaining defendants answered the Fifth Amended Class Action Complaint. In April 2012, plaintiffs filed a motion for class certification for the period from May 21, 1999, through September 29, 2004, which the court granted in January 2013. In March 2013, plaintiffs filed a motion for leave to amend their complaint to add certain allegations to expand the class period. In May 2013, the court denied plaintiffs’ motion for leave to amend their complaint to expand the class period, but granted plaintiffs’ leave to amend their complaint to add certain allegations within the existing class period. In June 2013, plaintiffs filed their Sixth Amended Class Action Complaint. In July 2013, defendants answered the Sixth Amended Class Action Complaint. Discovery has been completed and is now closed. On May 13, 2015, the court granted in part and denied in part defendants’ motions for summary judgment; the court granted judgment in defendants’ favor on five of the alleged misstatements, including all statements prior to March 27, 2000, but denied the motion with respect to the remaining statements. The trial in this matter is currently scheduled to begin on March 1, 2016. As previously disclosed, 13 individual securities lawsuits filed by foreign and domestic institutional investors also are consolidated with the Vioxx Securities Lawsuits. Discovery has been completed in eight of those actions, and is ongoing in the remaining five individual actions. The allegations in the individual actions are substantially similar to the allegations in the Vioxx Securities Lawsuits. All individual securities actions are consolidated with the Vioxx Securities Lawsuits for all purposes, including for trial. Insurance The Company has Directors and Officers insurance coverage applicable to the Vioxx Securities Lawsuits with remaining stated upper limits of approximately $145 million . As a result of the previously disclosed insurance arbitration, additional insurance coverage for these claims should also be available, if needed, under upper-level excess policies that provide coverage for a variety of risks. There are disputes with the insurers about the availability of some or all of the Company’s insurance coverage for these claims and there are likely to be additional disputes. The amounts actually recovered under the policies discussed in this paragraph may be less than the stated upper limits. International Lawsuits As previously disclosed, in addition to the lawsuits discussed above, Merck has been named as a defendant in litigation relating to Vioxx in Brazil, Canada and Europe (collectively, the Vioxx International Lawsuits). As previously disclosed, the Company has entered into an agreement to resolve all claims related to Vioxx in Canada pursuant to which the Company will pay a minimum of approximately $21 million but not more than an aggregate maximum of approximately $36 million . The agreement has been approved by courts in Canada’s provinces. Reserves The Company believes that it has meritorious defenses to the remaining Vioxx Product Liability Lawsuits, Vioxx Securities Lawsuits and Vioxx International Lawsuits (collectively, the Vioxx Litigation) and will vigorously defend against them. In view of the inherent difficulty of predicting the outcome of litigation, particularly where there are many claimants and the claimants seek indeterminate damages, the Company is unable to predict the outcome of these matters and, at this time, cannot reasonably estimate the possible loss or range of loss with respect to the remaining Vioxx Litigation. The Company has established a reserve with respect to the Canadian settlement and certain other Vioxx Product Liability Lawsuits. The Company also has an immaterial remaining reserve relating to the previously disclosed Vioxx investigation for the non-participating states with which litigation is continuing. The Company has established no other liability reserves with respect to the Vioxx Litigation. Unfavorable outcomes in the Vioxx Litigation could have a material adverse effect on the Company’s financial position, liquidity and results of operations. Other Product Liability Litigation Fosamax As previously disclosed, Merck is a defendant in product liability lawsuits in the United States involving Fosamax ( Fosamax Litigation). As of September 30, 2015 , approximately 4,880 cases had been filed and were pending against Merck in either federal or state court, including one case which seeks class action certification, as well as damages and/or medical monitoring. In approximately 375 of these actions, plaintiffs allege, among other things, that they have suffered osteonecrosis of the jaw (ONJ), generally subsequent to invasive dental procedures, such as tooth extraction or dental implants and/or delayed healing, in association with the use of Fosamax ; however, substantially all of those actions are subject to the settlement discussed below. In addition, plaintiffs in approximately 4,505 of these actions generally allege that they sustained femur fractures and/or other bone injuries (Femur Fractures) in association with the use of Fosamax . Cases Alleging ONJ and/or Other Jaw Related Injuries In August 2006, the JPML ordered that certain Fosamax product liability cases pending in federal courts nationwide should be transferred and consolidated into one multidistrict litigation ( Fosamax ONJ MDL) for coordinated pre-trial proceedings. In December 2013, Merck reached an agreement in principle with the Plaintiffs’ Steering Committee (PSC) in the Fosamax ONJ MDL to resolve pending ONJ cases not on appeal in the Fosamax ONJ MDL and in the state courts for an aggregate amount of $27.7 million . Merck and the PSC subsequently formalized the terms of this agreement in a Master Settlement Agreement (ONJ Master Settlement Agreement) that was executed in April 2014. As a condition to the settlement, 100% of the state and federal ONJ plaintiffs had to agree to participate in the settlement plan or Merck could either terminate the ONJ Master Settlement Agreement, or waive the 100% participation requirement and agree to a lesser funding amount for the settlement fund. On July 14, 2014, Merck elected to proceed with the ONJ Master Settlement Agreement at a reduced funding level since the participation level was approximately 95% . Merck has fully funded the Master Settlement Agreement and the escrow agent under the agreement has begun making settlement payments to qualifying plaintiffs. In addition, the judge overseeing the Fosamax ONJ MDL granted a motion filed by Merck and has entered an order that requires the approximately 40 non-participants whose cases will remain in the Fosamax ONJ MDL once the settlement is complete to submit expert reports in order for their cases to proceed any further. The ONJ Master Settlement Agreement has no effect on the cases alleging Femur Fractures discussed below. Cases Alleging Femur Fractures In March 2011, Merck submitted a Motion to Transfer to the JPML seeking to have all federal cases alleging Femur Fractures consolidated into one multidistrict litigation for coordinated pre-trial proceedings. The Motion to Transfer was granted in May 2011, and all federal cases involving allegations of Femur Fracture have been or will be transferred to a multidistrict litigation in the District of New Jersey (the Femur Fracture MDL). Judge Pisano presided over the Femur Fracture MDL until March 10, 2015, at which time the Femur Fracture MDL was reassigned from Judge Pisano to Judge Freda L. Wolfson following Judge Pisano’s retirement. In the only bellwether case tried to date in the Femur Fracture MDL, Glynn v. Merck , the jury returned a verdict in Merck’s favor. In addition, on June 27, 2013, the Femur Fracture MDL court granted Merck’s motion for judgment as a matter of law in the Glynn case and held that the plaintiff’s failure to warn claim was preempted by federal law. In August 2013, the Femur Fracture MDL court entered an order requiring plaintiffs in the Femur Fracture MDL to show cause why those cases asserting claims for a femur fracture injury that took place prior to September 14, 2010, should not be dismissed based on the court’s preemption decision in the Glynn case. Pursuant to the show cause order, on March 26, 2014, the Femur Fracture MDL court dismissed with prejudice approximately 650 cases on preemption grounds. Plaintiffs in approximately 500 of those cases are appealing that decision to the U.S. Court of Appeals for the Third Circuit. In June 2015, the Femur Fracture MDL court dismissed without prejudice another approximately 520 cases pending plaintiffs’ appeal of the preemption ruling to the Third Circuit. On June 17, 2014, Judge Pisano granted Merck summary judgment in the Gaynor v. Merck case and found that Merck’s updates in January 2011 to the Fosamax label regarding atypical femur fractures were adequate as a matter of law and that Merck adequately communicated those changes. The plaintiffs in Gaynor have appealed Judge Pisano’s decision to the Third Circuit. In August 2014, Merck filed a motion requesting that Judge Pisano enter a further order requiring all plaintiffs in the Femur Fracture MDL who claim that the 2011 Fosamax label is inadequate and the proximate cause of their alleged injuries to show cause why their cases should not be dismissed based on the court’s preemption decision and its ruling in the Gaynor case. In November 2014, the court granted Merck’s motion and entered the requested show cause order. As of September 30, 2015 , approximately 1,045 cases were pending in the Femur Fracture MDL including the 500 cases dismissed with prejudice on preemption grounds which are pending appeal and the 520 cases dismissed without prejudice. As of September 30, 2015 , approximately 3,090 cases alleging Femur Fractures have been filed in New Jersey state court and are pending before Judge Jessica Mayer in Middlesex County. The parties selected an initial group of 30 cases to be reviewed through fact discovery. Two additional groups of 50 cases each to be reviewed through fact discovery were selected in November 2013 and March 2014, respectively. A further group of 25 cases to be reviewed through fact discovery was selected by Merck in July 2015. As of September 30, 2015 , approximately 370 cases alleging Femur Fractures have been filed and are pending in California state court. A petition was filed seeking to coordinate all Femur Fracture cases filed in California state court before a single judge in Orange County, California. The petition was granted and Judge Thierry Colaw is currently presiding over the coordinated proceedings. In March 2014, the court directed that a group of 10 discovery pool cases be reviewed through fact discovery and subsequently scheduled the Galper v. Merck case, which plaintiffs’ selected, as the first trial. The Galper trial began on February 17, 2015 and the jury returned a verdict in Merck’s favor on April 3, 2015. The next Femur Fracture trial in California is currently scheduled to be held on March 14, 2016. Additionally, there are five Femur Fracture cases pending in other state courts. Discovery is ongoing in the Femur Fracture MDL and in state courts where Femur Fracture cases are pending and the Company intends to defend against these lawsuits. Januvia/Janumet As previously disclosed, Merck is a defendant in product liability lawsuits in the United States involving Januvia and/or Janumet . As of September 30, 2015 , approximately 1,035 product user claims were served on, and are pending against, Merck alleging generally that use of Januvia and/or Janumet caused the development of pancreatic cancer. These complaints were filed in several different state and federal courts. Most of the claims are pending in a consolidated multidistrict litigation proceeding in the U.S. District Court for the Southern District of California called “In re Incretin-Based Therapies Products Liability Litigation.” That proceeding includes federal lawsuits alleging pancreatic cancer due to use of the following medicines: Januvia, Janumet , Byetta and Victoza, the latter two of which are products manufactured by other pharmaceutical companies. In addition to the cases noted above, the Company has agreed, as of September 30, 2015, to toll the statute of limitations for approximately 20 additional claims. The Company intends to defend against these lawsuits. NuvaRing As previously disclosed, beginning in May 2007, a number of product liability complaints were filed in various jurisdictions asserting claims against the Company and its subsidiaries relating to NuvaRing , a combined hormonal contraceptive vaginal ring. The plaintiffs contend the Company, among other things, failed to adequately design and manufacture NuvaRing and failed to adequately warn of the alleged increased risk of venous thromboembolism (VTE) posed by NuvaRing , and/or downplayed the risk of VTE. The plaintiffs seek damages for injuries allegedly sustained from their product use, including some alleged deaths, heart attacks and strokes. The majority of the cases were pending in a federal multidistrict litigation venued in Missouri. Pursuant to a settlement agreement between Merck and negotiating plaintiffs’ counsel, which became effective as of June 4, 2014, Merck paid a lump total settlement of $100 million to resolve more than 95% of the cases filed and under retainer by counsel as of February 7, 2014. Plaintiffs in approximately 3,700 cases joined the settlement program. Each filed case is to be dismissed with prejudice once the settlement administration process is completed. Those dismissals began in the second quarter and will continue on a rolling basis throughout 2015. The Company has certain insurance coverage available to it, which is currently being used to partially fund the Company’s legal fees. This insurance coverage was also used to fund the settlement. As of September 30, 2015 , there were 13 cases pending outside of the settlement program, inclusive of cases filed after the settlement program closed. Of these cases, 12 are pending in the multidistrict litigation and are subject to individual case management orders requiring plaintiffs to meet various discovery and evidentiary requirements. As of September 30, 2015 , these 12 plaintiffs were meeting those requirements and continuing to prosecute their cases. Propecia/Proscar As previously disclosed, Merck is a defendant in product liability lawsuits in the United States involving Propecia and/or Proscar . As of September 30, 2015 , approximately 1,385 lawsuits have been filed by plaintiffs who allege that they have experienced persistent sexual side effects following cessation of treatment with Propecia and/or Proscar . Approximately 60 of the plaintiffs also allege that Propecia or Proscar has caused or can cause prostate cancer, testicular cancer or male breast cancer. The lawsuits have been filed in various federal courts and in state court in New Jersey. The federal lawsuits have been consolidated for pretrial purposes in a federal multidistrict litigation before Judge John Gleeson of the Eastern District of New York. The matters pending in state court in New Jersey have been consolidated before Judge Jessica Mayer in Middlesex County. In addition, there is one matter pending in state court in Massachusetts. The Company intends to defend against these lawsuits. Governmental Proceedings As previously disclosed, the Company’s subsidiaries in China have received and may continue to receive inquiries regarding their operations from various Chinese governmental agencies. Some of these inquiries may be related to matters involving other multinational pharmaceutical companies, as well as Chinese entities doing business with such companies. The Company’s policy is to cooperate with these authorities and to provide responses as appropriate. The Company has received a civil investigative demand from the U.S. Attorney’s Office, Eastern District of Pennsylvania which requests information relating to the Company’s contracting and pricing of Dulera Inhalation Aerosol with certain pharmacy benefit managers and Medicare Part D plans. The Company is cooperating with the investigation. Patent Litigation From time to time, generic manufacturers of pharmaceutical products file Abbreviated New Drug Applications with the U.S. Food and Drug Administration (FDA) seeking to market generic forms of the Company’s products prior to the expiration of relevant patents owned by the Company. To protect its patent rights, the Company may file patent infringement lawsuits against such generic companies. Certain products of the Company (or products marketed via agreements with other companies) currently involved in such patent infringement litigation in the United States include: Cancidas , Cubicin , Emend for Injection, Invanz , Nasonex , Noxafil, and NuvaRing . Similar lawsuits defending the Company’s patent rights may exist in other countries. The Company intends to vigorously defend its patents, which it believes are valid, against infringement by generic companies attempting to market products prior to the expiration of such patents. As with any litigation, there can be no assurance of the outcomes, which, if adverse, could result in significantly shortened periods of exclusivity for these products and, with respect to products acquired through mergers and acquisitions, potentially significant intangible asset impairment charges. Cancidas — In February 2014, a patent infringement lawsuit was filed in the United States against Xellia Pharmaceuticals ApS (Xellia) with respect to Xellia’s application to the FDA seeking pre-patent expiry approval to market a generic version of Cancidas . In June 2015, the district court found that Xellia infringed the Company’s patent and ordered that Xellia’s application not be approved until the patent expires in September 2017 (including pediatric exclusivity). Xellia has appealed this decision. In August 2014, a patent infringement lawsuit was filed in the United States against Fresenius Kabi USA, LLC (Fresenius) in respect of Fresenius’s application to the FDA seeking pre-patent expiry approval to market a generic version of Cancidas . The lawsuit automatically stays FDA approval of Fresenius’s application until December 2016 or until an adverse court decision, if any, whichever may occur earlier. Cubicin — In March 2012, a patent infringement lawsuit was filed in the United States against Hospira, Inc. (Hospira), with respect to Hospira’s application to the FDA seeking pre-patent expiry approval to market a generic version of Cubicin . A trial was held in February 2014, and in December 2014 the district court found the composition patent, which expires in June 2016, to be valid and infringed. Later patents, expiring in September 2019 and November 2020, were found to be invalid. Hospira has appealed the finding that the composition patent is not invalid and the Company has cross-appealed the finding that the later patents are invalid. The appeal was heard in July 2015, and the Company is currently awaiting the decision. If the decision is upheld on appeal, Hospira’s application will not be approved until at least June 2016. In October 2013, a patent infringement lawsuit was filed in the United States against Strides, Inc. and Agila Specialties Private Limited (Strides/Agila), with respect to Strides/Agila’s application to the FDA seeking pre-patent expiry approval to market a generic version of Cubicin. The lawsuit automatically stays FDA approval of Strides/Agila’s application until February 2016 or until an adverse court decision, if any, whichever may occur earlier. If the Hospira decision is upheld on appeal, Strides/Agila’s application will not be approved until at least June 2016. In July 2014, a patent infringement lawsuit was filed in the United States against Fresenius, with respect to Fresenius’s application to the FDA seeking pre-patent expiry approval to market a generic version of Cubicin. The lawsuit automatically stays FDA approval of Fresenius’s application until November 2016 or until an adverse court decision, if any, whichever may occur earlier. If the Hospira decision is upheld on appeal, Fresenius’s application will not be approved until at least June 2016. An earlier district court action against Teva Parenteral Medicines Inc., Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical Industries Ltd. (collectively, Teva) resulted in a settlement whereby Teva can launch a generic version of Cubicin in December 2017 (June 2018 if the Company obtains pediatric marketing exclusivity on Cubicin ). If the Hospira decision is upheld on appeal, Teva will be able to launch in June 2016. In October 2014, Agila Specialties Inc. and Mylan Pharmaceuticals Inc. (Agila/Mylan) filed petitions for Inter Partes Review (IPR) at the United States Patent and Trademark Office (USPTO) seeking the invalidity of the September 2019 and November 2020 patents. In April 2015, Agila/Mylan withdrew its petitions for IPR in exchange for the Company agreeing to narrow the issues in the Strides/Agila lawsuit referenced above. In November 2014, Fresenius filed petitions for IPR at the USPTO seeking the invalidity of the September 2019 patents. In May 2015, the USPTO granted Fresenius’s petition for an IPR on the September 2019 patents. In July 2015, Fresenius filed petitions for IPR seeking invalidity of the November 2020 patents. The USPTO has six months from filing to determine whether it will institute the requested IPR proceedings. Emend for Injection — In May 2012, a patent infringement lawsuit was filed in the United States against Sandoz Inc. (Sandoz) in respect of Sandoz’s application to the FDA seeking pre-patent expiry approval to market a generic version of Emend for Injection. The lawsuit automatically stays FDA approval of Sandoz’s application until July 2015 or until an adverse court decision, if any, whichever may occur earlier. The trial in the lawsuit against Sandoz was recently completed in the U.S. District Court for the District of New Jersey. In August 2015, the court found that the Company’s patent was infringed and not invalid. The court ordered that Sandoz’s application not be approved until the expiration of the Company’s patent in 2019. In June 2012, a patent infringement lawsuit was filed in the United States against Accord Healthcare, Inc. US, Accord Healthcare, Inc. and Intas Pharmaceuticals Ltd (collectively, Intas) in respect of Intas’ application to the FDA seeking pre-patent expiry approval to market a generic version of Emend for Injection. The Company agreed with Intas to stay the lawsuit until the outcome of the lawsuit with Sandoz. In October 2015, following the Sandoz decision, the court found that the Company’s patent was infringed and not invalid. The court ordered that Intas’s application not be approved until the expiration of the Company’s patent in 2019. In July 2014, a patent infringement lawsuit was filed in the United States against Fresenius in respect of Fresenius’s application to the FDA seeking pre-patent expiry approval to market a generic version of Emend for Injection. The lawsuit automatically stays FDA approval of Fresenius’s application until November 2016 or until an adverse court decision, if any, whichever may occur earlier. In December 2014, Apotex Inc. filed a petition for IPR at the USPTO seeking the invalidity of claims in the compound patent covering Emend for Injection. The USPTO rejected Apotex’s petition in June 2015. Invanz — In July 2014, a patent infringement lawsuit was filed in the United States against Hospira in respect of Hospira’s application to the FDA seeking pre-patent expiry approval to market a generic version of Invanz . The lawsuit automatically stays FDA approval of Hospira’s application until November 2016 or until an adverse court decision, if any, whichever may occur earlier. Since Hospira did not challenge an earlier patent covering Invanz , its application to the FDA will not be approved until at least that patent expires in May 2016. In August 2015, a patent infringement lawsuit was filed in the United States against Savior Lifetec Corporation (Savior) in respect of Savior’s application to the FDA seeking pre-patent expiry approval to market a generic version of Invanz . The lawsuit automatically stays FDA approval of Savior’s application until November 2017 or until an adverse court decision, if any, whichever may occur earlier. Since Savior did not challenge an earlier patent covering Invanz , its application to the FDA will not be approved until at least that patent expires in May 2016. Nasonex — In July 2014, a patent infringement lawsuit was filed in the United States against Teva Pharmaceuticals USA, Inc. (Teva Pharma) in respect of Teva Pharma’s application to the FDA seeking pre-patent expiry approval to market a generic version of Nasonex . The lawsuit automatically stays FDA approval of Teva Pharma’s application until November 2016 or until an adverse court decision, if any, whichever may occur earlier. In March 2015, a patent infringement lawsuit was filed in the United States against Amneal Pharmaceuticals LLC (Amneal), in respect of Amneal’s application to the FDA seeking pre-patent expiry approval to market a generic version of Nasonex . The lawsuit automatically stays FDA approval of Amneal’s application until August 2017 or until an adverse court decision, if any, whichever may occur earlier. A previous decision, issued in June 2013, held that the Merck patent in the Teva Pharma and Amneal lawsuits covering mometasone furoate monohydrate was valid, but that it was not infringed by Apotex Corp.’s proposed product. In April 2015, a patent infringement lawsuit was filed against Apotex Inc. and Apotex Corp. (Apotex) in respect of Apotex’s application to the FDA seeking pre-patent expiry approval to market a generic version of Nasonex that allegedly differs from the generic version in the previous lawsuit. Noxafil — In August 2015, the Company filed a lawsuit against Actavis Laboratories Fl, Inc. (Actavis) in the United States in respect of that company’s application to the FDA seeking pre-patent expiry approval to sell a generic version of Noxafil . The lawsuit automatically stays FDA approval of Actavis’s application until December 2017 or until an adverse court decision, if any, whichever may occur earlier. NuvaRing — In December 2013, the Company filed a lawsuit against a subsidiary of Allergan in the United States in respect of that company’s application to the FDA seeking pre-patent expiry approval to sell a generic version of NuvaRing . The trial in this matter is scheduled to begin in January 2016. In September 2015, the Company filed a lawsuit against Teva Pharma in the United States in respect of that company’s application to the FDA seeking pre-patent expiry approval to sell a generic version of NuvaRing . Anti-PD-1 Antibody Patent Oppositions and Litigation As previously disclosed, Ono Pharmaceutical Co. (Ono) has a European patent (EP 1 537 878) (’878) that broadly claims the use of an anti-PD-1 antibody, such as the Company’s immunotherapy, Keytruda , for the treatment of cancer. Ono has previously licensed its commercial rights to an anti-PD-1 antibody to Bristol-Myers Squibb (BMS) in certain markets. The Company believes that the ’878 patent is invalid and filed an opposition in the European Patent Office (EPO) seeking its revocation. In June 2014, the Opposition Division of the EPO found the claims in the ’878 patent ar |
Equity
Equity | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Equity | Equity Common Stock Other Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Non- Controlling Interests Total ($ and shares in millions) Shares Par Value Shares Cost Balance at January 1, 2014 3,577 $ 1,788 $ 40,508 $ 39,257 $ (2,197 ) 650 $ (29,591 ) $ 2,561 $ 52,326 Net income attributable to Merck & Co., Inc. — — — 4,604 — — — — 4,604 Cash dividends declared on common stock — — — (3,872 ) — — — — (3,872 ) Treasury stock shares purchased — — — — — 106 (6,083 ) — (6,083 ) Share-based compensation plans and other — — (168 ) — — (40 ) 1,779 46 1,657 Other comprehensive loss — — — — (801 ) — — — (801 ) AstraZeneca option exercise — — — — — — — (2,400 ) (2,400 ) Net income attributable to noncontrolling interests — — — — — — — 3 3 Distributions attributable to noncontrolling interests — — — — — — — (74 ) (74 ) Balance at September 30, 2014 3,577 $ 1,788 $ 40,340 $ 39,989 $ (2,998 ) 716 $ (33,895 ) $ 136 $ 45,360 Balance at January 1, 2015 3,577 $ 1,788 $ 40,423 $ 46,021 $ (4,323 ) 739 $ (35,262 ) $ 144 $ 48,791 Net income attributable to Merck & Co., Inc. — — — 3,465 — — — — 3,465 Cash dividends declared on common stock — — — (3,826 ) — — — — (3,826 ) Treasury stock shares purchased — — — — — 53 (3,005 ) — (3,005 ) Share-based compensation plans and other — — (263 ) — — (17 ) 840 — 577 Other comprehensive loss — — — — (250 ) — — — (250 ) Changes in noncontrolling ownership interests — — (21 ) — — — — (55 ) (76 ) Net income attributable to noncontrolling interests — — — — — — — 12 12 Distributions attributable to noncontrolling interests — — — — — — — (9 ) (9 ) Balance at September 30, 2015 3,577 $ 1,788 $ 40,139 $ 45,660 $ (4,573 ) 775 $ (37,427 ) $ 92 $ 45,679 In connection with the 1998 restructuring of Astra Merck Inc., the Company assumed $2.4 billion par value preferred stock with a dividend rate of 5% per annum, which was carried by KBI and included in Noncontrolling interests on the Consolidated Balance Sheet. As discussed in Note 7, on June 30, 2014, AstraZeneca exercised its option to acquire Merck’s interest in AZLP and this preferred stock obligation was retired. |
Share-Based Compensation Plans
Share-Based Compensation Plans | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation Plans | Share-Based Compensation Plans The Company has share-based compensation plans under which the Company grants restricted stock units (RSUs) and performance share units (PSUs) to certain management level employees. In addition, employees, non-employee directors and employees of certain of the Company’s equity method investees may be granted options to purchase shares of Company common stock at the fair market value at the time of grant. The following table provides the amounts of share-based compensation cost recorded in the Consolidated Statement of Income: Three Months Ended Nine Months Ended ($ in millions) 2015 2014 2015 2014 Pretax share-based compensation expense $ 75 $ 75 $ 221 $ 209 Income tax benefit (23 ) (23 ) (69 ) (64 ) Total share-based compensation expense, net of taxes $ 52 $ 52 $ 152 $ 145 Amounts in the table above do not reflect share-based compensation costs to settle non-vested Cubist equity awards attributable to postcombination service that were recognized as transaction expense in 2015 (see Note 3). During the first nine months of 2015 and 2014 , the Company granted 4 million RSUs with a weighted-average grant date fair value of $59.79 per RSU and 5 million RSUs with a weighted-average grant date fair value of $58.15 per RSU, respectively. During the first nine months of 2015 and 2014 , the Company granted 5 million stock options with a weighted-average exercise price of $59.82 per option and 5 million stock options with a weighted-average exercise price of $58.15 per option, respectively. The weighted-average fair value of options granted for the first nine months of 2015 and 2014 was $6.46 and $6.79 per option, respectively, and was determined using the following assumptions: Nine Months Ended September 30, 2015 2014 Expected dividend yield 4.1 % 4.3 % Risk-free interest rate 1.7 % 2.0 % Expected volatility 19.9 % 22.0 % Expected life (years) 6.2 6.4 At September 30, 2015 , there was $488 million of total pretax unrecognized compensation expense related to nonvested stock options, RSU and PSU awards which will be recognized over a weighted-average period of 2.0 years . For segment reporting, share-based compensation costs are unallocated expenses. |
Pension and Other Postretiremen
Pension and Other Postretirement Benefit Plans | 9 Months Ended |
Sep. 30, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Pension and Other Postretirement Benefit Plans | Pension and Other Postretirement Benefit Plans The Company has defined benefit pension plans covering eligible employees in the United States and in certain of its international subsidiaries. The net periodic benefit cost of such plans consisted of the following components: Three Months Ended Nine Months Ended 2015 2014 2015 2014 ($ in millions) U.S. International U.S. International U.S. International U.S. International Service cost $ 65 $ 61 $ 62 $ 66 $ 230 $ 190 $ 227 $ 202 Interest cost 108 52 105 68 326 156 319 204 Expected return on plan assets (203 ) (95 ) (195 ) (105 ) (614 ) (286 ) (585 ) (316 ) Net amortization 33 26 27 13 119 79 55 40 Termination benefits 2 — 16 1 20 1 42 5 Curtailments (1 ) (2 ) (10 ) (7 ) (10 ) (3 ) (43 ) (6 ) Settlements — 1 8 — — 4 8 — $ 4 $ 43 $ 13 $ 36 $ 71 $ 141 $ 23 $ 129 The Company provides medical benefits, principally to its eligible U.S. retirees and similar benefits to their dependents, through its other postretirement benefit plans. The net cost of such plans consisted of the following components: Three Months Ended Nine Months Ended ($ in millions) 2015 2014 2015 2014 Service cost $ 22 $ 18 $ 61 $ 56 Interest cost 28 27 83 84 Expected return on plan assets (36 ) (35 ) (107 ) (104 ) Net amortization (13 ) (18 ) (44 ) (53 ) Termination benefits 1 5 6 13 Curtailments (1 ) (7 ) (8 ) (33 ) $ 1 $ (10 ) $ (9 ) $ (37 ) In connection with restructuring actions (see Note 2), termination charges were recorded on pension and other postretirement benefit plans related to expanded eligibility for certain employees exiting Merck. Also, in connection with these restructuring actions, curtailments and settlements were recorded on pension and other postretirement benefit plans as reflected in the tables above. |
Other (Income) Expense, Net
Other (Income) Expense, Net | 9 Months Ended |
Sep. 30, 2015 | |
Other Income and Expenses [Abstract] | |
Other (Income) Expense, Net | Other (Income) Expense, Net Other (income) expense, net, consisted of: Three Months Ended Nine Months Ended ($ in millions) 2015 2014 2015 2014 Interest income $ (68 ) $ (69 ) $ (214 ) $ (190 ) Interest expense 165 191 503 567 Exchange losses 228 61 1,038 114 Equity income from affiliates (63 ) (24 ) (210 ) (241 ) Other, net (432 ) (325 ) (493 ) (1,228 ) $ (170 ) $ (166 ) $ 624 $ (978 ) The increase in exchange losses in the third quarter and first nine months of 2015 as compared with the corresponding periods of 2014 were driven by exchange losses related to Venezuela of $138 million and $853 million , respectively. During the second quarter of 2015, upon evaluation of evolving economic conditions in Venezuela and volatility in the country, the Company determined it was unlikely that all outstanding net monetary assets would be settled at the official rate of 6.30 VEF per U.S. dollar. Accordingly, during the second quarter of 2015, the Company recorded a charge of $715 million to revalue its net monetary assets in Venezuela to an amount that includes the Company’s estimate of the U.S. dollar amount that will ultimately be collected. During the third quarter of 2015, the Company recorded additional exchange losses of $138 million reflecting the ongoing effect of translating current quarter transactions and net monetary assets consistent with the second quarter. It is possible that the Company may record additional charges for devaluations or ongoing translation exchange losses in the future. The increase in equity income from affiliates in the third quarter of 2015 as compared with the third quarter of 2014 was driven primarily by higher equity income from certain research investment funds. The decline in equity income from affiliates for the first nine months of 2015 as compared with the same period in 2014 was due to the termination of the Company’s relationship with AZLP on June 30, 2014 (see Note 7), partially offset by higher equity income from certain research investment funds. Other, net (as reflected in the table above) in the third quarter and first nine months of 2015 includes a $250 million gain on the sale of certain migraine clinical development programs (see Note 3). In addition, Other, net in the third quarter and first nine months of 2015 includes the recognition of $50 million and $153 million , respectively, of deferred income related to AstraZenca’s option exercise (see Note 7) compared with $36 million in the third quarter and first nine months of 2014. Other, net in the first nine months of 2015 also includes an expense of $78 million for a contribution of investments in equity securities to the Merck Foundation. Other, net in the third quarter and first nine months of 2014 includes a $396 million gain on the divestiture of certain ophthalmic products in several international markets (see Note 3) and a $93 million goodwill impairment charge related to the Company’s joint venture with Supera (see Note 6). Other, net in the first nine months of 2014 also includes a gain of $741 million related to AstraZeneca’s option exercise (see Note 7) and a gain of $204 million related to the divestiture of Sirna (see Note 3). Interest paid for the nine months ended September 30, 2015 and 2014 was $452 million and $544 million , respectively. |
Taxes on Income
Taxes on Income | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Taxes on Income | Taxes on Income The effective income tax rates of 23.6% and 43.5% for the third quarter of 2015 and 2014 , respectively, and 24.2% and 15.8% for the first nine months of 2015 and 2014 , respectively, reflect the impacts of acquisition and divestiture-related costs and restructuring costs, partially offset by the beneficial impact of foreign earnings. The effective income tax rate for the first nine months of 2015 also reflects the favorable impact of a net benefit of $370 million related to the settlement of certain federal income tax issues, as well as the unfavorable effects of foreign exchange losses related to Venezuela for which no tax benefit was recorded and a $75 million out of period discrete adjustment recorded in the second quarter related to deferred taxes associated with prior year restructuring activities. Management considered the discrete adjustment to be immaterial to current and prior period financial statements as reported. The effective income tax rate for the first nine months of 2014 also reflects a net tax benefit of $517 million recorded in connection with AstraZeneca’s option exercise (see Note 7) and a benefit of approximately $300 million associated with a capital loss generated in the first quarter related to the sale of Sirna (see Note 3). The Company is under examination by numerous tax authorities in various jurisdictions globally. The ultimate finalization of the Company’s examinations with relevant taxing authorities can include formal administrative and legal proceedings, which could have a significant impact on the timing of the reversal of unrecognized tax benefits. The Company believes that its reserves for uncertain tax positions are adequate to cover existing risks or exposures. However, there is one item that is currently under discussion with the Internal Revenue Service relating to their 2006 through 2008 examination. The Company has concluded that its position should be sustained upon audit. However, if this item were to result in an unfavorable outcome or settlement, it could have a material adverse impact on the Company’s financial position, liquidity and results of operations. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The calculations of earnings per share are as follows: Three Months Ended Nine Months Ended ($ and shares in millions except per share amounts) 2015 2014 2015 2014 Net income attributable to Merck & Co., Inc. $ 1,826 $ 895 $ 3,465 $ 4,604 Average common shares outstanding 2,814 2,879 2,825 2,909 Common shares issuable (1) 22 32 25 33 Average common shares outstanding assuming dilution 2,836 2,911 2,850 2,942 Basic earnings per common share attributable to Merck & Co., Inc. common shareholders $ 0.65 $ 0.31 $ 1.23 $ 1.58 Earnings per common share assuming dilution attributable to Merck & Co., Inc. common shareholders $ 0.64 $ 0.31 $ 1.22 $ 1.57 (1) Issuable primarily under share-based compensation plans. For the three months ended September 30, 2015 and 2014 , 10 million and 5 million , respectively, and for the first nine months of 2015 and 2014, 7 million and 4 million , respectively, of common shares issuable under share-based compensation plans were excluded from the computation of earnings per common share assuming dilution because the effect would have been antidilutive. |
Other Comprehensive Income (Los
Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss) Changes in AOCI by component are as follows: Three Months Ended September 30, ($ in millions) Derivatives Investments Employee Benefit Plans Cumulative Translation Adjustment Accumulated Other Comprehensive Income (Loss) Balance July 1, 2014, net of taxes $ 27 $ 116 $ (1,241 ) $ (1,346 ) $ (2,444 ) Other comprehensive income (loss) before reclassification adjustments, pretax 434 (26 ) (715 ) (244 ) (551 ) Tax (152 ) (7 ) 226 (72 ) (5 ) Other comprehensive income (loss) before reclassification adjustments, net of taxes 282 (33 ) (489 ) (316 ) (556 ) Reclassification adjustments, pretax (44 ) 5 34 — (5 ) Tax 16 (1 ) (8 ) — 7 Reclassification adjustments, net of taxes (28 ) (1) 4 (2) 26 (3) — 2 Other comprehensive income (loss), net of taxes 254 (29 ) (463 ) (316 ) (554 ) Balance September 30, 2014, net of taxes $ 281 $ 87 $ (1,704 ) $ (1,662 ) $ (2,998 ) Balance July 1, 2015, net of taxes $ 606 $ 143 $ (2,909 ) $ (2,172 ) $ (4,332 ) Other comprehensive income (loss) before reclassification adjustments, pretax (16 ) (81 ) 3 (87 ) (181 ) Tax 9 24 2 2 37 Other comprehensive income (loss) before reclassification adjustments, net of taxes (7 ) (57 ) 5 (85 ) (144 ) Reclassification adjustments, pretax (171 ) (16 ) 46 — (141 ) Tax 60 6 (22 ) — 44 Reclassification adjustments, net of taxes (111 ) (1) (10 ) (2) 24 (3) — (97 ) Other comprehensive income (loss), net of taxes (118 ) (67 ) 29 (85 ) (241 ) Balance September 30, 2015, net of taxes $ 488 $ 76 $ (2,880 ) $ (2,257 ) $ (4,573 ) Nine Months Ended September 30, ($ in millions) Derivatives Investments Employee Benefit Plans Cumulative Translation Adjustment Accumulated Other Comprehensive Income (Loss) Balance January 1, 2014, net of taxes $ 132 $ 54 $ (909 ) $ (1,474 ) $ (2,197 ) Other comprehensive income (loss) before reclassification adjustments, pretax 277 13 (1,287 ) (123 ) (1,120 ) Tax (97 ) (2 ) 449 (65 ) 285 Other comprehensive income (loss) before reclassification adjustments, net of taxes 180 11 (838 ) (188 ) (835 ) Reclassification adjustments, pretax (48 ) 35 54 — 41 Tax 17 (13 ) (11 ) — (7 ) Reclassification adjustments, net of taxes (31 ) (1) 22 (2) 43 (3) — 34 Other comprehensive income (loss), net of taxes 149 33 (795 ) (188 ) (801 ) Balance September 30, 2014, net of taxes $ 281 $ 87 $ (1,704 ) $ (1,662 ) $ (2,998 ) Balance January 1, 2015, net of taxes $ 530 $ 111 $ (2,986 ) $ (1,978 ) $ (4,323 ) Other comprehensive income (loss) before reclassification adjustments, pretax 464 18 18 (181 ) 319 Tax (159 ) (1 ) (2 ) (98 ) (260 ) Other comprehensive income (loss) before reclassification adjustments, net of taxes 305 17 16 (279 ) 59 Reclassification adjustments, pretax (534 ) (78 ) 154 — (458 ) Tax 187 26 (64 ) — 149 Reclassification adjustments, net of taxes (347 ) (1) (52 ) (2) 90 (3) — (309 ) Other comprehensive income (loss), net of taxes (42 ) (35 ) 106 (279 ) (250 ) Balance September 30, 2015, net of taxes $ 488 $ 76 $ (2,880 ) $ (2,257 ) $ (4,573 ) (1) Relates to foreign currency cash flow hedges that were reclassified from AOCI to Sales. (2) Represents net realized (gains) losses on the sales of available-for-sale investments that were reclassified from AOCI to Other (income) expense, net . (3) Includes net amortization of prior service cost and actuarial gains and losses included in net periodic benefit cost (see Note 12). |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company’s operations are principally managed on a products basis and include the Pharmaceutical, Animal Health and Alliances operating segments. The Animal Health and Alliances segments are not material for separate reporting. The Pharmaceutical segment includes human health pharmaceutical and vaccine products marketed either directly by the Company or through joint ventures. 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 vaccines is sold 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 Company also has animal health operations that discover, develop, manufacture and market animal health products, including vaccines, which the Company sells to veterinarians, distributors and animal producers. The Alliances segment includes revenue and equity income from AZLP until its termination on June 30, 2014. On October 1, 2014, the Company sold its Consumer Care segment that developed, manufactured and marketed over-the-counter, foot care and sun care products. Sales of the Company’s products were as follows: Three Months Ended Nine Months Ended ($ in millions) 2015 2014 2015 2014 Primary Care and Women’s Health Cardiovascular Zetia $ 633 $ 660 $ 1,836 $ 1,988 Vytorin 302 369 942 1,146 Diabetes Januvia 1,014 933 2,942 2,849 Janumet 562 505 1,625 1,500 General Medicine and Women’s Health NuvaRing 190 186 538 531 Implanon/Nexplanon 176 158 437 379 Dulera 133 124 383 328 Follistim AQ 95 97 288 309 Hospital and Specialty Hepatitis PegIntron 40 84 148 300 HIV Isentress 377 412 1,137 1,255 Hospital Acute Care Cubicin (1) 325 7 805 18 Cancidas 139 183 436 505 Invanz 153 141 424 390 Noxafil 132 107 360 280 Bridion 89 90 262 245 Primaxin 75 91 228 243 Immunology Remicade 442 604 1,398 1,815 Simponi 178 170 505 500 Oncology Emend 141 136 396 402 Keytruda 159 4 352 4 Temodar 83 88 238 264 Diversified Brands Respiratory Singulair 201 218 658 773 Nasonex 121 261 625 830 Clarinex 39 49 145 180 Other Cozaar/Hyzaar 150 195 524 614 Arcoxia 123 132 361 400 Fosamax 86 114 277 358 Zocor 56 61 168 194 Propecia 41 66 133 197 Vaccines (2) Gardasil/Gardasil 9 625 590 1,410 1,382 ProQuad/M-M-R II /Varivax 390 421 1,096 1,027 Zostavax 179 181 503 479 RotaTeq 160 174 441 490 Pneumovax 23 138 197 354 400 Other pharmaceutical (3) 1,178 1,326 3,380 4,097 Total Pharmaceutical segment sales 8,925 9,134 25,755 26,672 Other segment sales (4) 846 1,321 2,578 4,657 Total segment sales 9,771 10,455 28,333 31,329 Other (5) 302 102 950 426 $ 10,073 $ 10,557 $ 29,283 $ 31,755 (1) Sales of Cubicin in 2015 represent sales subsequent to the Cubist acquisition date. Sales of Cubicin in 2014 reflect sales in Japan pursuant to a previously existing licensing agreement. (2) These amounts do not reflect sales of vaccines sold in most major European markets through the Company’s joint venture, Sanofi Pasteur MSD, the results of which are reflected in equity income from affiliates which is included in Other (income) expense, net . These amounts do, however, reflect supply sales to Sanofi Pasteur MSD . (3) Other pharmaceutical primarily reflects sales of other human health pharmaceutical products, including products within the franchises not listed separately . (4) Represents the non-reportable segments of Animal Health and Alliances, as well as Consumer Care until its divestiture on October 1, 2014. The Alliances segment includes revenue from the Company’s relationship with AZLP until its termination on June 30, 2014 (see Note 7). (5) Other revenues are primarily comprised of miscellaneous corporate revenues, including revenue hedging activities, as well as third-party manufacturing sales . Other revenues in the first nine months of 2014 also include $232 million received by Merck in connection with the sale of the U.S. marketing rights to Saphris (see Note 3). A reconciliation of segment profits to Income before taxes is as follows: Three Months Ended Nine Months Ended ($ in millions) 2015 2014 2015 2014 Segment profits: Pharmaceutical segment $ 5,641 $ 5,772 $ 16,088 $ 16,475 Other segments 429 539 1,310 2,050 Total segment profits 6,070 6,311 17,398 18,525 Other profits (losses) 195 79 538 370 Unallocated: Interest income 68 69 214 190 Interest expense (165 ) (191 ) (503 ) (567 ) Equity income from affiliates 25 (22 ) 161 62 Depreciation and amortization (383 ) (595 ) (1,175 ) (1,895 ) Research and development (1,291 ) (1,332 ) (4,310 ) (3,984 ) Amortization of purchase accounting adjustments (1,184 ) (1,008 ) (3,662 ) (3,198 ) Restructuring costs (113 ) (376 ) (386 ) (664 ) Gain on sale of certain migraine clinical development programs 250 — 250 — Foreign currency devaluation related to Venezuela — — (715 ) — Gain on divestiture of certain ophthalmic products — 396 — 396 Gain on AstraZeneca option exercise — — — 741 Other unallocated, net (1,075 ) (1,841 ) (3,225 ) (4,504 ) $ 2,397 $ 1,490 $ 4,585 $ 5,472 Segment profits are comprised of segment sales less standard costs and certain operating expenses directly incurred by the segments. For internal management reporting presented to the chief operating decision maker, Merck does not allocate materials and production costs, other than standard costs, the majority of research and development expenses 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 (losses) are primarily comprised of miscellaneous corporate profits (losses), as well as operating profits (losses) related to third-party manufacturing sales. Other unallocated, net includes expenses from corporate and manufacturing cost centers, goodwill and product intangible asset impairment charges, gains or losses on sales of businesses and other miscellaneous income or expense items. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued amended accounting guidance on revenue recognition that will be applied to all contracts with customers. The objective of the new guidance is to improve comparability of revenue recognition practices across entities and to provide more useful information to users of financial statements through improved disclosure requirements. In August 2015, the FASB approved a one-year deferral of the effective date making this guidance effective for annual and interim periods beginning in 2018. Reporting entities may choose to adopt the standard as of the original effective date. The Company is currently assessing the impact of adoption on its consolidated financial statements. |
Legal Costs, Policy | Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable. |
Restructuring (Tables)
Restructuring (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Charges Related to Restructuring Program Activities by Type of Cost | The following tables summarize the charges related to restructuring program activities by type of cost: Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 ($ in millions) Separation Costs Accelerated Depreciation Other Total Separation Costs Accelerated Depreciation Other Total 2013 Restructuring Program Materials and production $ — $ 13 $ (12 ) $ 1 $ — $ 27 $ 2 $ 29 Marketing and administrative — 2 12 14 — 46 17 63 Research and development — 8 8 16 — 24 9 33 Restructuring costs 36 — 35 71 105 — 88 193 36 23 43 102 105 97 116 318 Merger Restructuring Program Materials and production — 4 65 69 — 20 231 251 Marketing and administrative — 3 — 3 — 7 — 7 Research and development — 1 — 1 — 1 — 1 Restructuring costs (24 ) — 66 42 (5 ) — 198 193 (24 ) 8 131 115 (5 ) 28 429 452 $ 12 $ 31 $ 174 $ 217 $ 100 $ 125 $ 545 $ 770 Three Months Ended September 30, 2014 Nine Months Ended September 30, 2014 ($ in millions) Separation Costs Accelerated Depreciation Other Total Separation Costs Accelerated Depreciation Other Total 2013 Restructuring Program Materials and production $ — $ 5 $ — $ 5 $ — $ 189 $ 17 $ 206 Marketing and administrative — 45 — 45 — 92 — 92 Research and development — 75 6 81 — 160 14 174 Restructuring costs 310 — (4 ) 306 387 — (33 ) 354 310 125 2 437 387 441 (2 ) 826 Merger Restructuring Program Materials and production — 67 15 82 — 219 (48 ) 171 Marketing and administrative — 29 (6 ) 23 — 54 (3 ) 51 Research and development — — — — — — 1 1 Restructuring costs 5 — 65 70 104 — 206 310 5 96 74 175 104 273 156 533 $ 315 $ 221 $ 76 $ 612 $ 491 $ 714 $ 154 $ 1,359 |
Charges and Spending Relating to Restructuring Activities by Program | The following table summarizes the charges and spending relating to restructuring activities by program for the nine months ended September 30, 2015 : ($ in millions) Separation Costs Accelerated Depreciation Other Total 2013 Restructuring Program Restructuring reserves January 1, 2015 $ 495 $ — $ 14 $ 509 Expense 105 97 116 318 (Payments) receipts, net (308 ) — (127 ) (435 ) Non-cash activity — (97 ) 1 (96 ) Restructuring reserves September 30, 2015 (1) $ 292 $ — $ 4 $ 296 Merger Restructuring Program Restructuring reserves January 1, 2015 $ 536 $ — $ 6 $ 542 Expense (5 ) 28 429 452 (Payments) receipts, net (224 ) — (163 ) (387 ) Non-cash activity — (28 ) (216 ) (244 ) Restructuring reserves September 30, 2015 (1) $ 307 $ — $ 56 $ 363 (1) The cash outlays associated with the 2013 Restructuring Program are expected to be substantially completed by the end of 2015. The non-manufacturing cash outlays associated with the Merger Restructuring Program were substantially completed by the end of 2013; the remaining cash outlays are expected to be substantially completed by the end of 2016. |
Acquisitions, Divestitures, R26
Acquisitions, Divestitures, Research Collaborations and License Agreements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Schedule of Fair Value of Assets Acquired and Liabilities Assumed | A preliminary allocation of the fair value of assets acquired and liabilities assumed from Cubist was made as of the acquisition date. The Company subsequently adjusted the preliminary values assigned to certain assets and liabilities in order to reflect additional information obtained since the preliminary allocation that pertained to facts and circumstances that existed as of the acquisition date. These measurement period adjustments have been reflected in the opening balance sheet; however, since the adjustments did not have a significant impact on the Company’s consolidated statements of income or cash flows in any period, the interim financial statements were not retrospectively adjusted. The revised allocation is as follows: ($ millions) Cash and cash equivalents $ 733 Accounts receivable 123 Inventories 216 Other current assets 55 Property, plant and equipment 151 Identifiable intangible assets: Products and product rights (11 year weighted-average useful life) 6,923 In-process research and development (IPR&D) 50 Other noncurrent assets 184 Current liabilities (1) (233 ) Deferred income tax liabilities (2,518 ) Long-term debt (1,900 ) Other noncurrent liabilities (1) (122 ) Total identifiable net assets 3,662 Goodwill (2) 4,669 Consideration transferred $ 8,331 (1) Included in current liabilities and other noncurrent liabilities is contingent consideration of $73 million and $50 million , respectively. (2) The goodwill recognized is largely attributable to anticipated synergies expected to arise after the acquisition and was allocated to the Pharmaceutical segment. The goodwill is not deductible for tax purposes. |
Unaudited Supplemental Pro Forma Data | The following unaudited supplemental pro forma data presents consolidated information as if the acquisition of Cubist had been completed on January 1, 2014: Three Months Ended Nine Months Ended ($ in millions) 2015 2014 2015 2014 Sales $ 10,073 $ 10,866 $ 29,369 $ 32,620 Net income attributable to Merck & Co., Inc. 1,833 703 3,645 3,789 Basic earnings per common share attributable to Merck & Co., Inc. common shareholders 0.65 0.24 1.29 1.30 Earnings per common share assuming dilution attributable to Merck & Co., Inc. common shareholders 0.65 0.24 1.28 1.29 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Interest Rate Swaps Held | At September 30, 2015 , the Company was a party to 30 pay-floating, receive-fixed interest rate swap contracts designated as fair value hedges of fixed-rate notes in which the notional amounts match the amount of the hedged fixed-rate notes as detailed in the table below. September 30, 2015 Debt Instrument Par Value of Debt Number of Interest Rate Swaps Held Total Swap Notional Amount 0.70% notes due 2016 $ 1,000 4 $ 1,000 1.30% notes due 2018 1,000 4 1,000 5.00% notes due 2019 1,250 3 550 1.85% notes due 2020 1,250 5 1,250 3.875% notes due 2021 1,150 5 1,150 2.40% notes due 2022 1,000 4 1,000 2.35% notes due 2022 1,250 5 1,250 |
Fair Value of Derivatives on a Gross Basis Segregated between those Derivatives that are Designated as Hedging Instruments and those that are Not Designated as Hedging Instruments | Presented in the table below is the fair value of derivatives on a gross basis segregated between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments: September 30, 2015 December 31, 2014 Fair Value of Derivative U.S. Dollar Notional Fair Value of Derivative U.S. Dollar Notional ($ in millions) Balance Sheet Caption Asset Liability Asset Liability Derivatives Designated as Hedging Instruments Interest rate swap contracts (current) Deferred income taxes and other current assets $ 1 $ — $ 1,000 $ — $ — $ — Interest rate swap contracts (non-current) Other assets 101 — 6,200 19 — 1,950 Interest rate swap contracts (non-current) Other noncurrent liabilities — — — — 15 2,000 Foreign exchange contracts (current) Deferred income taxes and other current assets 710 — 4,876 772 — 5,513 Foreign exchange contracts (non-current) Other assets 491 — 4,854 691 — 6,253 Foreign exchange contracts (current) Accrued and other current liabilities — 1 34 — — — $ 1,303 $ 1 $ 16,964 $ 1,482 $ 15 $ 15,716 Derivatives Not Designated as Hedging Instruments Foreign exchange contracts (current) Deferred income taxes and other current assets $ 154 $ — $ 4,615 $ 365 $ — $ 6,966 Foreign exchange contracts (non-current) Other assets 18 — 179 — — — Foreign exchange contracts (current) Accrued and other current liabilities — 55 4,192 — 88 3,386 $ 172 $ 55 $ 8,986 $ 365 $ 88 $ 10,352 $ 1,475 $ 56 $ 25,950 $ 1,847 $ 103 $ 26,068 |
Information on Derivative Positions Subject to Master Netting Arrangements as if they were Presented on a Net Basis | The following table provides information on the Company’s derivative positions subject to these master netting arrangements as if they were presented on a net basis, allowing for the right of offset by counterparty and cash collateral exchanged per the master agreements and related credit support annexes: September 30, 2015 December 31, 2014 ($ in millions) Asset Liability Asset Liability Gross amounts recognized in the consolidated balance sheet $ 1,475 $ 56 $ 1,847 $ 103 Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet (31 ) (31 ) (97 ) (97 ) Cash collateral (received) posted (1,054 ) — (1,410 ) — Net amounts $ 390 $ 25 $ 340 $ 6 |
Location and Pretax Gain or Loss Amounts for Derivatives | The table below provides information on the location and pretax gain or loss amounts for derivatives that are: (i) designated in a fair value hedging relationship, (ii) designated in a foreign currency cash flow hedging relationship, (iii) designated in a foreign currency net investment hedging relationship and (iv) not designated in a hedging relationship: Three Months Ended Nine Months Ended ($ in millions) 2015 2014 2015 2014 Derivatives designated in a fair value hedging relationship Interest rate swap contracts Amount of (gain) loss recognized in Other (income) expense, net on derivatives (1) $ (130 ) $ 23 $ (97 ) $ 2 Amount of loss (gain) recognized in Other (income) expense, net on hedged item (1) 125 (23 ) 91 (3 ) Derivatives designated in foreign currency cash flow hedging relationships Foreign exchange contracts Amount of gain reclassified from AOCI to Sales (170 ) (42 ) (528 ) (45 ) Amount of loss (gain) recognized in OCI on derivatives 17 (433 ) (464 ) (276 ) Derivatives designated in foreign currency net investment hedging relationships Foreign exchange contracts Amount of gain recognized in Other (income) expense, net on derivatives (2) (1 ) (1 ) (4 ) (3 ) Amount of loss (gain) recognized in OCI on derivatives 13 (116 ) (5 ) (67 ) Derivatives not designated in a hedging relationship Foreign exchange contracts Amount of gain recognized in Other (income) expense, net on derivatives (3) (155 ) (290 ) (360 ) (314 ) Amount of loss (gain) recognized in Sales — 5 (1 ) 5 (1) There was $5 million and $6 million of ineffectiveness on the hedge during the third quarter and first nine months of 2015, respectively. (2) There was no ineffectiveness on the hedge. Represents the amount excluded from hedge effectiveness testing. (3) These derivative contracts mitigate changes in the value of remeasured foreign currency denominated monetary assets and liabilities attributable to changes in foreign currency exchange rates. |
Information on Available-for-sale Investments | Information on available-for-sale investments is as follows: September 30, 2015 December 31, 2014 Fair Value Amortized Cost Gross Unrealized Fair Value Amortized Cost Gross Unrealized ($ in millions) Gains Losses Gains Losses Corporate notes and bonds $ 10,806 $ 10,805 $ 30 $ (29 ) $ 10,107 $ 10,102 $ 22 $ (17 ) Commercial paper 2,448 2,448 — — 6,970 6,970 — — Asset-backed securities 1,384 1,383 2 (1 ) 1,460 1,462 1 (3 ) U.S. government and agency securities 1,272 1,268 4 — 1,774 1,775 1 (2 ) Mortgage-backed securities 737 734 4 (1 ) 602 604 2 (4 ) Foreign government bonds 638 636 2 — 385 385 — — Equity securities 528 428 100 — 730 557 173 — $ 17,813 $ 17,702 $ 142 $ (31 ) $ 22,028 $ 21,855 $ 199 $ (26 ) |
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | Financial assets and liabilities measured at fair value on a recurring basis are summarized below: Fair Value Measurements Using Fair Value Measurements Using Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total ($ in millions) September 30, 2015 December 31, 2014 Assets Investments Corporate notes and bonds $ — $ 10,806 $ — $ 10,806 $ — $ 10,107 $ — $ 10,107 Commercial paper — 2,448 — 2,448 — 6,970 — 6,970 Asset-backed securities (1) — 1,384 — 1,384 — 1,460 — 1,460 U.S. government and agency securities — 1,272 — 1,272 — 1,774 — 1,774 Mortgage-backed securities (1) — 737 — 737 — 602 — 602 Foreign government bonds — 638 — 638 — 385 — 385 Equity securities 336 — — 336 495 — — 495 336 17,285 — 17,621 495 21,298 — 21,793 Other assets Securities held for employee compensation 174 18 — 192 181 54 — 235 Derivative assets (2) Purchased currency options — 1,161 — 1,161 — 1,252 — 1,252 Forward exchange contracts — 212 — 212 — 576 — 576 Interest rate swaps — 102 — 102 — 19 — 19 — 1,475 — 1,475 — 1,847 — 1,847 Total assets $ 510 $ 18,778 $ — $ 19,288 $ 676 $ 23,199 $ — $ 23,875 Liabilities Other liabilities Contingent consideration $ — $ — $ 614 $ 614 $ — $ — $ 428 $ 428 Derivative liabilities (2) Forward exchange contracts — 56 — 56 — 46 — 46 Written currency options — — — — — 42 — 42 Interest rate swaps — — — — — 15 — 15 — 56 — 56 — 103 — 103 Total liabilities $ — $ 56 $ 614 $ 670 $ — $ 103 $ 428 $ 531 (1) Primarily all of the asset-backed securities are highly-rated (Standard & Poor’s rating of AAA and Moody’s Investors Service rating of Aaa), secured primarily by credit card, auto loan, and home equity receivables, with weighted-average lives of primarily 5 years or less. Mortgage-backed securities represent AAA-rated securities issued or unconditionally guaranteed as to payment of principal and interest by U.S. government agencies. (2) The fair value determination of derivatives includes the impact of the credit risk of counterparties to the derivatives and the Company’s own credit risk, the effects of which were not significant. |
Information About the Changes in Liabilities for Contingent Consideration | Summarized information about the changes in liabilities for contingent consideration is as follows: Nine Months Ended September 30, ($ in millions) 2015 2014 Fair value January 1 $ 428 $ 69 Changes in fair value (1) 8 6 Additions 228 — Payments (50 ) — Fair value September 30 $ 614 $ 75 (1) Recorded in Research and development expenses and Materials and production costs. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consisted of: ($ in millions) September 30, 2015 December 31, 2014 Finished goods $ 1,528 $ 1,588 Raw materials and work in process 4,586 5,141 Supplies 177 197 Total (approximates current cost) 6,291 6,926 Increase to LIFO costs 366 309 $ 6,657 $ 7,235 Recognized as: Inventories $ 5,123 $ 5,571 Other assets 1,534 1,664 |
Joint Ventures and Other Equi29
Joint Ventures and Other Equity Method Affiliates (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summarized Financial Information for AZLP | Summarized financial information for AZLP through the June 30, 2014 termination date is as follows: Six Months Ended June 30, ($ in millions) 2014 Sales $ 2,205 Materials and production costs 1,044 Other expense, net 604 Income before taxes (1) $ 557 (1) Merck’s partnership returns from AZLP were generally contractually determined as noted above and were not based on a percentage of income from AZLP, other than with respect to Merck’s 1% limited partnership interest. |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Shareholders' Equity | Common Stock Other Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Non- Controlling Interests Total ($ and shares in millions) Shares Par Value Shares Cost Balance at January 1, 2014 3,577 $ 1,788 $ 40,508 $ 39,257 $ (2,197 ) 650 $ (29,591 ) $ 2,561 $ 52,326 Net income attributable to Merck & Co., Inc. — — — 4,604 — — — — 4,604 Cash dividends declared on common stock — — — (3,872 ) — — — — (3,872 ) Treasury stock shares purchased — — — — — 106 (6,083 ) — (6,083 ) Share-based compensation plans and other — — (168 ) — — (40 ) 1,779 46 1,657 Other comprehensive loss — — — — (801 ) — — — (801 ) AstraZeneca option exercise — — — — — — — (2,400 ) (2,400 ) Net income attributable to noncontrolling interests — — — — — — — 3 3 Distributions attributable to noncontrolling interests — — — — — — — (74 ) (74 ) Balance at September 30, 2014 3,577 $ 1,788 $ 40,340 $ 39,989 $ (2,998 ) 716 $ (33,895 ) $ 136 $ 45,360 Balance at January 1, 2015 3,577 $ 1,788 $ 40,423 $ 46,021 $ (4,323 ) 739 $ (35,262 ) $ 144 $ 48,791 Net income attributable to Merck & Co., Inc. — — — 3,465 — — — — 3,465 Cash dividends declared on common stock — — — (3,826 ) — — — — (3,826 ) Treasury stock shares purchased — — — — — 53 (3,005 ) — (3,005 ) Share-based compensation plans and other — — (263 ) — — (17 ) 840 — 577 Other comprehensive loss — — — — (250 ) — — — (250 ) Changes in noncontrolling ownership interests — — (21 ) — — — — (55 ) (76 ) Net income attributable to noncontrolling interests — — — — — — — 12 12 Distributions attributable to noncontrolling interests — — — — — — — (9 ) (9 ) Balance at September 30, 2015 3,577 $ 1,788 $ 40,139 $ 45,660 $ (4,573 ) 775 $ (37,427 ) $ 92 $ 45,679 |
Share-Based Compensation Plans
Share-Based Compensation Plans (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Amounts of Share-Based Compensation Cost Recorded in Consolidated Statement of Income | The following table provides the amounts of share-based compensation cost recorded in the Consolidated Statement of Income: Three Months Ended Nine Months Ended ($ in millions) 2015 2014 2015 2014 Pretax share-based compensation expense $ 75 $ 75 $ 221 $ 209 Income tax benefit (23 ) (23 ) (69 ) (64 ) Total share-based compensation expense, net of taxes $ 52 $ 52 $ 152 $ 145 |
Assumptions Used to Determine Weighted-Average Fair Value of Options Granted | The weighted-average fair value of options granted for the first nine months of 2015 and 2014 was $6.46 and $6.79 per option, respectively, and was determined using the following assumptions: Nine Months Ended September 30, 2015 2014 Expected dividend yield 4.1 % 4.3 % Risk-free interest rate 1.7 % 2.0 % Expected volatility 19.9 % 22.0 % Expected life (years) 6.2 6.4 |
Pension and Other Postretirem32
Pension and Other Postretirement Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Pension Plans | |
Defined Benefit Plan Disclosure [Line Items] | |
Components of Net Cost of Defined Benefit Plans | The Company has defined benefit pension plans covering eligible employees in the United States and in certain of its international subsidiaries. The net periodic benefit cost of such plans consisted of the following components: Three Months Ended Nine Months Ended 2015 2014 2015 2014 ($ in millions) U.S. International U.S. International U.S. International U.S. International Service cost $ 65 $ 61 $ 62 $ 66 $ 230 $ 190 $ 227 $ 202 Interest cost 108 52 105 68 326 156 319 204 Expected return on plan assets (203 ) (95 ) (195 ) (105 ) (614 ) (286 ) (585 ) (316 ) Net amortization 33 26 27 13 119 79 55 40 Termination benefits 2 — 16 1 20 1 42 5 Curtailments (1 ) (2 ) (10 ) (7 ) (10 ) (3 ) (43 ) (6 ) Settlements — 1 8 — — 4 8 — $ 4 $ 43 $ 13 $ 36 $ 71 $ 141 $ 23 $ 129 |
Other Postretirement Benefit Plans | |
Defined Benefit Plan Disclosure [Line Items] | |
Components of Net Cost of Defined Benefit Plans | The Company provides medical benefits, principally to its eligible U.S. retirees and similar benefits to their dependents, through its other postretirement benefit plans. The net cost of such plans consisted of the following components: Three Months Ended Nine Months Ended ($ in millions) 2015 2014 2015 2014 Service cost $ 22 $ 18 $ 61 $ 56 Interest cost 28 27 83 84 Expected return on plan assets (36 ) (35 ) (107 ) (104 ) Net amortization (13 ) (18 ) (44 ) (53 ) Termination benefits 1 5 6 13 Curtailments (1 ) (7 ) (8 ) (33 ) $ 1 $ (10 ) $ (9 ) $ (37 ) |
Other (Income) Expense, Net (Ta
Other (Income) Expense, Net (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Other Income and Expenses [Abstract] | |
Other (Income) Expense, Net | Other (income) expense, net, consisted of: Three Months Ended Nine Months Ended ($ in millions) 2015 2014 2015 2014 Interest income $ (68 ) $ (69 ) $ (214 ) $ (190 ) Interest expense 165 191 503 567 Exchange losses 228 61 1,038 114 Equity income from affiliates (63 ) (24 ) (210 ) (241 ) Other, net (432 ) (325 ) (493 ) (1,228 ) $ (170 ) $ (166 ) $ 624 $ (978 ) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Calculations of Earnings Per Share | The calculations of earnings per share are as follows: Three Months Ended Nine Months Ended ($ and shares in millions except per share amounts) 2015 2014 2015 2014 Net income attributable to Merck & Co., Inc. $ 1,826 $ 895 $ 3,465 $ 4,604 Average common shares outstanding 2,814 2,879 2,825 2,909 Common shares issuable (1) 22 32 25 33 Average common shares outstanding assuming dilution 2,836 2,911 2,850 2,942 Basic earnings per common share attributable to Merck & Co., Inc. common shareholders $ 0.65 $ 0.31 $ 1.23 $ 1.58 Earnings per common share assuming dilution attributable to Merck & Co., Inc. common shareholders $ 0.64 $ 0.31 $ 1.22 $ 1.57 (1) Issuable primarily under share-based compensation plans. |
Other Comprehensive Income (L35
Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Changes in AOCI by Component | Changes in AOCI by component are as follows: Three Months Ended September 30, ($ in millions) Derivatives Investments Employee Benefit Plans Cumulative Translation Adjustment Accumulated Other Comprehensive Income (Loss) Balance July 1, 2014, net of taxes $ 27 $ 116 $ (1,241 ) $ (1,346 ) $ (2,444 ) Other comprehensive income (loss) before reclassification adjustments, pretax 434 (26 ) (715 ) (244 ) (551 ) Tax (152 ) (7 ) 226 (72 ) (5 ) Other comprehensive income (loss) before reclassification adjustments, net of taxes 282 (33 ) (489 ) (316 ) (556 ) Reclassification adjustments, pretax (44 ) 5 34 — (5 ) Tax 16 (1 ) (8 ) — 7 Reclassification adjustments, net of taxes (28 ) (1) 4 (2) 26 (3) — 2 Other comprehensive income (loss), net of taxes 254 (29 ) (463 ) (316 ) (554 ) Balance September 30, 2014, net of taxes $ 281 $ 87 $ (1,704 ) $ (1,662 ) $ (2,998 ) Balance July 1, 2015, net of taxes $ 606 $ 143 $ (2,909 ) $ (2,172 ) $ (4,332 ) Other comprehensive income (loss) before reclassification adjustments, pretax (16 ) (81 ) 3 (87 ) (181 ) Tax 9 24 2 2 37 Other comprehensive income (loss) before reclassification adjustments, net of taxes (7 ) (57 ) 5 (85 ) (144 ) Reclassification adjustments, pretax (171 ) (16 ) 46 — (141 ) Tax 60 6 (22 ) — 44 Reclassification adjustments, net of taxes (111 ) (1) (10 ) (2) 24 (3) — (97 ) Other comprehensive income (loss), net of taxes (118 ) (67 ) 29 (85 ) (241 ) Balance September 30, 2015, net of taxes $ 488 $ 76 $ (2,880 ) $ (2,257 ) $ (4,573 ) Nine Months Ended September 30, ($ in millions) Derivatives Investments Employee Benefit Plans Cumulative Translation Adjustment Accumulated Other Comprehensive Income (Loss) Balance January 1, 2014, net of taxes $ 132 $ 54 $ (909 ) $ (1,474 ) $ (2,197 ) Other comprehensive income (loss) before reclassification adjustments, pretax 277 13 (1,287 ) (123 ) (1,120 ) Tax (97 ) (2 ) 449 (65 ) 285 Other comprehensive income (loss) before reclassification adjustments, net of taxes 180 11 (838 ) (188 ) (835 ) Reclassification adjustments, pretax (48 ) 35 54 — 41 Tax 17 (13 ) (11 ) — (7 ) Reclassification adjustments, net of taxes (31 ) (1) 22 (2) 43 (3) — 34 Other comprehensive income (loss), net of taxes 149 33 (795 ) (188 ) (801 ) Balance September 30, 2014, net of taxes $ 281 $ 87 $ (1,704 ) $ (1,662 ) $ (2,998 ) Balance January 1, 2015, net of taxes $ 530 $ 111 $ (2,986 ) $ (1,978 ) $ (4,323 ) Other comprehensive income (loss) before reclassification adjustments, pretax 464 18 18 (181 ) 319 Tax (159 ) (1 ) (2 ) (98 ) (260 ) Other comprehensive income (loss) before reclassification adjustments, net of taxes 305 17 16 (279 ) 59 Reclassification adjustments, pretax (534 ) (78 ) 154 — (458 ) Tax 187 26 (64 ) — 149 Reclassification adjustments, net of taxes (347 ) (1) (52 ) (2) 90 (3) — (309 ) Other comprehensive income (loss), net of taxes (42 ) (35 ) 106 (279 ) (250 ) Balance September 30, 2015, net of taxes $ 488 $ 76 $ (2,880 ) $ (2,257 ) $ (4,573 ) (1) Relates to foreign currency cash flow hedges that were reclassified from AOCI to Sales. (2) Represents net realized (gains) losses on the sales of available-for-sale investments that were reclassified from AOCI to Other (income) expense, net . (3) Includes net amortization of prior service cost and actuarial gains and losses included in net periodic benefit cost (see Note 12). |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Sales of Company's Products | Sales of the Company’s products were as follows: Three Months Ended Nine Months Ended ($ in millions) 2015 2014 2015 2014 Primary Care and Women’s Health Cardiovascular Zetia $ 633 $ 660 $ 1,836 $ 1,988 Vytorin 302 369 942 1,146 Diabetes Januvia 1,014 933 2,942 2,849 Janumet 562 505 1,625 1,500 General Medicine and Women’s Health NuvaRing 190 186 538 531 Implanon/Nexplanon 176 158 437 379 Dulera 133 124 383 328 Follistim AQ 95 97 288 309 Hospital and Specialty Hepatitis PegIntron 40 84 148 300 HIV Isentress 377 412 1,137 1,255 Hospital Acute Care Cubicin (1) 325 7 805 18 Cancidas 139 183 436 505 Invanz 153 141 424 390 Noxafil 132 107 360 280 Bridion 89 90 262 245 Primaxin 75 91 228 243 Immunology Remicade 442 604 1,398 1,815 Simponi 178 170 505 500 Oncology Emend 141 136 396 402 Keytruda 159 4 352 4 Temodar 83 88 238 264 Diversified Brands Respiratory Singulair 201 218 658 773 Nasonex 121 261 625 830 Clarinex 39 49 145 180 Other Cozaar/Hyzaar 150 195 524 614 Arcoxia 123 132 361 400 Fosamax 86 114 277 358 Zocor 56 61 168 194 Propecia 41 66 133 197 Vaccines (2) Gardasil/Gardasil 9 625 590 1,410 1,382 ProQuad/M-M-R II /Varivax 390 421 1,096 1,027 Zostavax 179 181 503 479 RotaTeq 160 174 441 490 Pneumovax 23 138 197 354 400 Other pharmaceutical (3) 1,178 1,326 3,380 4,097 Total Pharmaceutical segment sales 8,925 9,134 25,755 26,672 Other segment sales (4) 846 1,321 2,578 4,657 Total segment sales 9,771 10,455 28,333 31,329 Other (5) 302 102 950 426 $ 10,073 $ 10,557 $ 29,283 $ 31,755 (1) Sales of Cubicin in 2015 represent sales subsequent to the Cubist acquisition date. Sales of Cubicin in 2014 reflect sales in Japan pursuant to a previously existing licensing agreement. (2) These amounts do not reflect sales of vaccines sold in most major European markets through the Company’s joint venture, Sanofi Pasteur MSD, the results of which are reflected in equity income from affiliates which is included in Other (income) expense, net . These amounts do, however, reflect supply sales to Sanofi Pasteur MSD . (3) Other pharmaceutical primarily reflects sales of other human health pharmaceutical products, including products within the franchises not listed separately . (4) Represents the non-reportable segments of Animal Health and Alliances, as well as Consumer Care until its divestiture on October 1, 2014. The Alliances segment includes revenue from the Company’s relationship with AZLP until its termination on June 30, 2014 (see Note 7). (5) Other revenues are primarily comprised of miscellaneous corporate revenues, including revenue hedging activities, as well as third-party manufacturing sales . Other revenues in the first nine months of 2014 also include $232 million received by Merck in connection with the sale of the U.S. marketing rights to Saphris (see Note 3). |
Reconciliation of Segment Profits to Income Before Taxes | A reconciliation of segment profits to Income before taxes is as follows: Three Months Ended Nine Months Ended ($ in millions) 2015 2014 2015 2014 Segment profits: Pharmaceutical segment $ 5,641 $ 5,772 $ 16,088 $ 16,475 Other segments 429 539 1,310 2,050 Total segment profits 6,070 6,311 17,398 18,525 Other profits (losses) 195 79 538 370 Unallocated: Interest income 68 69 214 190 Interest expense (165 ) (191 ) (503 ) (567 ) Equity income from affiliates 25 (22 ) 161 62 Depreciation and amortization (383 ) (595 ) (1,175 ) (1,895 ) Research and development (1,291 ) (1,332 ) (4,310 ) (3,984 ) Amortization of purchase accounting adjustments (1,184 ) (1,008 ) (3,662 ) (3,198 ) Restructuring costs (113 ) (376 ) (386 ) (664 ) Gain on sale of certain migraine clinical development programs 250 — 250 — Foreign currency devaluation related to Venezuela — — (715 ) — Gain on divestiture of certain ophthalmic products — 396 — 396 Gain on AstraZeneca option exercise — — — 741 Other unallocated, net (1,075 ) (1,841 ) (3,225 ) (4,504 ) $ 2,397 $ 1,490 $ 4,585 $ 5,472 |
Restructuring - Narrative (Deta
Restructuring - Narrative (Detail) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015USD ($)position | Sep. 30, 2014USD ($)position | Sep. 30, 2015USD ($)position | Sep. 30, 2014USD ($)position | Dec. 31, 2013position | |
Restructuring Cost and Reserve [Line Items] | |||||
Total pretax restructuring costs | $ 217 | $ 612 | $ 770 | $ 1,359 | |
2013 Restructuring Program | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total number of positions expected to be eliminated | position | 8,500 | ||||
Total pretax restructuring costs | 102 | $ 437 | 318 | $ 826 | |
Cumulative restructuring costs incurred to date since program inception | $ 2,800 | $ 2,800 | |||
Positions eliminated since inception of program | position | 7,715 | 7,715 | |||
Expected cumulative restructuring costs, pretax | $ 3,000 | $ 3,000 | |||
Percentage estimate of cumulative pretax costs that will result in cash outlays (primarily from employee separation expense) | 66.67% | ||||
Percentage estimate of cumulative pretax costs that will be non-cash (primarily from accelerated depreciation of facilities) | 33.33% | ||||
Number of positions eliminated | position | 425 | 830 | 1,620 | 3,425 | |
Merger Restructuring Program | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total pretax restructuring costs | $ 115 | $ 175 | $ 452 | $ 533 | |
Cumulative restructuring costs incurred to date since program inception | $ 8,300 | $ 8,300 | |||
Positions eliminated since inception of program | position | 29,420 | 29,420 | |||
Expected cumulative restructuring costs, pretax | $ 8,500 | $ 8,500 | |||
Remaining positions expected to be eliminated | position | 2,050 | 2,050 | |||
Percentage estimate of cumulative pretax costs that will result in cash outlays (primarily from employee separation expense) | 66.67% | ||||
Percentage estimate of cumulative pretax costs that will be non-cash (primarily from accelerated depreciation of facilities) | 33.33% | ||||
Number of positions eliminated | position | 260 | 185 | 1,015 | 975 |
Restructuring - Charges Related
Restructuring - Charges Related to Restructuring Program Activities by Type of Cost (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | $ 217 | $ 612 | $ 770 | $ 1,359 |
Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 12 | 315 | 100 | 491 |
Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 31 | 221 | 125 | 714 |
Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 174 | 76 | 545 | 154 |
2013 Restructuring Program | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 102 | 437 | 318 | 826 |
2013 Restructuring Program | Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 36 | 310 | 105 | 387 |
2013 Restructuring Program | Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 23 | 125 | 97 | 441 |
2013 Restructuring Program | Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 43 | 2 | 116 | (2) |
Merger Restructuring Program | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 115 | 175 | 452 | 533 |
Merger Restructuring Program | Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | (24) | 5 | (5) | 104 |
Merger Restructuring Program | Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 8 | 96 | 28 | 273 |
Merger Restructuring Program | Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 131 | 74 | 429 | 156 |
Materials and production | 2013 Restructuring Program | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 1 | 5 | 29 | 206 |
Materials and production | 2013 Restructuring Program | Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 0 | 0 | 0 |
Materials and production | 2013 Restructuring Program | Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 13 | 5 | 27 | 189 |
Materials and production | 2013 Restructuring Program | Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | (12) | 0 | 2 | 17 |
Materials and production | Merger Restructuring Program | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 69 | 82 | 251 | 171 |
Materials and production | Merger Restructuring Program | Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 0 | 0 | 0 |
Materials and production | Merger Restructuring Program | Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 4 | 67 | 20 | 219 |
Materials and production | Merger Restructuring Program | Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 65 | 15 | 231 | (48) |
Marketing and administrative | 2013 Restructuring Program | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 14 | 45 | 63 | 92 |
Marketing and administrative | 2013 Restructuring Program | Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 0 | 0 | 0 |
Marketing and administrative | 2013 Restructuring Program | Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 2 | 45 | 46 | 92 |
Marketing and administrative | 2013 Restructuring Program | Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 12 | 0 | 17 | 0 |
Marketing and administrative | Merger Restructuring Program | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 3 | 23 | 7 | 51 |
Marketing and administrative | Merger Restructuring Program | Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 0 | 0 | 0 |
Marketing and administrative | Merger Restructuring Program | Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 3 | 29 | 7 | 54 |
Marketing and administrative | Merger Restructuring Program | Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | (6) | 0 | (3) |
Research and development | 2013 Restructuring Program | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 16 | 81 | 33 | 174 |
Research and development | 2013 Restructuring Program | Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 0 | 0 | 0 |
Research and development | 2013 Restructuring Program | Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 8 | 75 | 24 | 160 |
Research and development | 2013 Restructuring Program | Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 8 | 6 | 9 | 14 |
Research and development | Merger Restructuring Program | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 1 | 0 | 1 | 1 |
Research and development | Merger Restructuring Program | Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 0 | 0 | 0 |
Research and development | Merger Restructuring Program | Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 1 | 0 | 1 | 0 |
Research and development | Merger Restructuring Program | Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 0 | 0 | 1 |
Restructuring costs | 2013 Restructuring Program | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 71 | 306 | 193 | 354 |
Restructuring costs | 2013 Restructuring Program | Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 36 | 310 | 105 | 387 |
Restructuring costs | 2013 Restructuring Program | Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 0 | 0 | 0 |
Restructuring costs | 2013 Restructuring Program | Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 35 | (4) | 88 | (33) |
Restructuring costs | Merger Restructuring Program | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 42 | 70 | 193 | 310 |
Restructuring costs | Merger Restructuring Program | Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | (24) | 5 | (5) | 104 |
Restructuring costs | Merger Restructuring Program | Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 0 | 0 | 0 |
Restructuring costs | Merger Restructuring Program | Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | $ 66 | $ 65 | $ 198 | $ 206 |
Restructuring - Charges and Spe
Restructuring - Charges and Spending Relating to Restructuring Activities by Program (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Restructuring Reserve [Roll Forward] | ||||
Expense | $ 217 | $ 612 | $ 770 | $ 1,359 |
Separation Costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Expense | 12 | 315 | 100 | 491 |
Accelerated Depreciation | ||||
Restructuring Reserve [Roll Forward] | ||||
Expense | 31 | 221 | 125 | 714 |
Other | ||||
Restructuring Reserve [Roll Forward] | ||||
Expense | 174 | 76 | 545 | 154 |
2013 Restructuring Program | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 509 | |||
Expense | 102 | 437 | 318 | 826 |
(Payments) receipts, net | (435) | |||
Non-cash activity | (96) | |||
Restructuring reserve, ending balance | 296 | 296 | ||
2013 Restructuring Program | Separation Costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 495 | |||
Expense | 36 | 310 | 105 | 387 |
(Payments) receipts, net | (308) | |||
Non-cash activity | 0 | |||
Restructuring reserve, ending balance | 292 | 292 | ||
2013 Restructuring Program | Accelerated Depreciation | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 0 | |||
Expense | 23 | 125 | 97 | 441 |
(Payments) receipts, net | 0 | |||
Non-cash activity | (97) | |||
Restructuring reserve, ending balance | 0 | 0 | ||
2013 Restructuring Program | Other | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 14 | |||
Expense | 43 | 2 | 116 | (2) |
(Payments) receipts, net | (127) | |||
Non-cash activity | 1 | |||
Restructuring reserve, ending balance | 4 | 4 | ||
Merger Restructuring Program | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 542 | |||
Expense | 115 | 175 | 452 | 533 |
(Payments) receipts, net | (387) | |||
Non-cash activity | (244) | |||
Restructuring reserve, ending balance | 363 | 363 | ||
Merger Restructuring Program | Separation Costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 536 | |||
Expense | (24) | 5 | (5) | 104 |
(Payments) receipts, net | (224) | |||
Non-cash activity | 0 | |||
Restructuring reserve, ending balance | 307 | 307 | ||
Merger Restructuring Program | Accelerated Depreciation | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 0 | |||
Expense | 8 | 96 | 28 | 273 |
(Payments) receipts, net | 0 | |||
Non-cash activity | (28) | |||
Restructuring reserve, ending balance | 0 | 0 | ||
Merger Restructuring Program | Other | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 6 | |||
Expense | 131 | $ 74 | 429 | $ 156 |
(Payments) receipts, net | (163) | |||
Non-cash activity | (216) | |||
Restructuring reserve, ending balance | $ 56 | $ 56 |
Acquisitions, Divestitures, R40
Acquisitions, Divestitures, Research Collaborations and License Agreements - Narrative (Detail) | Jul. 31, 2015USD ($) | Jan. 21, 2015USD ($) | Oct. 01, 2014USD ($) | Aug. 05, 2014USD ($) | Jul. 01, 2014USD ($) | Oct. 06, 2009 | Aug. 31, 2015USD ($) | Feb. 28, 2015USD ($)renewal | May. 31, 2014 | Mar. 31, 2014USD ($)shares | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Dec. 31, 2013USD ($) |
Business Acquisition [Line Items] | |||||||||||||||||||
Contingent consideration | $ 614,000,000 | $ 428,000,000 | $ 75,000,000 | $ 614,000,000 | $ 614,000,000 | $ 75,000,000 | $ 69,000,000 | ||||||||||||
Goodwill | 17,761,000,000 | 12,992,000,000 | 17,761,000,000 | 17,761,000,000 | |||||||||||||||
Agreement Term | 2 years | ||||||||||||||||||
Payments to Acquire Businesses, Net of Cash Acquired | 110,000,000 | 0 | |||||||||||||||||
Income tax expense (benefit) | 566,000,000 | 648,000,000 | 1,108,000,000 | 865,000,000 | |||||||||||||||
Extended period of marketing rights | 15 years | ||||||||||||||||||
Cubist Pharmaceuticals Inc | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Business Combination, Consideration Transferred | $ 8,300,000,000 | ||||||||||||||||||
Cash paid for acquisition of business | 7,800,000,000 | ||||||||||||||||||
Fair value of debt assumed in business combination | $ 1,900,000,000 | ||||||||||||||||||
Fair Value Inputs, Discount Rate | 8.00% | ||||||||||||||||||
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual | 362,000,000 | 899,000,000 | |||||||||||||||||
Business Acquisition, Transaction Costs | 324,000,000 | ||||||||||||||||||
Contingent consideration | 123,000,000 | 123,000,000 | 123,000,000 | ||||||||||||||||
In-process research and development (IPR&D) | $ 50,000,000 | ||||||||||||||||||
Other noncurrent assets | 184,000,000 | ||||||||||||||||||
Goodwill | 4,669,000,000 | ||||||||||||||||||
Fair value of products and product rights | 6,923,000,000 | ||||||||||||||||||
Deferred income tax liabilities | $ 2,518,000,000 | ||||||||||||||||||
Cubist Pharmaceuticals Inc | surotomycin | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Fair Value Inputs, Discount Rate | 9.00% | ||||||||||||||||||
NGM Biopharmaceuticals | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Upfront and milestone payments | $ 94,000,000 | ||||||||||||||||||
Cost Method Investment, Ownership Percentage | 15.00% | ||||||||||||||||||
Payment to acquire cost method investment | $ 106,000,000 | ||||||||||||||||||
Long-term Purchase Commitment, Maximum Amount | $ 250,000,000 | ||||||||||||||||||
Agreement Term | 5 years | ||||||||||||||||||
Revenue Cost Allocation Percentage (up to) | 50.00% | ||||||||||||||||||
Times of Agreement Extension | renewal | 2 | ||||||||||||||||||
cCAM Biotherapeutics | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Business Combination, Consideration Transferred | $ 201,000,000 | ||||||||||||||||||
Cash paid for acquisition of business | $ 96,000,000 | ||||||||||||||||||
Fair Value Inputs, Discount Rate | 10.50% | ||||||||||||||||||
Amount of future additional payments for milestones, maximum | $ 510,000,000 | ||||||||||||||||||
Contingent consideration | 105,000,000 | 105,000,000 | $ 105,000,000 | 105,000,000 | |||||||||||||||
In-process research and development (IPR&D) | 180,000,000 | ||||||||||||||||||
Other noncurrent assets | 7,000,000 | ||||||||||||||||||
Goodwill | 14,000,000 | ||||||||||||||||||
Allergan plc | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Total consideration received for sale of asset | 250,000,000 | ||||||||||||||||||
Proceeds from Collaborators | $ 125,000,000 | ||||||||||||||||||
Noncash consideration received | $ 125,000,000 | ||||||||||||||||||
Gain on sale of certain migraine clinical development programs | $ 250,000,000 | $ 250,000,000 | |||||||||||||||||
Idenix Pharmaceuticals, Inc. | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Business Combination, Consideration Transferred | $ 3,900,000,000 | ||||||||||||||||||
Fair Value Inputs, Discount Rate | 11.50% | ||||||||||||||||||
In-process research and development (IPR&D) | $ 3,200,000,000 | ||||||||||||||||||
Goodwill | 1,500,000,000 | ||||||||||||||||||
Payments to Acquire Businesses, Net of Cash Acquired | 3,700,000,000 | ||||||||||||||||||
Deferred income tax liabilities | 951,000,000 | ||||||||||||||||||
Other net liabilities | $ 12,000,000 | ||||||||||||||||||
Santen Pharmaceutical Co. Ltd. | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Proceeds from divestiture business | $ 50,000,000 | $ 515,000,000 | |||||||||||||||||
Gain on divestiture of certain ophthalmic products | $ 84,000,000 | $ 396,000,000 | 396,000,000 | ||||||||||||||||
Santen Pharmaceutical Co. Ltd. | Minimum | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Disposition of Business Agreement Term | 2 years | ||||||||||||||||||
Santen Pharmaceutical Co. Ltd. | Maximum | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Disposition of Business Agreement Term | 5 years | ||||||||||||||||||
Sirna Therapeutics Inc. | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Noncash consideration received | $ 22,000,000 | $ 172,000,000 | |||||||||||||||||
Proceeds from sale of subsidiary | $ 25,000,000 | ||||||||||||||||||
Shares received in consideration for sale of subsidiary | shares | 2,520,044 | ||||||||||||||||||
Percentage of shares received from sale of subsidiary | 15.00% | 85.00% | |||||||||||||||||
Gain on disposition of subsidiary | 204,000,000 | ||||||||||||||||||
Income tax expense (benefit) | (300,000,000) | ||||||||||||||||||
Saphris/Sycrest | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Proceeds from sale of intangible assets | $ 232,000,000 |
Acquisitions, Divestitures, R41
Acquisitions, Divestitures, Research Collaborations and License Agreements - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Jan. 21, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 |
Business Acquisition [Line Items] | |||||
Goodwill | $ 17,761 | $ 12,992 | |||
Contingent consideration | 614 | $ 428 | $ 75 | $ 69 | |
Cubist Pharmaceuticals Inc | |||||
Business Acquisition [Line Items] | |||||
Cash and cash equivalents | $ 733 | ||||
Accounts receivable | 123 | ||||
Inventories | 216 | ||||
Other current assets | 55 | ||||
Property, plant and equipment | 151 | ||||
Products and product rights (11 year weighted-average useful life) | 6,923 | ||||
In-process research and development (IPR&D) | 50 | ||||
Other noncurrent assets | 184 | ||||
Current liabilities | (233) | ||||
Deferred income tax liabilities | (2,518) | ||||
Long-term debt | (1,900) | ||||
Other noncurrent liabilities | (122) | ||||
Total identifiable net assets | 3,662 | ||||
Goodwill | 4,669 | ||||
Consideration transferred | $ 8,331 | ||||
Product and product rights, weighted average useful life | 11 years | ||||
Contingent consideration | $ 123 | ||||
Cubist Pharmaceuticals Inc | Other Current Liabilities | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration | $ 73 | ||||
Cubist Pharmaceuticals Inc | Other noncurrent liabilities | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration | $ 50 |
Acquisitions, Divestitures, R42
Acquisitions, Divestitures, Research Collaborations and License Agreements - Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Business Combinations [Abstract] | ||||
Sales | $ 10,073 | $ 10,866 | $ 29,369 | $ 32,620 |
Net income attributable to Merck & Co., Inc. | $ 1,833 | $ 703 | $ 3,645 | $ 3,789 |
Basic earnings per common share attributable to Merck & Co., Inc. common shareholders (in dollars per share) | $ 0.65 | $ 0.24 | $ 1.29 | $ 1.30 |
Earnings per common share assuming dilution attributable to Merck & Co. Inc. common shareholders (in dollars per share) | $ 0.65 | $ 0.24 | $ 1.28 | $ 1.29 |
Financial Instruments - Narrati
Financial Instruments - Narrative (Detail) $ in Millions | 9 Months Ended | ||||
Sep. 30, 2015USD ($)interest_rate_swap | Sep. 30, 2014USD ($) | Jul. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Derivative [Line Items] | |||||
Maximum planning cycle of third-party sales hedges (no more than) | 3 years | ||||
Maximum average period of maturities of contracts in years (less than) | 1 year | ||||
Pretax gains (losses) from euro-denominated notes included in cumulative translation adjustments | $ 255 | $ 166 | |||
Number of Interest Rate Swaps Held | interest_rate_swap | 30 | ||||
Pretax net unrealized gains on derivatives maturing within next 12 months estimated to be reclassified from AOCI to sales | $ 497 | ||||
Available-for-sale debt securities included in Short-term investments | 4,500 | ||||
Available-for-sale debt securities maturing after one year through five years | 11,800 | ||||
Cash and cash equivalents | 7,548 | 11,370 | $ 7,441 | $ 15,621 | |
Cash equivalents | 6,500 | ||||
Contingent consideration liability recognized | 614 | 75 | 428 | $ 69 | |
Contingent consideration payments | 50 | $ 0 | |||
Fair value of loans payable and long-term debt, including current portion | 27,200 | 22,500 | |||
Carrying value of loans payable and long-term debt, including current portion | 26,700 | 21,400 | |||
Accounts receivable classified in Other assets | 30 | 80 | |||
Accounts receivable outstanding for more than one year | 130 | ||||
Cash collateral received from counterparties | 1,054 | $ 1,410 | |||
cCAM Biotherapeutics | |||||
Derivative [Line Items] | |||||
Contingent consideration liability recognized | 105 | $ 105 | |||
Cubist Pharmaceuticals Inc | |||||
Derivative [Line Items] | |||||
Contingent consideration liability recognized | 123 | ||||
Contingent consideration payments | $ 50 |
Financial Instruments - Summary
Financial Instruments - Summary of Interest Rate Swaps Held (Details) | Sep. 30, 2015USD ($)interest_rate_swap | Feb. 28, 2015USD ($) | Dec. 31, 2014USD ($) |
Derivative [Line Items] | |||
Par Value of Debt | $ 8,000,000,000 | ||
Number of Interest Rate Swaps Held | interest_rate_swap | 30 | ||
Total Swap Notional Amount | $ 25,950,000,000 | $ 26,068,000,000 | |
0.70% notes due 2016 | Interest rate swap contracts | |||
Derivative [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 0.70% | ||
Par Value of Debt | $ 1,000,000,000 | ||
Number of Interest Rate Swaps Held | interest_rate_swap | 4 | ||
Total Swap Notional Amount | $ 1,000,000,000 | ||
1.30% notes due 2018 | Interest rate swap contracts | |||
Derivative [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 1.30% | ||
Par Value of Debt | $ 1,000,000,000 | ||
Number of Interest Rate Swaps Held | interest_rate_swap | 4 | ||
Total Swap Notional Amount | $ 1,000,000,000 | ||
5.00% notes due 2019 | Interest rate swap contracts | |||
Derivative [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | ||
Par Value of Debt | $ 1,250,000,000 | ||
Number of Interest Rate Swaps Held | interest_rate_swap | 3 | ||
Total Swap Notional Amount | $ 550,000,000 | ||
1.85% notes due 2020 | |||
Derivative [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 1.85% | ||
Par Value of Debt | $ 1,250,000,000 | ||
1.85% notes due 2020 | Interest rate swap contracts | |||
Derivative [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 1.85% | ||
Par Value of Debt | $ 1,250,000,000 | ||
Number of Interest Rate Swaps Held | interest_rate_swap | 5 | ||
Total Swap Notional Amount | $ 1,250,000,000 | ||
3.875% notes due 2021 | Interest rate swap contracts | |||
Derivative [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 3.875% | ||
Par Value of Debt | $ 1,150,000,000 | ||
Number of Interest Rate Swaps Held | interest_rate_swap | 5 | ||
Total Swap Notional Amount | $ 1,150,000,000 | ||
2.40% notes due 2022 | Interest rate swap contracts | |||
Derivative [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 2.40% | ||
Par Value of Debt | $ 1,000,000,000 | ||
Number of Interest Rate Swaps Held | interest_rate_swap | 4 | ||
Total Swap Notional Amount | $ 1,000,000,000 | ||
2.35% notes due 2022 | |||
Derivative [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 2.35% | ||
Par Value of Debt | $ 1,250,000,000 | ||
2.35% notes due 2022 | Interest rate swap contracts | |||
Derivative [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 2.35% | ||
Par Value of Debt | $ 1,250,000,000 | ||
Number of Interest Rate Swaps Held | interest_rate_swap | 5 | ||
Total Swap Notional Amount | $ 1,250,000,000 |
Financial Instruments - Fair Va
Financial Instruments - Fair Value of Derivatives Segregated between those Derivatives that are Designated as Hedging Instruments and those that are Not Designated as Hedging Instruments (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | $ 1,475 | $ 1,847 |
Fair Value of Derivative, Liability | 56 | 103 |
U.S. Dollar Notional | 25,950 | 26,068 |
Derivatives Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 1,303 | 1,482 |
Fair Value of Derivative, Liability | 1 | 15 |
U.S. Dollar Notional | 16,964 | 15,716 |
Derivatives Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 172 | 365 |
Fair Value of Derivative, Liability | 55 | 88 |
U.S. Dollar Notional | 8,986 | 10,352 |
Interest rate swap contracts | Derivatives Designated as Hedging Instruments | Deferred income taxes and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 1 | 0 |
U.S. Dollar Notional | 1,000 | 0 |
Interest rate swap contracts | Derivatives Designated as Hedging Instruments | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 101 | 19 |
U.S. Dollar Notional | 6,200 | 1,950 |
Interest rate swap contracts | Derivatives Designated as Hedging Instruments | Other noncurrent liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Liability | 0 | 15 |
U.S. Dollar Notional | 0 | 2,000 |
Foreign exchange contracts | Derivatives Designated as Hedging Instruments | Deferred income taxes and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 710 | 772 |
U.S. Dollar Notional | 4,876 | 5,513 |
Foreign exchange contracts | Derivatives Designated as Hedging Instruments | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 491 | 691 |
U.S. Dollar Notional | 4,854 | 6,253 |
Foreign exchange contracts | Derivatives Designated as Hedging Instruments | Accrued and other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Liability | 1 | 0 |
U.S. Dollar Notional | 34 | 0 |
Foreign exchange contracts | Derivatives Not Designated as Hedging Instruments | Deferred income taxes and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 154 | 365 |
U.S. Dollar Notional | 4,615 | 6,966 |
Foreign exchange contracts | Derivatives Not Designated as Hedging Instruments | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 18 | 0 |
U.S. Dollar Notional | 179 | 0 |
Foreign exchange contracts | Derivatives Not Designated as Hedging Instruments | Accrued and other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Liability | 55 | 88 |
U.S. Dollar Notional | $ 4,192 | $ 3,386 |
Financial Instruments - Informa
Financial Instruments - Information on Derivative Positions Subject to Master Netting Arrangements as if they were Presented on a Net Basis (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross amounts recognized in the consolidated balance sheet, Asset | $ 1,475 | $ 1,847 |
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet, Asset | (31) | (97) |
Cash collateral (received) posted, Asset | (1,054) | (1,410) |
Net amounts, Asset | 390 | 340 |
Gross amounts recognized in the consolidated balance sheet, Liability | 56 | 103 |
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet, Liability | (31) | (97) |
Cash collateral (received) posted, Liability | 0 | 0 |
Net amounts, Liability | $ 25 | $ 6 |
Financial Instruments - Locatio
Financial Instruments - Location and Pretax Gain or Loss Amounts for Derivatives (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative, Net Hedge Ineffectiveness Gain | $ 5 | $ 6 | ||
Interest rate swap contracts | Derivatives designated in a fair value hedging relationship | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (gain) loss recognized in Other (income) expense, net on derivatives | (130) | $ 23 | (97) | $ 2 |
Amount of loss (gain) recognized in Other (income) expense, net on hedged item | 125 | (23) | 91 | (3) |
Foreign exchange contracts | Derivatives not designated in a hedging relationship | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (gain) loss recognized in Other (income) expense, net on derivatives | (155) | (290) | (360) | (314) |
Amount of loss (gain) recognized in Sales | 0 | 5 | (1) | 5 |
Foreign exchange contracts | Derivatives designated in foreign currency cash flow hedging relationships | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain reclassified from AOCI to Sales | (170) | (42) | (528) | (45) |
Amount of loss (gain) recognized in OCI on derivatives | 17 | (433) | (464) | (276) |
Foreign exchange contracts | Derivatives designated in foreign currency net investment hedging relationships | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of loss (gain) recognized in OCI on derivatives | 13 | (116) | (5) | (67) |
Amount of gain recognized in Other (income) expense, net on derivatives | $ (1) | $ (1) | $ (4) | $ (3) |
Financial Instruments - Infor48
Financial Instruments - Information on Available-for-sale Investments (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | $ 17,813 | $ 22,028 |
Amortized Cost | 17,702 | 21,855 |
Gross Unrealized Gains | 142 | 199 |
Gross Unrealized Losses | (31) | (26) |
Commercial paper | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | 2,448 | 6,970 |
Amortized Cost | 2,448 | 6,970 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Corporate notes and bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | 10,806 | 10,107 |
Amortized Cost | 10,805 | 10,102 |
Gross Unrealized Gains | 30 | 22 |
Gross Unrealized Losses | (29) | (17) |
Asset-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | 1,384 | 1,460 |
Amortized Cost | 1,383 | 1,462 |
Gross Unrealized Gains | 2 | 1 |
Gross Unrealized Losses | (1) | (3) |
U.S. government and agency securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | 1,272 | 1,774 |
Amortized Cost | 1,268 | 1,775 |
Gross Unrealized Gains | 4 | 1 |
Gross Unrealized Losses | 0 | (2) |
Mortgage-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | 737 | 602 |
Amortized Cost | 734 | 604 |
Gross Unrealized Gains | 4 | 2 |
Gross Unrealized Losses | (1) | (4) |
Foreign government bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | 638 | 385 |
Amortized Cost | 636 | 385 |
Gross Unrealized Gains | 2 | 0 |
Gross Unrealized Losses | 0 | 0 |
Equity securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | 528 | 730 |
Amortized Cost | 428 | 557 |
Gross Unrealized Gains | 100 | 173 |
Gross Unrealized Losses | $ 0 | $ 0 |
Financial Instruments - Financi
Financial Instruments - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Millions | 9 Months Ended | |||
Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | |
Assets | ||||
Investments | $ 17,813 | $ 22,028 | ||
Derivative assets | 1,475 | 1,847 | ||
Liabilities | ||||
Contingent consideration | 614 | 428 | $ 75 | $ 69 |
Derivative liabilities | 56 | 103 | ||
Commercial paper | ||||
Assets | ||||
Investments | 2,448 | 6,970 | ||
Corporate notes and bonds | ||||
Assets | ||||
Investments | 10,806 | 10,107 | ||
Asset-backed securities | ||||
Assets | ||||
Investments | $ 1,384 | 1,460 | ||
Liabilities | ||||
Investments, Primary Weighted Average Life of Collateral | 5 years | |||
U.S. government and agency securities | ||||
Assets | ||||
Investments | $ 1,272 | 1,774 | ||
Mortgage-backed securities | ||||
Assets | ||||
Investments | 737 | 602 | ||
Foreign government bonds | ||||
Assets | ||||
Investments | 638 | 385 | ||
Equity securities | ||||
Assets | ||||
Investments | 528 | 730 | ||
Fair Value, Measurements, Recurring | ||||
Assets | ||||
Investments | 17,621 | 21,793 | ||
Securities held for employee compensation | 192 | 235 | ||
Derivative assets | 1,475 | 1,847 | ||
Total assets | 19,288 | 23,875 | ||
Liabilities | ||||
Contingent consideration | 614 | 428 | ||
Derivative liabilities | 56 | 103 | ||
Total liabilities | 670 | 531 | ||
Fair Value, Measurements, Recurring | Purchased currency options | ||||
Assets | ||||
Derivative assets | 1,161 | 1,252 | ||
Liabilities | ||||
Derivative liabilities | 0 | 42 | ||
Fair Value, Measurements, Recurring | Foreign exchange contracts | ||||
Assets | ||||
Derivative assets | 212 | 576 | ||
Liabilities | ||||
Derivative liabilities | 56 | 46 | ||
Fair Value, Measurements, Recurring | Interest rate swap contracts | ||||
Assets | ||||
Derivative assets | 102 | 19 | ||
Liabilities | ||||
Derivative liabilities | 0 | 15 | ||
Fair Value, Measurements, Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Investments | 336 | 495 | ||
Securities held for employee compensation | 174 | 181 | ||
Derivative assets | 0 | 0 | ||
Total assets | 510 | 676 | ||
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 17,285 | 21,298 | ||
Securities held for employee compensation | 18 | 54 | ||
Derivative assets | 1,475 | 1,847 | ||
Total assets | 18,778 | 23,199 | ||
Liabilities | ||||
Derivative liabilities | 56 | 103 | ||
Total liabilities | 56 | 103 | ||
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Purchased currency options | ||||
Assets | ||||
Derivative assets | 1,161 | 1,252 | ||
Liabilities | ||||
Derivative liabilities | 0 | 42 | ||
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Foreign exchange contracts | ||||
Assets | ||||
Derivative assets | 212 | 576 | ||
Liabilities | ||||
Derivative liabilities | 56 | 46 | ||
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Interest rate swap contracts | ||||
Assets | ||||
Derivative assets | 102 | 19 | ||
Liabilities | ||||
Derivative liabilities | 0 | 15 | ||
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Securities held for employee compensation | 0 | 0 | ||
Derivative assets | 0 | 0 | ||
Total assets | 0 | 0 | ||
Liabilities | ||||
Contingent consideration | 614 | 428 | ||
Total liabilities | 614 | 428 | ||
Fair Value, Measurements, Recurring | Commercial paper | ||||
Assets | ||||
Investments | 2,448 | 6,970 | ||
Fair Value, Measurements, Recurring | Commercial paper | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 2,448 | 6,970 | ||
Fair Value, Measurements, Recurring | Corporate notes and bonds | ||||
Assets | ||||
Investments | 10,806 | 10,107 | ||
Fair Value, Measurements, Recurring | Corporate notes and bonds | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 10,806 | 10,107 | ||
Fair Value, Measurements, Recurring | Asset-backed securities | ||||
Assets | ||||
Investments | 1,384 | 1,460 | ||
Fair Value, Measurements, Recurring | Asset-backed securities | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 1,384 | 1,460 | ||
Fair Value, Measurements, Recurring | U.S. government and agency securities | ||||
Assets | ||||
Investments | 1,272 | 1,774 | ||
Fair Value, Measurements, Recurring | U.S. government and agency securities | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 1,272 | 1,774 | ||
Fair Value, Measurements, Recurring | Mortgage-backed securities | ||||
Assets | ||||
Investments | 737 | 602 | ||
Fair Value, Measurements, Recurring | Mortgage-backed securities | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 737 | 602 | ||
Fair Value, Measurements, Recurring | Foreign government bonds | ||||
Assets | ||||
Investments | 638 | 385 | ||
Fair Value, Measurements, Recurring | Foreign government bonds | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 638 | 385 | ||
Fair Value, Measurements, Recurring | Equity securities | ||||
Assets | ||||
Investments | 336 | 495 | ||
Fair Value, Measurements, Recurring | Equity securities | Quoted Prices In Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Investments | $ 336 | $ 495 |
Financial Instruments - Infor50
Financial Instruments - Information About Changes in Liabilities for Contingent Consideration (Detail) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Fair value, beginning balance | $ 428 | $ 69 |
Changes in fair value | 8 | 6 |
Additions | 228 | 0 |
Payments | (50) | 0 |
Fair value, ending balance | $ 614 | $ 75 |
Inventories - Inventories (Deta
Inventories - Inventories (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 1,528 | $ 1,588 |
Raw materials and work in process | 4,586 | 5,141 |
Supplies | 177 | 197 |
Total (approximates current cost) | 6,291 | 6,926 |
Increase to LIFO costs | 366 | 309 |
Total current and noncurrent inventories | 6,657 | 7,235 |
Recognized as: | ||
Inventories | 5,123 | 5,571 |
Other assets | $ 1,534 | $ 1,664 |
Inventories - Narrative (Detail
Inventories - Narrative (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Inventories not expected to be sold within one year included in Other assets | $ 1,500 | $ 1,600 |
Inventories produced in preparation for product launches included in Other assets | $ 67 | $ 74 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles - Narrative (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Jul. 31, 2015 | Jan. 21, 2015 | Dec. 31, 2014 | |
Goodwill And Other Intangible Assets [Line Items] | ||||||
Goodwill | $ 17,761 | $ 12,992 | ||||
Intangible asset impairment charges related to IPR&D | 62 | |||||
Intangible asset impairment charges related to marketed products | $ 412 | $ 1,100 | ||||
Supera | ||||||
Goodwill And Other Intangible Assets [Line Items] | ||||||
Intangible asset impairment charges related to IPR&D | 36 | 36 | ||||
Goodwill impairment charge | $ 93 | $ 93 | ||||
surotomycin | ||||||
Goodwill And Other Intangible Assets [Line Items] | ||||||
Intangible asset impairment charges related to IPR&D | 50 | |||||
Rebetol | ||||||
Goodwill And Other Intangible Assets [Line Items] | ||||||
Intangible asset impairment charges related to marketed products | $ 12 | |||||
cCAM Biotherapeutics | ||||||
Goodwill And Other Intangible Assets [Line Items] | ||||||
In-process research and development (IPR&D) | $ 180 | |||||
Goodwill | $ 14 | |||||
Cubist Pharmaceuticals Inc | ||||||
Goodwill And Other Intangible Assets [Line Items] | ||||||
Fair value of products and product rights | $ 6,923 | |||||
In-process research and development (IPR&D) | 50 | |||||
Goodwill | $ 4,669 |
Joint Ventures and Other Equi54
Joint Ventures and Other Equity Method Affiliates - Narrative (Detail) $ in Millions | Jun. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Dec. 31, 1998 | Sep. 30, 2015USD ($) |
Equity Income from Affiliates [Line Items] | ||||||||
Equity income from affiliates | $ 63 | $ 24 | $ 210 | $ 241 | ||||
Proceeds from AstraZeneca option exercise | 0 | 419 | ||||||
AstraZeneca option exercise | 2,400 | |||||||
Deferred income tax expense (benefit) | (846) | (1,773) | ||||||
AstraZeneca LP | ||||||||
Equity Income from Affiliates [Line Items] | ||||||||
Equity income from affiliates | $ 192 | |||||||
Limited partner interest in AZLP | 1.00% | |||||||
General partner interest in AZLP | 99.00% | |||||||
Proceeds from AstraZeneca option exercise | $ 419 | |||||||
Portion of exercise price that was deferred | $ 327 | $ 327 | ||||||
Recognition of Deferred Income | $ 50 | $ 36 | $ 153 | 36 | $ 293 | |||
Portion of exercise price that represents multiple of average annual profit allocation recognized as a gain | $ 91 | |||||||
Multiple of average annual profit allocation to be included in option exercise price | 10 | |||||||
Years prior to option exercise to be included in average annual profit allocation portion of exercise price | 3 years | |||||||
Non-cash gain recognized upon AstraZeneca option exercise | $ 650 | |||||||
AstraZeneca option exercise | 2,400 | |||||||
Reduction in AZLP investment balance related to AstraZeneca option exercise | 1,400 | |||||||
Goodwill written off related to AstraZeneca option exercise | 340 | |||||||
Deferred income tax expense (benefit) | $ (517) |
Joint Ventures and Other Equi55
Joint Ventures and Other Equity Method Affiliates - Summarized Financial Information for AZLP (Detail) - AstraZeneca LP $ in Millions | 6 Months Ended |
Jun. 30, 2014USD ($) | |
Equity Income from Affiliates [Line Items] | |
Sales | $ 2,205 |
Materials and production costs | 1,044 |
Other expense, net | 604 |
Income before taxes | $ 557 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Detail) - USD ($) | 1 Months Ended | 9 Months Ended | |
Feb. 28, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Debt Instrument [Line Items] | |||
Debt Instrument, Face Amount | $ 8,000,000,000 | ||
Proceeds from Debt, Net of Issuance Costs | 7,900,000,000 | ||
Repayments of Long-term Debt | $ 2,905,000,000 | $ 7,000,000 | |
Floating Rate Notes Due 2017 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Face Amount | 300,000,000 | ||
Floating Rate Notes Due 2020 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Face Amount | 700,000,000 | ||
1.85% notes due 2020 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Face Amount | $ 1,250,000,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 1.85% | ||
2.35% notes due 2022 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Face Amount | $ 1,250,000,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 2.35% | ||
2.75% Notes Due 2025 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Face Amount | $ 2,500,000,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 2.75% | ||
3.70% Notes Due 2045 | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Face Amount | $ 2,000,000,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 3.70% | ||
Cubist Pharmaceuticals Inc | |||
Debt Instrument [Line Items] | |||
Repayments of Long-term Debt | $ 1,900,000,000 |
Contingencies - Vioxx Litigatio
Contingencies - Vioxx Litigation - Narrative (Detail) - Vioxx | 9 Months Ended |
Sep. 30, 2015USD ($)Statelegalmatter | |
Cases alleging personal injury | |
Loss Contingencies [Line Items] | |
Loss contingency, pending claims, number | 20 |
Cases alleging economic loss | |
Loss Contingencies [Line Items] | |
Loss contingency, pending claims, number | 30 |
Settlement agreement amount | $ | $ 23,000,000 |
Cases Brought by State Attorneys General | |
Loss Contingencies [Line Items] | |
Loss contingency, pending claims, number | State | 3 |
Securities Lawsuits | |
Loss Contingencies [Line Items] | |
Loss contingency, pending claims, number | 13 |
Upper limits of Directors and Officers insurance coverage | $ | $ 145,000,000 |
Canadian Litigation | Minimum | |
Loss Contingencies [Line Items] | |
Payments to be made pursuant to settlement agreement | $ | 21,000,000 |
Canadian Litigation | Maximum | |
Loss Contingencies [Line Items] | |
Payments to be made pursuant to settlement agreement | $ | $ 36,000,000 |
Cases discovery completed | Securities Lawsuits | |
Loss Contingencies [Line Items] | |
Loss contingency, pending claims, number | 8 |
Cases in discovery | Securities Lawsuits | |
Loss Contingencies [Line Items] | |
Loss contingency, pending claims, number | 5 |
Contingencies - Fosamax Litigat
Contingencies - Fosamax Litigation - Narrative (Detail) - Fosamax $ in Millions | Mar. 26, 2014legalmatter | Jun. 30, 2015legalmatter | Dec. 31, 2013USD ($) | Sep. 30, 2015legalmatter | Jul. 31, 2015legalmatter | Jul. 14, 2014 | Mar. 31, 2014legalmatter | Nov. 30, 2013legalmatter |
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number | 4,880 | |||||||
Cases Alleging ONJ | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number | 375 | |||||||
Cases Alleging Femur Fracture | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number | 4,505 | |||||||
Cases Alleging Femur Fracture | New Jersey State Court | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number | 3,090 | |||||||
Loss contingency, initial cases selected for review, number | 30 | |||||||
Loss contingency, subsequent cases selected for review, number | 25 | 50 | 50 | |||||
Cases Alleging Femur Fracture | California State Court | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number | 370 | |||||||
Loss contingency, initial cases selected for review, number | 10 | |||||||
Cases Alleging Femur Fracture | Other State Court | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number | 5 | |||||||
ONJ Litigation | ||||||||
Loss Contingencies [Line Items] | ||||||||
Settlement agreement amount | $ | $ 27.7 | |||||||
Percentage of participation in litigation settlement condition | 100.00% | |||||||
Percentage of participation in litigation settlement | 95.00% | |||||||
ONJ MDL | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number | 40 | |||||||
Femur Fracture MDL | Federal | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number | 1,045 | |||||||
Loss contingency, claims dismissed, number | 650 | 520 | ||||||
Loss contingency, claims on appeal, number | 500 |
Contingencies - Januvia_Janumet
Contingencies - Januvia/Janumet Litigation - Narrative (Detail) - Januvia | Sep. 30, 2015legalmatter |
Loss Contingencies [Line Items] | |
Loss contingency, pending claims, number | 1,035 |
Cases Company Agreed ToToll Statute Of Limitations | |
Loss Contingencies [Line Items] | |
Loss contingency, pending claims, number | 20 |
Contingencies - NuvaRing Litiga
Contingencies - NuvaRing Litigation - Narrative (Detail) - NuvaRing $ in Millions | Jun. 04, 2014USD ($)legalmatter | Sep. 30, 2015plaintifflegalmatter |
Loss Contingencies [Line Items] | ||
Settlement agreement amount | $ | $ 100 | |
Percentage of participation in litigation settlement (more than) | 95.00% | |
Loss contingency, claims settled, number | 3,700 | |
Loss contingency, pending claims, number | 13 | |
NuvaRingMDL | ||
Loss Contingencies [Line Items] | ||
Loss contingency, pending claims, number | 12 | |
Number of plaintiffs | plaintiff | 12 |
Contingencies - Propecia_Prosca
Contingencies - Propecia/Proscar Litigation - Narrative (Detail) - Propecia/Proscar | 9 Months Ended |
Sep. 30, 2015plaintifflegalmatter | |
Loss Contingencies [Line Items] | |
Loss contingency, pending claims, number | 1,385 |
Other State Court | |
Loss Contingencies [Line Items] | |
Loss contingency, pending claims, number | 1 |
Cases alleging cancer | |
Loss Contingencies [Line Items] | |
Number of plaintiffs | plaintiff | 60 |
Contingencies - Legal Defense R
Contingencies - Legal Defense Reserves - Narrative (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Legal Defense Costs | ||
Loss Contingencies [Line Items] | ||
Legal defense costs reserve | $ 255 | $ 215 |
Equity - Narrative (Detail)
Equity - Narrative (Detail) $ in Billions | 12 Months Ended |
Dec. 31, 1998USD ($) | |
Noncontrolling Interest [Line Items] | |
Preferred stock assumed with Astra Merck Inc. dividend per annum | 5.00% |
AstraZeneca LP | |
Noncontrolling Interest [Line Items] | |
Noncontrolling Interest, Amount Represented by Preferred Stock | $ 2.4 |
Equity - Shareholders' Equity (
Equity - Shareholders' Equity (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Shares, Beginning Balance | 3,577,103,522 | |||
Equity, Beginning Balance | $ 48,791 | $ 52,326 | ||
Net Income Attributable to Merck & Co., Inc. | $ 1,826 | $ 895 | 3,465 | 4,604 |
Cash dividends declared on common stock | (3,826) | (3,872) | ||
Treasury stock shares purchased | (3,005) | (6,083) | ||
Share-based compensation plans and other | 577 | 1,657 | ||
Other comprehensive loss | (250) | (801) | ||
Changes in noncontrolling ownership interests | (76) | |||
AstraZeneca option exercise | (2,400) | |||
Net income attributable to noncontrolling interests | $ 5 | (53) | 12 | 3 |
Distributions attributable to noncontrolling interests | $ (9) | (74) | ||
Shares, Ending balance | 3,577,103,522 | 3,577,103,522 | ||
Equity, Ending Balance | $ 45,679 | $ 45,360 | $ 45,679 | $ 45,360 |
Common Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Shares, Beginning Balance | 3,577,000,000 | 3,577,000,000 | ||
Equity, Beginning Balance | $ 1,788 | $ 1,788 | ||
Shares, Ending balance | 3,577,000,000 | 3,577,000,000 | 3,577,000,000 | 3,577,000,000 |
Equity, Ending Balance | $ 1,788 | $ 1,788 | $ 1,788 | $ 1,788 |
Other Paid-In Capital | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Equity, Beginning Balance | 40,423 | 40,508 | ||
Share-based compensation plans and other | (263) | (168) | ||
Changes in noncontrolling ownership interests | (21) | |||
Equity, Ending Balance | 40,139 | 40,340 | 40,139 | 40,340 |
Retained Earnings | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Equity, Beginning Balance | 46,021 | 39,257 | ||
Net Income Attributable to Merck & Co., Inc. | 3,465 | 4,604 | ||
Cash dividends declared on common stock | (3,826) | (3,872) | ||
Equity, Ending Balance | 45,660 | 39,989 | 45,660 | 39,989 |
Accumulated Other Comprehensive Loss | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Equity, Beginning Balance | (4,323) | (2,197) | ||
Other comprehensive loss | (250) | (801) | ||
Equity, Ending Balance | $ (4,573) | $ (2,998) | $ (4,573) | $ (2,998) |
Treasury Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Shares, Beginning Balance | 739,000,000 | 650,000,000 | ||
Equity, Beginning Balance | $ (35,262) | $ (29,591) | ||
Treasury stock shares purchased, Shares | 53,000,000 | 106,000,000 | ||
Treasury stock shares purchased | $ (3,005) | $ (6,083) | ||
Share-based compensation plans and other, Shares | (17,000,000) | (40,000,000) | ||
Share-based compensation plans and other | $ 840 | $ 1,779 | ||
Shares, Ending balance | 775,000,000 | 716,000,000 | 775,000,000 | 716,000,000 |
Equity, Ending Balance | $ (37,427) | $ (33,895) | $ (37,427) | $ (33,895) |
Non- Controlling Interests | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Equity, Beginning Balance | 144 | 2,561 | ||
Share-based compensation plans and other | 0 | 46 | ||
Changes in noncontrolling ownership interests | (55) | |||
AstraZeneca option exercise | (2,400) | |||
Net income attributable to noncontrolling interests | 12 | 3 | ||
Distributions attributable to noncontrolling interests | (9) | (74) | ||
Equity, Ending Balance | $ 92 | $ 136 | $ 92 | $ 136 |
Share-Based Compensation Plan65
Share-Based Compensation Plans - Narrative (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
RSUs granted (in shares) | 4 | 5 |
Weighted-average fair value per RSU granted (in dollars per share) | $ 59.79 | $ 58.15 |
Options granted (in shares) | 5 | 5 |
Weighted- average exercise price of options granted in period (in dollars per share) | $ 59.82 | $ 58.15 |
Weighted- average fair value per option granted (in dollars per share) | $ 6.46 | $ 6.79 |
Total pretax unrecognized compensation expense related to nonvested stock options, RSU and PSU awards | $ 488 | |
Weighted average period in years of recognition for nonvested stock options, RSU and PSU awards | 2 years |
Share-Based Compensation Plan66
Share-Based Compensation Plans - Amounts of Share-Based Compensation Cost Recorded in Consolidated Statement of Income (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Pretax share-based compensation expense | $ 75 | $ 75 | $ 221 | $ 209 |
Income tax benefit | (23) | (23) | (69) | (64) |
Total share-based compensation expense, net of taxes | $ 52 | $ 52 | $ 152 | $ 145 |
Share-Based Compensation Plan67
Share-Based Compensation Plans - Assumptions Used to Determine Weighted-Average Fair Value of Options Granted (Detail) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Expected dividend yield | 4.10% | 4.30% |
Risk-free interest rate | 1.70% | 2.00% |
Expected volatility | 19.90% | 22.00% |
Expected life (years) | 6 years 1 month 25 days | 6 years 4 months 24 days |
Pension and Other Postretirem68
Pension and Other Postretirement Benefit Plans - Components of Net Periodic Benefit Cost (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
U.S. | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 65 | $ 62 | $ 230 | $ 227 |
Interest cost | 108 | 105 | 326 | 319 |
Expected return on plan assets | (203) | (195) | (614) | (585) |
Net amortization | 33 | 27 | 119 | 55 |
Termination benefits | 2 | 16 | 20 | 42 |
Curtailments | (1) | (10) | (10) | (43) |
Settlements | 0 | 8 | 0 | 8 |
Net periodic benefit cost | 4 | 13 | 71 | 23 |
International | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 61 | 66 | 190 | 202 |
Interest cost | 52 | 68 | 156 | 204 |
Expected return on plan assets | (95) | (105) | (286) | (316) |
Net amortization | 26 | 13 | 79 | 40 |
Termination benefits | 0 | 1 | 1 | 5 |
Curtailments | (2) | (7) | (3) | (6) |
Settlements | 1 | 0 | 4 | 0 |
Net periodic benefit cost | 43 | 36 | 141 | 129 |
Other Postretirement Benefit Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 22 | 18 | 61 | 56 |
Interest cost | 28 | 27 | 83 | 84 |
Expected return on plan assets | (36) | (35) | (107) | (104) |
Net amortization | (13) | (18) | (44) | (53) |
Termination benefits | 1 | 5 | 6 | 13 |
Curtailments | (1) | (7) | (8) | (33) |
Net periodic benefit cost | $ 1 | $ (10) | $ (9) | $ (37) |
Other (Income) Expense, Net (De
Other (Income) Expense, Net (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Other Income and Expenses [Abstract] | ||||
Interest income | $ (68) | $ (69) | $ (214) | $ (190) |
Interest expense | 165 | 191 | 503 | 567 |
Exchange losses | 228 | 61 | 1,038 | 114 |
Equity income from affiliates | (63) | (24) | (210) | (241) |
Other, net | (432) | (325) | (493) | (1,228) |
Other (income) expense, net | $ (170) | $ (166) | $ 624 | $ (978) |
Other (Income) Expense, Net - N
Other (Income) Expense, Net - Narrative (Detail) $ in Millions | 3 Months Ended | 9 Months Ended | 15 Months Ended | ||||
Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($)VEF / $ | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | |
Component of Other Income / Expense of Nonoperating [Line Items] | |||||||
Foreign exchange losses related to Venezuela | $ 715 | $ 0 | |||||
Noncash Contribution Expense | 78 | ||||||
Gain on AstraZeneca option exercise | 0 | 741 | |||||
Interest paid | 452 | 544 | |||||
AstraZeneca LP | |||||||
Component of Other Income / Expense of Nonoperating [Line Items] | |||||||
Recognition of Deferred Income | $ 50 | $ 36 | 153 | 36 | $ 293 | ||
Supera | |||||||
Component of Other Income / Expense of Nonoperating [Line Items] | |||||||
Goodwill impairment charge | 93 | 93 | |||||
Venezuela | |||||||
Component of Other Income / Expense of Nonoperating [Line Items] | |||||||
Foreign exchange losses related to Venezuela | 138 | $ 715 | 853 | ||||
Foreign Currency Exchange Rate, Translation (in vef per usd) | VEF / $ | 6.30 | ||||||
Allergan plc | |||||||
Component of Other Income / Expense of Nonoperating [Line Items] | |||||||
Gain on sale of certain migraine clinical development programs | $ 250 | $ 250 | |||||
Santen Pharmaceutical Co. Ltd. | |||||||
Component of Other Income / Expense of Nonoperating [Line Items] | |||||||
Gain on divestiture of certain ophthalmic products | $ 84 | $ 396 | 396 | ||||
Sirna Therapeutics Inc. | |||||||
Component of Other Income / Expense of Nonoperating [Line Items] | |||||||
Gain on disposition of subsidiary | $ 204 |
Taxes on Income - Narrative (De
Taxes on Income - Narrative (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Tax Contingency [Line Items] | ||||
Effective Income Tax Rate | 23.60% | 43.50% | 24.20% | 15.80% |
Income tax expense (benefit) | $ 566 | $ 648 | $ 1,108 | $ 865 |
Deferred tax expense (benefit) related to discrete adjustment | 75 | |||
Deferred income tax expense (benefit) | (846) | (1,773) | ||
Settlement with Taxing Authority | ||||
Income Tax Contingency [Line Items] | ||||
Income tax expense (benefit) | $ (370) | |||
AstraZeneca LP | ||||
Income Tax Contingency [Line Items] | ||||
Deferred income tax expense (benefit) | (517) | |||
Sirna Therapeutics Inc. | ||||
Income Tax Contingency [Line Items] | ||||
Income tax expense (benefit) | $ (300) |
Earnings Per Share - Calculatio
Earnings Per Share - Calculations of Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Net Income Attributable to Merck & Co., Inc. | $ 1,826 | $ 895 | $ 3,465 | $ 4,604 |
Average common shares outstanding, in shares | 2,814 | 2,879 | 2,825 | 2,909 |
Common shares issuable, in shares | 22 | 32 | 25 | 33 |
Average common shares outstanding assuming dilution, in shares | 2,836 | 2,911 | 2,850 | 2,942 |
Basic earnings per common share attributable to Merck & Co., Inc. common shareholders, in dollars per share | $ 0.65 | $ 0.31 | $ 1.23 | $ 1.58 |
Earnings per common share assuming dilution attributable to Merck & Co., Inc. common shareholders, in dollars per share | $ 0.64 | $ 0.31 | $ 1.22 | $ 1.57 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Detail) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Common shares issuable under share-based compensation plans excluded from diluted earnings per common share because the effect would have been antidilutive | 10 | 5 | 7 | 4 |
Other Comprehensive Income (L74
Other Comprehensive Income (Loss) - Changes in AOCI by Component (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), beginning balance | $ (4,332) | $ (2,444) | $ (4,323) | $ (2,197) |
Other comprehensive income (loss) before reclassification adjustments, pretax | (181) | (551) | 319 | (1,120) |
Tax | 37 | (5) | (260) | 285 |
Other comprehensive income (loss) before reclassification adjustments, net of taxes | (144) | (556) | 59 | (835) |
Reclassification adjustments, pretax | (141) | (5) | (458) | 41 |
Tax | 44 | 7 | 149 | (7) |
Reclassification adjustments, net of taxes | (97) | 2 | (309) | 34 |
Other comprehensive income (loss), net of taxes | (241) | (554) | (250) | (801) |
Accumulated Other Comprehensive Income (Loss), ending balance | (4,573) | (2,998) | (4,573) | (2,998) |
Derivatives | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), beginning balance | 606 | 27 | 530 | 132 |
Other comprehensive income (loss) before reclassification adjustments, pretax | (16) | 434 | 464 | 277 |
Tax | 9 | (152) | (159) | (97) |
Other comprehensive income (loss) before reclassification adjustments, net of taxes | (7) | 282 | 305 | 180 |
Reclassification adjustments, pretax | (171) | (44) | (534) | (48) |
Tax | 60 | 16 | 187 | 17 |
Reclassification adjustments, net of taxes | (111) | (28) | (347) | (31) |
Other comprehensive income (loss), net of taxes | (118) | 254 | (42) | 149 |
Accumulated Other Comprehensive Income (Loss), ending balance | 488 | 281 | 488 | 281 |
Investments | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), beginning balance | 143 | 116 | 111 | 54 |
Other comprehensive income (loss) before reclassification adjustments, pretax | (81) | (26) | 18 | 13 |
Tax | 24 | (7) | (1) | (2) |
Other comprehensive income (loss) before reclassification adjustments, net of taxes | (57) | (33) | 17 | 11 |
Reclassification adjustments, pretax | (16) | 5 | (78) | 35 |
Tax | 6 | (1) | 26 | (13) |
Reclassification adjustments, net of taxes | (10) | 4 | (52) | 22 |
Other comprehensive income (loss), net of taxes | (67) | (29) | (35) | 33 |
Accumulated Other Comprehensive Income (Loss), ending balance | 76 | 87 | 76 | 87 |
Employee Benefit Plans | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), beginning balance | (2,909) | (1,241) | (2,986) | (909) |
Other comprehensive income (loss) before reclassification adjustments, pretax | 3 | (715) | 18 | (1,287) |
Tax | 2 | 226 | (2) | 449 |
Other comprehensive income (loss) before reclassification adjustments, net of taxes | 5 | (489) | 16 | (838) |
Reclassification adjustments, pretax | 46 | 34 | 154 | 54 |
Tax | (22) | (8) | (64) | (11) |
Reclassification adjustments, net of taxes | 24 | 26 | 90 | 43 |
Other comprehensive income (loss), net of taxes | 29 | (463) | 106 | (795) |
Accumulated Other Comprehensive Income (Loss), ending balance | (2,880) | (1,704) | (2,880) | (1,704) |
Cumulative Translation Adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), beginning balance | (2,172) | (1,346) | (1,978) | (1,474) |
Other comprehensive income (loss) before reclassification adjustments, pretax | (87) | (244) | (181) | (123) |
Tax | 2 | (72) | (98) | (65) |
Other comprehensive income (loss) before reclassification adjustments, net of taxes | (85) | (316) | (279) | (188) |
Reclassification adjustments, pretax | 0 | 0 | 0 | 0 |
Tax | 0 | 0 | 0 | 0 |
Reclassification adjustments, net of taxes | 0 | 0 | 0 | 0 |
Other comprehensive income (loss), net of taxes | (85) | (316) | (279) | (188) |
Accumulated Other Comprehensive Income (Loss), ending balance | $ (2,257) | $ (1,662) | $ (2,257) | $ (1,662) |
Segment Reporting - Sales of Co
Segment Reporting - Sales of Company's Products (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Sales | $ 10,073 | $ 10,557 | $ 29,283 | $ 31,755 |
Saphris/Sycrest | ||||
Segment Reporting Information [Line Items] | ||||
Proceeds from sale of intangible assets | 232 | |||
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 9,771 | 10,455 | 28,333 | 31,329 |
Operating Segments | Total Pharmaceutical segment sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 8,925 | 9,134 | 25,755 | 26,672 |
Operating Segments | Total Pharmaceutical segment sales | Zetia | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 633 | 660 | 1,836 | 1,988 |
Operating Segments | Total Pharmaceutical segment sales | Vytorin | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 302 | 369 | 942 | 1,146 |
Operating Segments | Total Pharmaceutical segment sales | Januvia | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 1,014 | 933 | 2,942 | 2,849 |
Operating Segments | Total Pharmaceutical segment sales | Janumet | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 562 | 505 | 1,625 | 1,500 |
Operating Segments | Total Pharmaceutical segment sales | NuvaRing | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 190 | 186 | 538 | 531 |
Operating Segments | Total Pharmaceutical segment sales | Implanon/Nexplanon | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 176 | 158 | 437 | 379 |
Operating Segments | Total Pharmaceutical segment sales | Dulera | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 133 | 124 | 383 | 328 |
Operating Segments | Total Pharmaceutical segment sales | Follistim AQ | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 95 | 97 | 288 | 309 |
Operating Segments | Total Pharmaceutical segment sales | PegIntron | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 40 | 84 | 148 | 300 |
Operating Segments | Total Pharmaceutical segment sales | Isentress | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 377 | 412 | 1,137 | 1,255 |
Operating Segments | Total Pharmaceutical segment sales | Cubicin | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 325 | 7 | 805 | 18 |
Operating Segments | Total Pharmaceutical segment sales | Cancidas | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 139 | 183 | 436 | 505 |
Operating Segments | Total Pharmaceutical segment sales | Invanz | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 153 | 141 | 424 | 390 |
Operating Segments | Total Pharmaceutical segment sales | Noxafil | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 132 | 107 | 360 | 280 |
Operating Segments | Total Pharmaceutical segment sales | Bridion | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 89 | 90 | 262 | 245 |
Operating Segments | Total Pharmaceutical segment sales | Primaxin | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 75 | 91 | 228 | 243 |
Operating Segments | Total Pharmaceutical segment sales | Remicade | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 442 | 604 | 1,398 | 1,815 |
Operating Segments | Total Pharmaceutical segment sales | Simponi | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 178 | 170 | 505 | 500 |
Operating Segments | Total Pharmaceutical segment sales | Emend | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 141 | 136 | 396 | 402 |
Operating Segments | Total Pharmaceutical segment sales | Keytruda | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 159 | 4 | 352 | 4 |
Operating Segments | Total Pharmaceutical segment sales | Temodar | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 83 | 88 | 238 | 264 |
Operating Segments | Total Pharmaceutical segment sales | Singulair | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 201 | 218 | 658 | 773 |
Operating Segments | Total Pharmaceutical segment sales | Nasonex | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 121 | 261 | 625 | 830 |
Operating Segments | Total Pharmaceutical segment sales | Clarinex | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 39 | 49 | 145 | 180 |
Operating Segments | Total Pharmaceutical segment sales | Cozaar/Hyzaar | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 150 | 195 | 524 | 614 |
Operating Segments | Total Pharmaceutical segment sales | Arcoxia | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 123 | 132 | 361 | 400 |
Operating Segments | Total Pharmaceutical segment sales | Fosamax | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 86 | 114 | 277 | 358 |
Operating Segments | Total Pharmaceutical segment sales | Zocor | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 56 | 61 | 168 | 194 |
Operating Segments | Total Pharmaceutical segment sales | Propecia | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 41 | 66 | 133 | 197 |
Operating Segments | Total Pharmaceutical segment sales | Gardasil/Gardasil 9 | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 625 | 590 | 1,410 | 1,382 |
Operating Segments | Total Pharmaceutical segment sales | ProQuad/M-M-R II/Varivax | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 390 | 421 | 1,096 | 1,027 |
Operating Segments | Total Pharmaceutical segment sales | Zostavax | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 179 | 181 | 503 | 479 |
Operating Segments | Total Pharmaceutical segment sales | RotaTeq | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 160 | 174 | 441 | 490 |
Operating Segments | Total Pharmaceutical segment sales | Pneumovax 23 | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 138 | 197 | 354 | 400 |
Operating Segments | Total Pharmaceutical segment sales | Other Pharmaceutical | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 1,178 | 1,326 | 3,380 | 4,097 |
Operating Segments | Other segment sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 846 | 1,321 | 2,578 | 4,657 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Sales | $ 302 | $ 102 | $ 950 | $ 426 |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of Segment Profits to Income Before Taxes (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Income Before Taxes | $ 2,397 | $ 1,490 | $ 4,585 | $ 5,472 |
Interest income | 68 | 69 | 214 | 190 |
Interest expense | (165) | (191) | (503) | (567) |
Equity income from affiliates | 63 | 24 | 210 | 241 |
Depreciation and amortization | (4,815) | (5,118) | ||
Research and development | (1,500) | (1,659) | (4,906) | (4,897) |
Restructuring costs | (113) | (376) | (386) | (664) |
Foreign currency devaluation related to Venezuela | (715) | 0 | ||
Gain on AstraZeneca option exercise | 0 | 741 | ||
Total segment profits | ||||
Segment Reporting Information [Line Items] | ||||
Income Before Taxes | 6,070 | 6,311 | 17,398 | 18,525 |
Total segment profits | Pharmaceutical segment | ||||
Segment Reporting Information [Line Items] | ||||
Income Before Taxes | 5,641 | 5,772 | 16,088 | 16,475 |
Total segment profits | Other segments | ||||
Segment Reporting Information [Line Items] | ||||
Income Before Taxes | 429 | 539 | 1,310 | 2,050 |
Other profits (losses) | ||||
Segment Reporting Information [Line Items] | ||||
Income Before Taxes | 195 | 79 | 538 | 370 |
Unallocated: | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 68 | 69 | 214 | 190 |
Interest expense | (165) | (191) | (503) | (567) |
Equity income from affiliates | 25 | (22) | 161 | 62 |
Depreciation and amortization | (383) | (595) | (1,175) | (1,895) |
Research and development | (1,291) | (1,332) | (4,310) | (3,984) |
Amortization of purchase accounting adjustments | (1,184) | (1,008) | (3,662) | (3,198) |
Restructuring costs | (113) | (376) | (386) | (664) |
Gain on sale of certain migraine clinical development programs | 250 | 0 | 250 | 0 |
Foreign currency devaluation related to Venezuela | 0 | 0 | (715) | 0 |
Gain on divestiture of certain ophthalmic products | 0 | 396 | 0 | 396 |
Gain on AstraZeneca option exercise | 0 | 0 | 0 | 741 |
Other unallocated, net | $ (1,075) | $ (1,841) | $ (3,225) | $ (4,504) |