Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 31, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
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 | 2,757,137,517 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | ||||
Sales | $ 10,536 | $ 10,073 | $ 29,692 | $ 29,283 |
Costs, Expenses and Other | ||||
Materials and production | 3,409 | 3,761 | 10,559 | 11,084 |
Marketing and administrative | 2,393 | 2,472 | 7,169 | 7,698 |
Research and development | 1,664 | 1,500 | 5,475 | 4,906 |
Restructuring costs | 161 | 113 | 386 | 386 |
Other (income) expense, net | 22 | (170) | 88 | 624 |
Total Costs, Expenses and Other | 7,649 | 7,676 | 23,677 | 24,698 |
Income Before Taxes | 2,887 | 2,397 | 6,015 | 4,585 |
Taxes on Income | 699 | 566 | 1,487 | 1,108 |
Net Income | 2,188 | 1,831 | 4,528 | 3,477 |
Less: Net Income Attributable to Noncontrolling Interests | 4 | 5 | 13 | 12 |
Net Income Attributable to Merck & Co., Inc. | $ 2,184 | $ 1,826 | $ 4,515 | $ 3,465 |
Basic Earnings per Common Share Attributable to Merck & Co., Inc. Common Shareholders (in dollars per share) | $ 0.79 | $ 0.65 | $ 1.63 | $ 1.23 |
Earnings per Common Share Assuming Dilution Attributable to Merck & Co., Inc. Common Shareholders (in dollars per share) | 0.78 | 0.64 | 1.62 | 1.22 |
Dividends Declared per Common Share (in dollars per share) | $ 0.46 | $ 0.45 | $ 1.38 | $ 1.35 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income Attributable to Merck & Co., Inc. | $ 2,184 | $ 1,826 | $ 4,515 | $ 3,465 |
Other Comprehensive Income (Loss) Net of Taxes: | ||||
Net unrealized loss on derivatives, net of reclassifications | (74) | (118) | (367) | (42) |
Net unrealized (loss) gain on investments, net of reclassifications | (30) | (67) | 96 | (35) |
Benefit plan net (loss) gain and prior service (cost) credit, net of amortization | (144) | 29 | (280) | 106 |
Cumulative translation adjustment | 82 | (85) | 447 | (279) |
Other comprehensive income (loss), net of taxes | (166) | (241) | (104) | (250) |
Comprehensive Income Attributable to Merck & Co., Inc. | $ 2,018 | $ 1,585 | $ 4,411 | $ 3,215 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 7,907 | $ 8,524 |
Short-term investments | 5,160 | 4,903 |
Accounts receivable (net of allowance for doubtful accounts of $173 in 2016 and $165 in 2015) (excludes accounts receivable of $10 in 2016 and 2015 classified in Other assets) | 7,364 | 6,484 |
Inventories (excludes inventories of $1,104 in 2016 and $1,569 in 2015 classified in Other assets) | 5,244 | 4,700 |
Other current assets | 3,765 | 5,140 |
Total current assets | 29,440 | 29,751 |
Investments | 11,657 | 13,039 |
Property, Plant and Equipment, at cost, net of accumulated depreciation of $16,022 in 2016 and $15,923 in 2015 | 12,029 | 12,507 |
Goodwill | 18,260 | 17,723 |
Other Intangibles, Net | 20,506 | 22,602 |
Other Assets | 6,443 | 6,055 |
Total Assets | 98,335 | 101,677 |
Current Liabilities | ||
Loans payable and current portion of long-term debt | 1,487 | 2,583 |
Trade accounts payable | 2,481 | 2,533 |
Accrued and other current liabilities | 9,087 | 11,216 |
Income taxes payable | 1,208 | 1,560 |
Dividends payable | 1,292 | 1,309 |
Total current liabilities | 15,555 | 19,201 |
Long-Term Debt | 23,656 | 23,829 |
Deferred Income Taxes | 6,374 | 6,535 |
Other Noncurrent Liabilities | 8,793 | 7,345 |
Merck & Co., Inc. Stockholders’ Equity | ||
Common stock, $0.50 par value Authorized - 6,500,000,000 shares Issued - 3,577,103,522 shares in 2016 and 2015 | 1,788 | 1,788 |
Other paid-in capital | 39,897 | 40,222 |
Retained earnings | 46,028 | 45,348 |
Accumulated other comprehensive loss | (4,252) | (4,148) |
Stockholders' equity before deduction for treasury stock | 83,461 | 83,210 |
Less treasury stock, at cost: 815,442,334 shares in 2016 and 795,975,449 shares in 2015 | 39,717 | 38,534 |
Total Merck & Co., Inc. stockholders’ equity | 43,744 | 44,676 |
Noncontrolling Interests | 213 | 91 |
Total equity | 43,957 | 44,767 |
Liabilities and Equity | $ 98,335 | $ 101,677 |
CONDENSED CONSOLIDATED BALANCE5
CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 173 | $ 165 |
Accounts receivable classified in Other assets | 10 | 10 |
Inventories classified in Other assets | 1,104 | 1,569 |
Accumulated depreciation | $ 16,022 | $ 15,923 |
Common stock, par value (in dollars per share) | $ 0.50 | $ 0.50 |
Common stock, shares authorized (shares) | 6,500,000,000 | 6,500,000,000 |
Common stock, shares issued (shares) | 3,577,103,522 | 3,577,103,522 |
Treasury stock, shares (shares) | 815,442,334 | 795,975,449 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash Flows from Operating Activities | ||
Net income | $ 4,528 | $ 3,477 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 4,286 | 4,815 |
Intangible asset impairment charges | 572 | 80 |
Foreign currency devaluation related to Venezuela | 0 | 715 |
Equity income from affiliates | (59) | (210) |
Dividends and distributions from equity affiliates | 12 | 12 |
Deferred income taxes | (65) | (846) |
Share-based compensation | 225 | 221 |
Other | 247 | 815 |
Net changes in assets and liabilities | (3,002) | (787) |
Net Cash Provided by Operating Activities | 6,744 | 8,292 |
Cash Flows from Investing Activities | ||
Capital expenditures | (1,063) | (790) |
Purchases of securities and other investments | (10,084) | (12,425) |
Proceeds from sales of securities and other investments | 11,300 | 16,531 |
Acquisition of Cubist Pharmaceuticals, Inc., net of cash acquired | 0 | (7,598) |
Acquisitions of other businesses, net of cash acquired | (778) | (110) |
Dispositions of businesses, net of cash divested | 0 | 151 |
Other | (22) | 100 |
Net Cash Used in Investing Activities | (647) | (4,141) |
Cash Flows from Financing Activities | ||
Net change in short-term borrowings | 909 | (1,526) |
Proceeds from issuance of debt | 8 | 7,938 |
Payments on debt | (2,386) | (2,905) |
Purchases of treasury stock | (2,418) | (3,005) |
Dividends paid to stockholders | (3,853) | (3,854) |
Proceeds from exercise of stock options | 790 | 434 |
Other | (117) | (63) |
Net Cash Used in Financing Activities | (7,067) | (2,981) |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 353 | (1,063) |
Net (Decrease) Increase in Cash and Cash Equivalents | (617) | 107 |
Cash and Cash Equivalents at Beginning of Year | 8,524 | 7,441 |
Cash and Cash Equivalents at End of Period | $ 7,907 | $ 7,548 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed 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 26, 2016. 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 statement 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 Adopted Accounting Standards In the first quarter of 2016, the Company adopted accounting guidance issued by the Financial Accounting Standards Board (FASB) in April 2015, which requires debt issuance costs to be presented as a direct deduction from the carrying amount of that debt on the balance sheet as opposed to being presented as a deferred charge. Approximately $100 million of debt issuance costs were reclassified in the first quarter of 2016 as a result of the adoption of the new standard. Prior period amounts have been recast to conform to the new presentation. In the second quarter of 2016, the Company elected to early adopt an accounting standards update issued by the FASB in March of 2016 intended to simplify the accounting and reporting for employee share-based payment transactions. Among other provisions, the new standard requires that excess tax benefits and deficiencies that arise upon vesting or exercise of share-based payments be recognized in the income statement (as opposed to previous guidance under which tax effects were recorded to Other paid-in-capital in certain instances). This aspect of the new guidance, which was required to be adopted prospectively, resulted in the recognition of $35 million and $64 million of excess tax benefits in Taxes on income for the third quarter and first nine months of 2016, respectively, arising from share-based payments. The new guidance also amended the presentation of certain share-based payment items in the statement of cash flows. Cash flows related to excess income tax benefits are now classified as an operating activity (formerly included as a financing activity). The Company elected to adopt this aspect of the new guidance prospectively. The standard also clarified that cash payments made to taxing authorities on the employees’ behalf for shares withheld should be presented as a financing activity. This aspect of the guidance was adopted retrospectively; accordingly, the Company reclassified $118 million of such payments from operating activities to financing activities in the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2015 to conform to the current presentation. The Company has elected to continue to estimate the impact of forfeitures when determining the amount of compensation cost to be recognized each period rather than account for them as they occur. Recently Issued Accounting Standards In May 2014, the 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 interim and annual 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. In January 2016, the FASB issued revised guidance for the accounting and reporting of financial instruments. The new guidance requires that equity investments with readily determinable fair values currently classified as available-for-sale be measured at fair value with changes in fair value recognized in net income. The new guidance also simplifies the impairment testing of equity investments without readily determinable fair values and changes certain disclosure requirements. This guidance is effective for interim and annual periods beginning in 2018. Early adoption is not permitted. The Company is currently assessing the impact of adoption on its consolidated financial statements. In February 2016, the FASB issued new accounting guidance for the accounting and reporting of leases. The new guidance requires that lessees recognize a right-of-use asset and a lease liability recorded on the balance sheet for each of its leases (other than leases that meet the definition of a short-term lease). Leases will be classified as either operating or finance. Operating leases will result in straight-line expense in the income statement (similar to current operating leases) while finance leases will result in more expense being recognized in the earlier years of the lease term (similar to current capital leases). The new guidance will be effective for interim and annual periods beginning in 2019. Early adoption is permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements. In June 2016, the FASB issued amended guidance on the accounting for credit losses on financial instruments within its scope. The guidance introduces an expected loss model for estimating credit losses, replacing the incurred loss model. The new guidance also changes the impairment model for available-for-sale debt securities, requiring the use of an allowance to record estimated credit losses (and subsequent recoveries). The new guidance is effective for interim and annual periods beginning in 2020, with earlier application permitted in 2019. The Company is currently evaluating the impact of adoption on its consolidated financial statements. In August 2016, the FASB issued guidance on the classification of certain cash receipts and payments in the statement of cash flows intended to reduce diversity in practice. The guidance is effective for interim and annual periods beginning in 2018. Early adoption is permitted. The guidance is to be applied retrospectively to all periods presented but may be applied prospectively if retrospective application would be impracticable. The Company is currently evaluating the effect of the standard on its Consolidated Statement of Cash Flows. In October 2016, the FASB issued guidance on the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. Under existing guidance, the recognition of current and deferred income taxes for an intra-entity asset transfer is prohibited until the asset has been sold to a third party. The new guidance will require the recognition of the income tax consequences of an intra-entity transfer of an asset (with the exception of inventory) when the intra-entity transfer occurs. The guidance is effective for interim and annual periods beginning in 2018. Early adoption is permitted. The new guidance is to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings in the beginning of the period of adoption. The Company does not anticipate the adoption of the new guidance will have a material effect on its financial statements. |
Acquisitions, Divestitures, Res
Acquisitions, Divestitures, Research Collaborations and License Agreements | 9 Months Ended |
Sep. 30, 2016 | |
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 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. In July 2016, Merck acquired Afferent Pharmaceuticals (Afferent), a privately held pharmaceutical company focused on the development of therapeutic candidates targeting the P2X3 receptor for the treatment of common, poorly-managed, neurogenic conditions. Afferent’s lead investigational candidate, MK-7264 (formerly AF-219), is a selective, non-narcotic, orally-administered P2X3 antagonist currently being evaluated in a Phase 2b clinical trial for the treatment of refractory, chronic cough as well as in a Phase 2 clinical trial in idiopathic pulmonary fibrosis with cough. Total consideration transferred of $510 million included cash paid for outstanding Afferent shares of $ 487 million , as well as share-based compensation payments to settle equity awards attributable to precombination service and cash paid for transaction costs on behalf of Afferent. In addition, former Afferent shareholders are eligible to receive a total of up to an additional $750 million contingent upon the attainment of certain clinical development and commercial milestones for multiple indications and candidates, including MK-7264. This 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 Company determined the fair value of the contingent consideration was $223 million at the acquisition date utilizing a probability-weighted estimated cash flow stream adjusted for the expected timing of each payment using an appropriate discount rate dependent on the nature and timing of the milestone payment. Merck recognized an intangible asset for in-process research and development (IPR&D) of $779 million , net deferred tax liabilities of $258 million , and other net assets of $29 million (primarily consisting of cash acquired). The excess of the consideration transferred over the fair value of net assets acquired of $183 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 12.0% . Actual cash flows are likely to be different than those assumed. Pro forma financial information has not been included because Afferent’s historical financial results are not significant when compared with the Company’s financial results. In July 2016, Merck, through its wholly owned subsidiary Healthcare Services & Solutions, LLC, acquired a majority ownership interest in The StayWell Company LLC (StayWell), a portfolio company of Vestar Capital Partners (Vestar). StayWell is a health engagement company that helps its clients engage and educate people to improve health and business results. Under the terms of the transaction, Merck paid $150 million for a majority ownership interest. Additionally, Merck provided StayWell with a $150 million intercompany loan to pay down preexisting third-party debt. Merck has an option to buy, and Vestar has an option to require Merck to buy, some or all of Vestar’s remaining ownership interest beginning three years from the acquisition date at fair value. This transaction was accounted for as an acquisition of a business. Merck recognized intangible assets of $238 million , deferred tax liabilities of $84 million , other net liabilities of $5 million and noncontrolling interest of $124 million . The excess of the consideration transferred over the fair value of net assets acquired of $275 million was recorded as goodwill and is largely attributable to anticipated synergies expected to arise after the acquisition. The goodwill was allocated to the Healthcare Services segment and is not deductible for tax purposes. The intangible assets recognized primarily relate to customer relationships, which are being amortized over a 10 -year useful life, and medical information and solutions content, which are being amortized over a five -year useful life. Pro forma financial information has not been included because StayWell’s historical financial results are not significant when compared with the Company’s financial results. Also in July 2016, Merck announced it had executed an agreement to acquire a controlling interest in Vallée S.A. (Vallée), a leading privately held producer of animal health products in Brazil. Vallée has an extensive portfolio of products spanning parasiticides, anti-infectives and vaccines that include products for livestock, horses, and companion animals. Under the terms of the agreement, Merck will acquire approximately 93% of the shares of Vallée for approximately $400 million , based on exchange rates at the time of the announcement. This agreement is subject to regulatory review and certain closing conditions. In June 2016, Merck and Moderna Therapeutics (Moderna) entered into a strategic collaboration and license agreement to develop and commercialize novel messenger RNA (mRNA)-based personalized cancer vaccines. The development program will entail multiple studies in several types of cancer and include the evaluation of mRNA-based personalized cancer vaccines in combination with Merck’s Keytruda . Pursuant to the terms of the agreement, Merck made an upfront cash payment to Moderna of $200 million in July 2016, which was recorded in Research and development expenses in the second quarter of 2016. Following human proof of concept studies, Merck has the right to elect to make an additional payment to Moderna. If Merck exercises this right, the two companies will then equally share cost and profits under a worldwide collaboration for the development of personalized cancer vaccines. Moderna will have the right to elect to co-promote the personalized cancer vaccines in the United States. The agreement entails exclusivity around combinations with Keytruda . Moderna and Merck will each have the ability to combine mRNA-based personalized cancer vaccines with other (non-PD-1) agents. As previously disclosed, in 2014, the Company entered into a worldwide clinical development collaboration with Bayer AG (Bayer) to market and develop soluble guanylate cyclase (sGC) modulators, including Bayer’s Adempas . The arrangement provided for potential future milestone payments of up to $1.1 billion based upon the achievement of agreed-upon sales goals. During the second quarter of 2016, the Company determined it was probable that, in 2017, sales of Adempas would exceed the threshold triggering a $350 million milestone payment from Merck to Bayer. Accordingly, in the second quarter of 2016, the Company recorded a $350 million liability and a corresponding intangible asset and also recognized $50 million of cumulative amortization expense within Materials and production costs. The remaining intangible asset at June 30, 2016 of $300 million is being amortized over the then-remaining estimated useful life of the asset of 10.5 years as supported by projected future cash flows, subject to impairment testing. Additional potential future milestone payments of $775 million have not yet been accrued as they are not deemed by the Company to be probable at this time. In January 2016, Merck acquired IOmet Pharma Ltd (IOmet), a privately held UK-based drug discovery company focused on the development of innovative medicines for the treatment of cancer, with a particular emphasis on the fields of cancer immunotherapy and cancer metabolism. The acquisition provides Merck with IOmet’s preclinical pipeline of IDO (indoleamine-2,3-dioxygenase 1), TDO (tryptophan-2,3-dioxygenase), and dual-acting IDO/TDO inhibitors. Total purchase consideration in the transaction of $227 million included a cash payment of $150 million and future additional milestone payments of up to $250 million that are contingent upon certain clinical and regulatory milestones being achieved. The transaction was accounted for as an acquisition of a business. The Company determined the fair value of the contingent consideration was $77 million at the acquisition date utilizing a probability-weighted estimated cash flow stream adjusted for the expected timing of each payment utilizing a discount rate of 10.5% . Merck recognized intangible assets for IPR&D of $155 million and net deferred tax assets of $26 million . The excess of the consideration transferred over the fair value of net assets acquired of $46 million was recorded as goodwill that was allocated to the Pharmaceutical segment and is not deductible for tax purposes. The fair values of the identifiable intangible assets related to IPR&D were determined using an income approach. The assets’ probability-adjusted future net cash flows were then discounted to present value also using a discount rate of 10.5% . Actual cash flows are likely to be different than those assumed. Pro forma financial information has not been included because IOmet’s historical financial results are not significant when compared with the Company’s financial results. Also in January 2016, Merck sold the U.S. marketing rights to Cortrophin and Corticotropin Zinc Hydroxide to ANI Pharmaceuticals, Inc. (ANI). Under the terms of the agreement, ANI made a payment of $75 million , which was recorded in Sales in the first nine months of 2016, and may make additional payments to the Company based on future sales. Merck does not have any ongoing supply or other performance obligations after the closing date. In July 2015, Merck acquired cCAM, a privately held biopharmaceutical company focused on the discovery and development of novel cancer immunotherapies. 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. The transaction was accounted for as an acquisition of a business. The Company determined the fair value of the contingent consideration was $105 million at the acquisition date utilizing a probability-weighted estimated cash flow stream adjusted for the expected timing of each payment utilizing a discount rate of 10.5% . 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. The asset’s probability-adjusted future net cash flows were discounted to present value also using a discount rate of 10.5% . Actual cash flows are likely to be different than those assumed. 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 , of which $125 million was paid in August 2015 upon closing of the transaction and the remaining $125 million was paid in April of 2016. The Company recorded a gain of $250 million within Other (income) expense, net in the third quarter of 2015 related to the transaction. Allergan is fully responsible for development of the CGRP programs, as well as manufacturing and commercialization upon approval and launch of the products. Under the agreement, Merck is eligible for the receipt of potential development and commercial milestone payments and royalties at tiered double-digit rates based on commercialization of the programs. During the third quarter of 2016, Merck recognized a gain of $40 million within Other (income) expense, net for the achievement of a research and development milestone, which was paid by Allergan. 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. 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 was 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 has the option to extend the research agreement for two additional two -year terms. Acquisition of Cubist Pharmaceuticals, Inc. In January 2015, Merck acquired Cubist Pharmaceuticals, Inc. (Cubist), a leader in the development of therapies to treat serious infections caused by a broad range of bacteria. This transaction, which was accounted for as an acquisition of a business, 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. Total consideration transferred of $8.3 billion included 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. In addition, the Company assumed all of the outstanding convertible debt of Cubist, which had a fair value of approximately $1.9 billion at the acquisition date. Merck redeemed this debt in February 2015. The estimated fair value of assets acquired and liabilities assumed from Cubist is as follows: ($ in 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 IPR&D 50 Other noncurrent assets 184 Current liabilities (1) (233 ) Deferred income tax liabilities (2,519 ) Long-term debt (1,900 ) Other noncurrent liabilities (1) (122 ) Total identifiable net assets 3,661 Goodwill (2) 4,670 Consideration transferred $ 8,331 (1) Included in current liabilities and other noncurrent liabilities is contingent consideration of $73 million and $50 million , respectively. (2) The goodwill recognized is largely attributable to anticipated synergies expected to arise after the acquisition and was allocated to the Pharmaceutical segment. The goodwill is not deductible for tax purposes. The estimated fair values of identifiable intangible assets related to currently marketed products were determined using an income approach through which fair value is estimated based on market participant expectations of each asset’s discounted projected net cash flows. The probability-adjusted future net cash flows of each product were then discounted to present value utilizing a discount rate of 8% . Actual cash flows are likely to be different than those assumed. In connection with the Cubist acquisition, liabilities were recorded for potential future consideration that is contingent upon the achievement of future sales-based milestones. The fair value of contingent consideration liabilities was determined at the acquisition date using unobservable inputs. These inputs include the estimated amount and timing of projected cash flows, the probability of success (achievement of the contingent event) and a risk-adjusted discount rate of 8% used to present value the probability-weighted cash flows. Changes in the inputs could result in a different fair value measurement. The following unaudited supplemental pro forma data presents consolidated information as if the acquisition of Cubist had been completed on January 1, 2014: Three Months Ended Nine Months Ended ($ in millions, except per share amounts) 2015 2015 Sales $ 10,073 $ 29,369 Net income attributable to Merck & Co., Inc. 1,833 3,645 Basic earnings per common share attributable to Merck & Co., Inc. common shareholders 0.65 1.29 Earnings per common share assuming dilution attributable to Merck & Co., Inc. common shareholders 0.65 1.28 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. |
Restructuring
Restructuring | 9 Months Ended |
Sep. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring The Company incurs substantial costs for restructuring program activities related to Merck’s productivity and cost reduction initiatives, as well as in connection with the integration of certain acquired businesses. In 2010 and 2013, the Company commenced actions under global restructuring programs designed to streamline its cost structure. The actions under these programs include the elimination of positions in sales, administrative and headquarters organizations, as well as the sale or closure of certain manufacturing and research and development sites and the consolidation of office facilities. The Company also continues to reduce its global real estate footprint and improve the efficiency of its manufacturing and supply network. The non-facility related restructuring actions under these programs are substantially complete; the remaining activities primarily relate to ongoing facility rationalizations. The Company recorded total pretax costs of $212 million and $217 million in the third quarter of 2016 and 2015 , respectively, and $759 million and $770 million for the first nine months of 2016 and 2015, respectively, related to restructuring program activities. Since inception of the programs through September 30, 2016 , Merck has recorded total pretax accumulated costs of approximately $12.2 billion and eliminated approximately 39,630 positions comprised of employee separations, as well as the elimination of contractors and vacant positions. The Company expects to substantially complete the remaining actions under these programs by the end of 2017 and incur approximately $800 million of additional pretax costs. The Company estimates that approximately two-thirds of the cumulative pretax costs will result in cash outlays, primarily related to employee separation expense. Approximately one-third of the cumulative pretax costs are non-cash, relating primarily to the accelerated depreciation of facilities to be closed or divested. For segment reporting, restructuring charges are unallocated expenses. The following tables summarize the charges related to restructuring program activities by type of cost: Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016 ($ in millions) Separation Costs Accelerated Depreciation Other Total Separation Costs Accelerated Depreciation Other Total Materials and production $ — $ 18 $ 18 $ 36 $ — $ 69 $ 80 $ 149 Marketing and administrative — 1 — 1 — 8 83 91 Research and development — 14 — 14 — 133 — 133 Restructuring costs 61 — 100 161 172 — 214 386 $ 61 $ 33 $ 118 $ 212 $ 172 $ 210 $ 377 $ 759 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 Materials and production $ — $ 17 $ 53 $ 70 $ — $ 47 $ 233 $ 280 Marketing and administrative — 5 12 17 — 53 17 70 Research and development — 9 8 17 — 25 9 34 Restructuring costs 12 — 101 113 100 — 286 386 $ 12 $ 31 $ 174 $ 217 $ 100 $ 125 $ 545 $ 770 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 2016 and 2015 , approximately 300 positions and 685 positions, respectively, and for the first nine months of 2016 and 2015, approximately 1,355 positions and 2,635 positions, respectively, were eliminated under restructuring program activities. 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 asset, based upon the anticipated date the site will be closed or divested or the equipment disposed of, and depreciation expense as determined utilizing the useful life prior to the restructuring actions. All 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 recorded accelerated depreciation of the site assets. Anticipated site closure dates, particularly related to manufacturing locations, have been and may continue to be adjusted to reflect changes resulting from regulatory or other factors. Other activity in 2016 and 2015 includes asset abandonment, shut-down and other related costs, as well as pretax gains and losses resulting from sales of facilities and related assets. 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 program activities for the nine months ended September 30, 2016 : ($ in millions) Separation Costs Accelerated Depreciation Other Total Restructuring reserves January 1, 2016 $ 592 $ — $ 53 $ 645 Expense 172 210 377 759 (Payments) receipts, net (251 ) — (200 ) (451 ) Non-cash activity — (210 ) (164 ) (374 ) Restructuring reserves September 30, 2016 (1) $ 513 $ — $ 66 $ 579 (1) The remaining cash outlays are expected to be substantially completed by the end of 2017. |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 30, 2016 | |
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 variability caused by changes in foreign exchange rates that would affect 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 two 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 and forward contracts. In connection with the Company’s revenue hedging program, a purchased collar option strategy may also be utilized. Purchased put options 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. Forward contracts obligate the Company 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, 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. 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 fair values of these derivative contracts are recorded as either assets (gain positions) or liabilities (loss positions) in the Condensed 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 Condensed 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 net monetary assets that are denominated in a currency other than a subsidiary’s 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 and Japanese yen. 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 Condensed 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 Condensed 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 losses of $60 million and pretax gains $255 million for the first nine months of 2016 and 2015 , 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. In May 2016, four interest rate swaps with notional amounts of $250 million each matured. These swaps effectively converted the Company’s $1.0 billion , 0.70% fixed-rate notes due 2016 to variable rate debt. At September 30, 2016 , the Company was a party to 26 pay-floating, receive-fixed interest rate swap contracts designated as fair value hedges of fixed-rate notes in which the notional amounts match the amount of the hedged fixed-rate notes as detailed in the table below. ($ in millions) September 30, 2016 Debt Instrument Par Value of Debt Number of Interest Rate Swaps Held Total Swap Notional Amount 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 swap rate 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 Condensed 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, 2016 December 31, 2015 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 (noncurrent) Other assets $ 158 $ — $ 5,200 $ 42 $ — $ 2,700 Interest rate swap contracts (current) Accrued and other current liabilities — — — — 1 1,000 Interest rate swap contracts (noncurrent) Other noncurrent liabilities — 1 1,000 — 23 3,500 Foreign exchange contracts (current) Other current assets 274 — 4,265 579 — 4,171 Foreign exchange contracts (noncurrent) Other assets 96 — 2,162 386 — 4,136 Foreign exchange contracts (current) Accrued and other current liabilities — 20 845 — 1 77 $ 528 $ 21 $ 13,472 $ 1,007 $ 25 $ 15,584 Derivatives Not Designated as Hedging Instruments Foreign exchange contracts (current) Other current assets $ 92 $ — $ 6,157 $ 212 $ — $ 8,783 Foreign exchange contracts (noncurrent) Other assets — — — 18 — 179 Foreign exchange contracts (current) Accrued and other current liabilities — 35 4,062 — 37 2,508 Foreign exchange contracts (noncurrent) Other noncurrent liabilities — 1 7 — 1 6 $ 92 $ 36 $ 10,226 $ 230 $ 38 $ 11,476 $ 620 $ 57 $ 23,698 $ 1,237 $ 63 $ 27,060 As noted above, the Company records its derivatives on a gross basis in the Condensed 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, 2016 December 31, 2015 ($ in millions) Asset Liability Asset Liability Gross amounts recognized in the consolidated balance sheet $ 620 $ 57 $ 1,237 $ 63 Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet (50 ) (50 ) (59 ) (59 ) Cash collateral (received) posted (299 ) — (862 ) — Net amounts $ 271 $ 7 $ 316 $ 4 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) 2016 2015 2016 2015 Derivatives designated in a fair value hedging relationship Interest rate swap contracts Amount of loss (gain) recognized in Other (income) expense, net on derivatives (1) $ 59 $ (130 ) $ (139 ) $ (97 ) Amount of (gain) loss recognized in Other (income) expense, net on hedged item (1) (60 ) 125 135 91 Derivatives designated in foreign currency cash flow hedging relationships Foreign exchange contracts Amount of gain reclassified from AOCI to Sales (44 ) (170 ) (251 ) (528 ) Amount of loss (gain) recognized in OCI on derivatives 69 17 311 (464 ) 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 ) — (4 ) Amount of loss (gain) recognized in OCI on derivatives — 13 — (5 ) Derivatives not designated in a hedging relationship Foreign exchange contracts Amount of loss (gain) recognized in Other (income) expense, net on derivatives (3) 29 (155 ) (87 ) (360 ) Amount of gain recognized in Sales — — — (1 ) (1) There was $1 million and $5 million of ineffectiveness on the hedge during the third quarter of 2016 and 2015, respectively, and $4 million and $6 million of ineffectiveness on the hedge for the first nine months of 2016 and 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, 2016 , the Company estimates $52 million of pretax net unrealized gains on derivatives maturing within the next 12 months that hedge foreign currency denominated sales over that same period will be reclassified from AOCI to Sales . The amount ultimately reclassified to Sales may differ as foreign exchange rates change. Realized gains and losses are ultimately determined by actual exchange rates at maturity. Investments in Debt and Equity Securities Information on investments in debt and equity securities is as follows: September 30, 2016 December 31, 2015 Fair Value Amortized Cost Gross Unrealized Fair Value Amortized Cost Gross Unrealized ($ in millions) Gains Losses Gains Losses Corporate notes and bonds $ 10,857 $ 10,791 $ 71 $ (5 ) $ 10,259 $ 10,299 $ 7 $ (47 ) U.S. government and agency securities 2,293 2,288 6 (1 ) 1,761 1,767 — (6 ) Commercial paper 1,516 1,516 — — 2,977 2,977 — — Asset-backed securities 1,397 1,394 4 (1 ) 1,284 1,290 — (6 ) Mortgage-backed securities 895 892 4 (1 ) 694 697 1 (4 ) Foreign government bonds 494 493 1 — 607 586 22 (1 ) Equity securities 410 316 102 (8 ) 534 409 125 — $ 17,862 $ 17,690 $ 188 $ (16 ) $ 18,116 $ 18,025 $ 155 $ (64 ) Available-for-sale debt securities included in Short-term investments totaled $5.2 billion at September 30, 2016 . Of the remaining debt securities, $10.4 billion mature within five years. At September 30, 2016 and December 31, 2015 , 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, 2016 December 31, 2015 Assets Investments Corporate notes and bonds $ — $ 10,651 $ — $ 10,651 $ — $ 10,259 $ — $ 10,259 U.S. government and agency securities 30 1,950 — 1,980 — 1,761 — 1,761 Commercial paper — 1,516 — 1,516 — 2,977 — 2,977 Asset-backed securities (1) — 1,265 — 1,265 — 1,284 — 1,284 Mortgage-backed securities (1) — 663 — 663 — 694 — 694 Foreign government bonds — 493 — 493 — 607 — 607 Equity securities 249 — — 249 360 — — 360 279 16,538 — 16,817 360 17,582 — 17,942 Other assets (2) U.S. government and agency securities — 313 — 313 — — — — Mortgage-backed securities (1) — 232 — 232 — — — — Corporate notes and bonds — 206 — 206 — — — — Asset-backed securities (1) — 132 — 132 — — — — Foreign government bonds — 1 — 1 — — — — Equity securities 161 — — 161 155 19 — 174 161 884 — 1,045 155 19 — 174 Derivative assets (3) Purchased currency options — 399 — 399 — 1,041 — 1,041 Interest rate swaps — 158 — 158 — 42 — 42 Forward exchange contracts — 63 — 63 — 154 — 154 — 620 — 620 — 1,237 — 1,237 Total assets $ 440 $ 18,042 $ — $ 18,482 $ 515 $ 18,838 $ — $ 19,353 Liabilities Other liabilities Contingent consideration $ — $ — $ 894 $ 894 $ — $ — $ 590 $ 590 Derivative liabilities (3) Forward exchange contracts — 55 — 55 — 38 — 38 Written currency options — 1 — 1 — 1 — 1 Interest rate swaps — 1 — 1 — 24 — 24 — 57 — 57 — 63 — 63 Total liabilities $ — $ 57 $ 894 $ 951 $ — $ 63 $ 590 $ 653 (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 increase in investments included in Other assets reflects certain assets previously restricted for retiree benefits that became available to fund certain other health and welfare benefits during the second quarter of 2016 (see Note 12). (3) 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 2016 . As of September 30, 2016 , Cash and cash equivalents of $7.9 billion included $7.2 billion of cash equivalents (considered Level 2 in the fair value hierarchy). Contingent Consideration Summarized information about the changes in liabilities for contingent consideration is as follows: Nine Months Ended September 30, ($ in millions) 2016 2015 Fair value January 1 $ 590 $ 428 Changes in fair value (1) 29 8 Additions 300 228 Payments (25 ) (50 ) Fair value September 30 $ 894 $ 614 (1) Recorded in Research and development expenses and Materials and production costs. The Company recognized liabilities for contingent consideration in 2016 related to the acquisitions of IOmet and Afferent and in 2015 related to the acquisitions of Cubist and cCAM (see Note 2), reflected as “Additions” in the table above. The payments of contingent consideration reflected in the table above for 2016 relate to the first commercial sale of Zerbaxa in the European Union and for 2015 relate 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, 2016 , was $27.0 billion compared with a carrying value of $25.1 billion and at December 31, 2015 , was $27.0 billion compared with a carrying value of $26.4 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, 2016 , the Company’s total net accounts receivable outstanding for more than one year were approximately $125 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. 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, 2016 and December 31, 2015 , the Company had received cash collateral of $299 million and $862 million , respectively, from various counterparties and the obligation to return such collateral is recorded in Accrued and other current liabilities . The Company had not advanced any cash collateral to counterparties as of September 30, 2016 or December 31, 2015 . |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of: ($ in millions) September 30, 2016 December 31, 2015 Finished goods $ 1,421 $ 1,343 Raw materials and work in process 4,432 4,374 Supplies 175 168 Total (approximates current cost) 6,028 5,885 Increase to LIFO costs 320 384 $ 6,348 $ 6,269 Recognized as: Inventories $ 5,244 $ 4,700 Other assets 1,104 1,569 Amounts recognized as Other assets are comprised almost entirely of raw materials and work in process inventories. At September 30, 2016 and December 31, 2015 , these amounts included $1.0 billion and $1.5 billion , respectively, of inventories not expected to be sold within one year. In addition, these amounts included $56 million and $63 million at September 30, 2016 and December 31, 2015 , respectively, of inventories produced in preparation for product launches. |
Other Intangibles
Other Intangibles | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangibles | 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. See Note 2 for information on intangible assets acquired as a result of business acquisitions in 2016. During the first nine months of 2016, the Company recorded $347 million of intangible asset impairment charges within Materials and production costs. Of this amount, $252 million relates to Zontivity , a product for the reduction of thrombotic cardiovascular events in patients with a history of myocardial infarction or with peripheral arterial disease. In March 2016, following several business decisions that reduced sales expectations for Zontivity in the United States and Europe, the Company lowered its cash flow projections for Zontivity . The Company utilized market participant assumptions and considered several different scenarios to determine the fair value of the intangible asset related to Zontivity that, when compared with its related carrying value, resulted in the impairment charge noted above. In addition, the Company wrote-off $95 million that had been capitalized in connection with in-licensed products Grastek and Ragwitek , allergy immunotherapy tablets that, for business reasons, the Company has determined it will return to the licensor. Also, during the first nine months of 2016, the Company recorded $225 million of IPR&D impairment charges within Research and development expenses. Of this amount, $112 million relates to a charge for an in-licensed program for house dust mite allergies that, for business reasons, will be returned to the licensor. The remaining IPR&D impairment charges primarily relate to deprioritized pipeline programs that were deemed to have no alternative use during the period, including a $79 million impairment charge for MK-8342B, an investigational candidate for contraception. During the first nine months of 2015, the Company recorded $62 million of IPR&D impairment charges. Of this amount, $50 million relates to the surotomycin clinical development program. 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. The Company may recognize additional non-cash impairment charges in the future related to other marketed products or pipeline programs and such charges could be material. |
Joint Ventures and Other Equity
Joint Ventures and Other Equity Method Affiliates | 9 Months Ended |
Sep. 30, 2016 | |
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 (SPMSD) and certain investment funds. Equity income from affiliates was $21 million and $63 million for the third quarter of 2016 and 2015 , respectively, and $59 million and $210 million for the first nine months of 2016 and 2015, respectively, and is included in Other (income) expense, net (see Note 13). Sanofi Pasteur MSD In March 2016, Merck and Sanofi Pasteur announced their intention to end their joint vaccines operations in Europe. The joint venture Sanofi Pasteur MSD (SPMSD), owned equally by Sanofi Pasteur and Merck, was created in 1994 to develop and commercialize vaccines originating from both companies’ pipelines to improve and promote public health in 19 European countries. Sanofi Pasteur and Merck expect the project to be completed by the end of 2016, subject to local labor laws and regulations and regulatory approvals. Upon concluding the joint venture, Merck plans to integrate its European vaccine business into its operations, manage its product portfolio and pursue its growth strategy in Europe. SPMSD vaccine sales were $351 million and $318 million for the third quarter of 2016 and 2015 , respectively, and were $725 million and $655 million for the first nine months of 2016 and 2015, respectively. 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. (the Partnership). Astra contributed the net assets of its wholly owned subsidiary, Astra USA, Inc., to the Partnership. The Partnership, renamed AstraZeneca LP (AZLP) upon Astra’s 1999 merger with Zeneca Group Plc, became the exclusive distributor of the products for which KBI retained rights. In connection with AstraZeneca’s 2014 exercise of its option to purchase Merck’s interest in KBI, the Company deferred $327 million of the exercise price, which reflected an estimate of the fair value of Merck’s interest in Nexium and Prilosec. This amount, which is subject to a true-up in 2018 based on actual sales from closing in 2014 to June 2018, was deferred and recognized over time in Other (income) expense, net as the contingency was eliminated as sales occurred. The deferred income amount has been fully amortized based on the sales performance of Nexium and Prilosec subsequent to the 2014 option exercise. Beginning in the first quarter of 2016, the Company is recognizing income and a corresponding receivable for amounts that will be due to Merck from AstraZeneca based on the sales performance of Nexium and Prilosec subject to the true-up in June 2018. The Company recognized $76 million of such income in the first nine months of 2016. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt In November 2016, the Company issued €1.0 billion principal amount of senior unsecured notes consisting of €500 million principal amount of 0.50% notes due 2024 and €500 million principal amount of 1.375% notes due 2036. The Company intends to use the net proceeds of the offering of $1.1 billion for general corporate purposes, including without limitation the repayment of outstanding commercial paper borrowings and other indebtedness with upcoming maturities. In June 2016, the Company terminated its existing credit facility and entered into a new $6.0 billion , five -year credit facility that matures in June 2021. The facility provides backup liquidity for the Company’s commercial paper borrowing facility and is to be used for general corporate purposes. The Company has not drawn funding from this facility. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
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. 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 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 was a defendant in a number of putative class action lawsuits alleging economic injury as a result of the purchase of Vioxx , all but one of which have been settled. Under the settlement, Merck agreed to 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 claims review process has been completed with the Company paying approximately $700,000 . The amount of attorneys’ fees to be paid is yet to be determined. Merck is also a defendant in a lawsuit (together with the above-referenced lawsuits, the Vioxx Product Liability Lawsuits) brought by the Attorney General of Utah. The lawsuit is pending in Utah state court. Utah alleges that Merck misrepresented the safety of Vioxx and seeks damages and penalties under the Utah False Claims Act. No trial date has been set. Merck recently reached agreements with the Attorneys General in Alaska and Montana to settle their state consumer protection act cases against the Company for $15.25 million and $16.7 million , respectively. As a result, Alaska’s action was dismissed with prejudice on September 30, 2016, and Montana’s action was dismissed with prejudice on October 6, 2016. Shareholder Lawsuits As previously disclosed, in addition to the Vioxx Product Liability Lawsuits, various putative class actions and individual lawsuits were 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 were coordinated in a multidistrict litigation in the U.S. District Court for the District of New Jersey before Judge Stanley R. Chesler. As previously disclosed, Merck has reached a resolution of the Vioxx securities class action for which a reserve was recorded in 2015 and under which Merck created a settlement fund in 2016 of $830 million (the Settlement Class Fund) and agreed to pay an additional amount for approved attorneys’ fees and expenses up to $232 million (the Fee/Expense Fund). On June 28, 2016, the court approved the settlement and awarded attorneys’ fees and expenses in the amount of $222 million ; the remaining amount of the Fee/Expense Fund will be added to the Settlement Class Fund. The Company paid the total settlement amount into escrow in April 2016. After available funds under certain insurance policies, Merck’s net cash payment for the settlement and fees was approximately $680 million . The settlement covers all claims relating to Vioxx by settlement class members who purchased Merck securities between May 21, 1999, and October 29, 2004. The settlement is not an admission of wrongdoing and, as part of the settlement agreement, defendants continue to deny the allegations. In addition, Merck has reached a resolution of the above referenced individual securities lawsuits filed by foreign and domestic institutional investors, which were also consolidated with the Vioxx Securities Lawsuits. As a result of these settlements, Merck has resolved all of the Vioxx Securities Lawsuits. Insurance As a result of the previously disclosed insurance arbitration, the Company’s insurers paid insurance proceeds of approximately $380 million in connection with the settlement of the class action. The Company also has Directors and Officers insurance coverage applicable to the Vioxx Securities Lawsuits with remaining stated upper limits of approximately $145 million , which the Company has not received. There are disputes with the insurers about the availability of the Company’s Directors and Officers insurance coverage for these claims. The amounts actually recovered under the Directors and Officers 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 and Europe (collectively, the Vioxx International Lawsuits). The litigation in these jurisdictions is generally in procedural stages and Merck expects that the litigation may continue for a number of years. Reserves The Company has an immaterial reserve with respect to certain Vioxx Product Liability Lawsuits. The Company has established no other liability reserves for, and believes that it has meritorious defenses to, the remaining Vioxx Product Liability Lawsuits and Vioxx International Lawsuits and will vigorously defend against them. 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, 2016 , approximately 4,310 cases are filed and pending against Merck in either federal or state court. In approximately 20 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 . In addition, plaintiffs in approximately 4,290 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 Judicial Panel on Multidistrict Litigation (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 and included over 1,200 plaintiffs. In July 2014, Merck elected to proceed with the ONJ Master Settlement Agreement at a reduced funding level of $27.3 million since the participation level was approximately 95% . Merck has fully funded the ONJ Master Settlement Agreement and the escrow agent under the agreement has been making settlement payments to qualifying plaintiffs. 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 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, in June 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, in March 2014, the Femur Fracture MDL court dismissed with prejudice approximately 650 cases on preemption grounds. Plaintiffs in approximately 515 of those cases are appealing that decision to the U.S. Court of Appeals for the Third Circuit. The Femur Fracture MDL court has since dismissed without prejudice another approximately 540 cases pending plaintiffs’ appeal of the preemption ruling to the Third Circuit. On June 30, 2016, the Third Circuit heard oral argument on plaintiffs’ appeal of the preemption ruling and the parties await the decision. In addition, in June 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, 2016 , three cases were pending in the Femur Fracture MDL, excluding the 515 cases dismissed with prejudice on preemption grounds that are pending appeal and the 540 cases dismissed without prejudice that are also pending the aforementioned appeal. As of September 30, 2016 , approximately 2,940 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, and Merck has recently begun selecting the next group of cases to be reviewed through fact discovery. As of September 30, 2016 , approximately 285 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 in February 2015 and the jury returned a verdict in Merck’s favor in April 2015, and plaintiff has appealed that verdict to the California appellate court. The next Femur Fracture trial in California that was scheduled to begin in April 2016, was stayed at plaintiffs’ request and a new trial date has not been set. 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, 2016 , approximately 1,140 product user claims have been served on Merck alleging generally that use of Januvia and/or Janumet caused the development of pancreatic cancer and other injuries. These complaints were filed in several different state and federal courts. Most of the claims were filed 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” (MDL). The MDL 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. The majority of claims not filed in the MDL were filed in the Superior Court of California, County of Los Angeles (California State Court). As of September 30, 2016 , nine product users have claims pending against Merck in state courts other than the California State Court. In November 2015, the MDL and California State Court – in separate opinions – granted summary judgment to defendants on grounds of preemption. Of the approximately 1,140 served product user claims, these rulings resulted in the dismissal of approximately 1,100 product user claims. Plaintiffs are appealing the MDL and California State Court preemption rulings. In addition to the claims noted above, the Company has agreed, as of September 30, 2016 , to toll the statute of limitations for approximately 50 additional claims. The Company intends to continue defending against these lawsuits. 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, 2016 , approximately 1,370 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 50 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 Brian Cogan of the Eastern District of New York. The matters pending in state court in New Jersey have been consolidated before Judge Mayer in Middlesex County. In addition, there is one matter pending in state court in Massachusetts and one matter pending in state court in New York. 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. Commercial and Other Litigation K-DUR Antitrust Litigation As previously disclosed, in June 1997 and January 1998, Schering-Plough Corporation (Schering-Plough) settled patent litigation with Upsher-Smith, Inc. (Upsher-Smith) and ESI Lederle, Inc. (Lederle), respectively, relating to generic versions of Schering-Plough’s long-acting potassium chloride product supplement used by cardiac patients, for which Lederle and Upsher-Smith had filed Abbreviated New Drug Applications (ANDAs). Following the commencement of an administrative proceeding by the U.S. Federal Trade Commission (FTC) in 2001 alleging anti-competitive effects from those settlements (which was resolved in Schering-Plough’s favor), putative class and non-class action suits were filed on behalf of direct and indirect purchasers of K-DUR against Schering-Plough, Upsher-Smith and Lederle and were consolidated in a multidistrict litigation in the U.S. District Court for the District of New Jersey. These suits claimed violations of federal and state antitrust laws, as well as other state statutory and common law causes of action, and sought unspecified damages. In April 2008, the indirect purchasers voluntarily dismissed their case. In March 2010, the District Court granted summary judgment to the defendants on the remaining lawsuits and dismissed the matter in its entirety. In July 2012, the Third Circuit Court of Appeals reversed the District Court’s grant of summary judgment and remanded the case for further proceedings. At the same time, the Third Circuit upheld a December 2008 decision by the District Court certifying certain direct purchaser plaintiffs’ claims as a class action. In August 2012, the Company filed a petition for certiorari with the U.S. Supreme Court seeking review of the Third Circuit’s decision. In June 2013, the Supreme Court granted that petition, vacated the judgment of the Third Circuit, and remanded the case for further consideration in light of its decision in FTC v. Actavis, Inc. That decision held that whether a so-called “reverse payment” - i.e., a payment from the holder of a pharmaceutical patent to a party challenging the patent made in connection with a settlement of their dispute - violates the antitrust laws should be determined on the basis of a “rule of reason” analysis. In September 2013, the Third Circuit returned the case to the District Court for further proceedings in accordance with the Actavis standard. In April 2015, the Company filed motions for summary judgment. On February 25, 2016, the District Court denied the Company’s motion for summary judgment relating to all of the direct purchasers’ claims concerning the settlement with Upsher-Smith and granted the Company’s motion for summary judgment relating to all of the direct purchasers’ claims concerning the settlement with Lederle. In anticipation of trial, which is expected to occur in the spring of 2017, the parties on October 31, 2016, filed motions to exclude certain expert opinions and defendants filed a motion for summary judgment. Patent Litigation From time to time, generic manufacturers of pharmaceutical products file ANDAs 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 , 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 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 appealed this decision, and the appeal was heard in March 2016. In May 2016, the parties reached a settlement whereby Xellia can launch its generic version in August 2017, or earlier under certain conditions. 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 trial in this matter is currently scheduled to begin in November 2016. 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. 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. The trial in this matter was held in April 2016 and, in October 2016, the district court ruled that the patent is valid and infringed. 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. 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. The trial in this matter was held in June 2016 and the Company is currently awaiting the court’s decision. 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. The trial in this matter was held in June 2016 and the Company is currently awaiting the court’s decision. 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 the Company believes 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. In March 2016, the Company filed a lawsuit against Roxane Laboratories, Inc. (Roxane) 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 Roxane’s application until August 2018 or until an adverse court decision, if any, whichever may occur earlier. In February 2016, the Company filed a lawsuit against Par Sterile Products LLC, Par Pharmaceutical, Inc., Par Pharmaceutical Companies, Inc. and Par Pharmaceutical Holdings, Inc. (collectively, Par) 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 . In October 2016, the parties reached a settlement whereby Par can launch its generic version in January 2023, or earlier under certain conditions. NuvaRing — In December 2013, the Company filed a lawsuit against a subsidiary of Allergan plc 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 was held in January 2016. In August 2016, the district court ruled that the patent was invalid and the Company has appealed this decision. 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 . The Company had been involved in ongoing litigation in Canada with Apotex concerning the Company’s patents related to lovastatin, alendronate, and norfloxacin. All of the litigation has now been either settled or concluded. As a consequence of the conclusion of all of this litigation, in the first nine months of 2016, the Company recorded a net gain of $117 million included in Other (income) expense, net (see Note 13). 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 are valid. The Company received the Opposition Division’s written opinion in September 2014 and the Company submitted its substantive appeal in February 2015. In April 2014, the Company, and three other companies, opposed another European patent (EP 2 161 336) (’336) owned by BMS and Ono that it believes is invalid. The ’336 patent, as granted, broadly claimed anti-PD-1 antibodies that could include Keytruda . In February 2015 and May 2016, BMS and Ono submitted requests to amend the claims of the ’336 patent. During a hearing in July 2016, the EPO allowed the May 2016 amendment and, as a result, the claims of the ’336 patent no longer broadly claim anti-PD-1 antibodies such as Keytruda . In May 2014, the Company filed a lawsuit in the UK seeking revocation of the UK national versions of both the ’878 and ’336 patents. In July 2014, Ono and BMS sued the Company seeking a declaration that the ’878 patent would be infringed in the UK by the marketing of Keytruda . The Company has sought a declaration from the UK court that Keytruda will not infringe the ’336 patent in the UK. BMS and Ono notified the Company of their request to amend the claims of the EPO ’336 patent and of their intention to seek permission from the court to similarly amend the UK national version so that the claims of the ’336 patent would no longer broadly claim anti-PD-1 antibodies such as Keytruda . A trial was held in the UK in July 2015. At that trial, the issues of validity and infringement of the ’878 patent were heard at the same time by the court. In October 2015, the court issued its judgment, finding the ’878 patent valid and infringed. Merck appealed this judgment. The appeal is scheduled to be heard in March 2017. BMS and Ono have concurrently started a proceeding to determine the amount of damages and royalties the Company would pay should the appeal be denied. A hearing in that proceeding is scheduled for November 2017. In February 2015, the Company filed lawsuits in the Netherlands seeking revocation of the Dutch national versions of both the ’878 and ’336 patents. BMS and Ono amended the claims of the ’336 patent so that the claims of the ’336 patent no longer broadly claim anti-PD-1 antibodies such as Keytruda . Trial regarding the validity and infringement of the ’878 patent was held in January 2016. In June 2016, the District Court in The Hague issued its judgment finding the Dutch ‘878 patent valid and infringed. The Company has appealed this judgment. In December 2015, BMS and Ono filed lawsuits against the Company in France, Ireland, Spain, Switzerland and Germany alleging infringement of the ’878 patent. In France, BMS and Ono filed for preliminary relief seeking payment of damages while the case is pending. A hearing on this preliminary relief was held in February 2016 and BMS’s and Ono’s request for preliminary relief was denied. The trial regarding infringement and validity of the French version of the ’878 patent is scheduled for November 2017. A trial concerning the infringement of the German version of the ’878 patent is currently scheduled to begin in July 2017. In October 2016, the Company filed a lawsuit in Spain seeking the revocation of the Spanish version of the ’878 patent. Dates for trials regarding the validity and infringement of the Irish, Spanish and Swiss national versions of the ’878 patent have not yet been scheduled. The Company continues to believe the ’878 patent is invalid. The Company can file lawsuits seeking revocation of the ’878 patents in other national courts in Europe at any time, and Ono and BMS can file patent infringement actions against the Company in other national courts in Europe at or around the time the Company launches Keytruda . If a national court determines that the Company infringed a valid claim in the ’878 patent, Ono and BMS may be entitled to monetary damages, including royalties on future sales of Keytruda , and potentially could seek an injunction to prevent the Company from marketing Keytruda in that country. The United States Patent and Trademark Office (USPTO) granted US Patent Nos. 8,728,474 to Ono and 8,779,105 to Ono and BMS in May 2014. These patents are equivalent to the ’878 and ’336 patents, respectively. In September 2014, BMS and Ono filed a lawsuit in the United States alleging that, by marketing Keytruda , the Company will infringe US Patent No. 8,728,474. BMS and Ono are not seeking to prevent or stop the marketing of Keytruda in the United States. The trial in this matter is currently scheduled to begin in April 2017. The Company believes that the 8,728,474 patent and the 8,779,105 patent are both invalid. In June 2015 and July 2015, Ono filed lawsuits in the United States alleging |
Equity
Equity | 9 Months Ended |
Sep. 30, 2016 | |
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, 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 Other comprehensive loss, net of tax — — — — (250 ) — — — (250 ) 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 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 Balance at January 1, 2016 3,577 $ 1,788 $ 40,222 $ 45,348 $ (4,148 ) 796 $ (38,534 ) $ 91 $ 44,767 Net income attributable to Merck & Co., Inc. — — — 4,515 — — — — 4,515 Other comprehensive loss, net of tax — — — — (104 ) — — — (104 ) Cash dividends declared on common stock — — — (3,835 ) — — — — (3,835 ) Treasury stock shares purchased — — — — — 44 (2,418 ) — (2,418 ) Share-based compensation plans and other — — (325 ) — — (25 ) 1,235 — 910 Changes in noncontrolling ownership interests — — — — — — — 124 124 Net income attributable to noncontrolling interests — — — — — — — 13 13 Distributions attributable to noncontrolling interests — — — — — — — (15 ) (15 ) Balance at September 30, 2016 3,577 $ 1,788 $ 39,897 $ 46,028 $ (4,252 ) 815 $ (39,717 ) $ 213 $ 43,957 |
Share-Based Compensation Plans
Share-Based Compensation Plans | 9 Months Ended |
Sep. 30, 2016 | |
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. The Company also issues RSUs to employees of certain of the Company’s equity method investees. In addition, employees and non-employee directors 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 Condensed Consolidated Statement of Income: Three Months Ended Nine Months Ended ($ in millions) 2016 2015 2016 2015 Pretax share-based compensation expense $ 77 $ 75 $ 225 $ 221 Income tax benefit (24 ) (23 ) (69 ) (69 ) Total share-based compensation expense, net of taxes $ 53 $ 52 $ 156 $ 152 Amounts in the table above do not reflect share-based compensation costs to settle non-vested Afferent and Cubist equity awards attributable to postcombination service that were recognized as transaction expense in 2016 and 2015, respectively (see Note 2). During the first nine months of 2016 and 2015 , the Company granted 6 million RSUs with a weighted-average grant date fair value of $54.61 per RSU and 4 million RSUs with a weighted-average grant date fair value of $59.79 per RSU, respectively. During the first nine months of 2016 and 2015 , the Company granted 6 million stock options with a weighted-average exercise price of $54.62 per option and 5 million stock options with a weighted-average exercise price of $59.82 per option, respectively. The weighted-average fair value of options granted for the first nine months of 2016 and 2015 was $5.89 and $6.46 per option, respectively, and was determined using the following assumptions: Nine Months Ended September 30, 2016 2015 Expected dividend yield 3.8 % 4.1 % Risk-free interest rate 1.4 % 1.7 % Expected volatility 19.6 % 19.9 % Expected life (years) 6.2 6.2 At September 30, 2016 , there was $524 million of total pretax unrecognized compensation expense related to nonvested stock options, RSU and PSU awards which will be recognized over a weighted-average period of 2.1 years . For segment reporting, share-based compensation costs are unallocated expenses. |
Pension and Other Postretiremen
Pension and Other Postretirement Benefit Plans | 9 Months Ended |
Sep. 30, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Pension and Other Postretirement Benefit Plans | Pension and Other Postretirement Benefit Plans The Company has defined benefit pension plans covering eligible employees in the United States and in certain of its international subsidiaries. The net periodic benefit cost (credit) of such plans consisted of the following components: Three Months Ended Nine Months Ended 2016 2015 2016 2015 ($ in millions) U.S. International U.S. International U.S. International U.S. International Service cost $ 66 $ 59 $ 65 $ 61 $ 212 $ 179 $ 230 $ 190 Interest cost 116 51 108 52 342 155 326 156 Expected return on plan assets (203 ) (95 ) (203 ) (95 ) (623 ) (288 ) (614 ) (286 ) Net amortization 18 18 33 26 48 55 119 79 Termination benefits 6 1 2 — 11 2 20 1 Curtailments 3 (2 ) (1 ) (2 ) 3 (1 ) (10 ) (3 ) Settlements — — — 1 — — — 4 $ 6 $ 32 $ 4 $ 43 $ (7 ) $ 102 $ 71 $ 141 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 (credit) of such plans consisted of the following components: Three Months Ended Nine Months Ended ($ in millions) 2016 2015 2016 2015 Service cost $ 14 $ 22 $ 41 $ 61 Interest cost 19 28 62 83 Expected return on plan assets (19 ) (36 ) (88 ) (107 ) Net amortization (25 ) (13 ) (78 ) (44 ) Termination benefits 1 1 1 6 Curtailments (5 ) (1 ) (7 ) (8 ) $ (15 ) $ 1 $ (69 ) $ (9 ) In connection with restructuring actions (see Note 3), 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. The Company now anticipates that contributions to its international pension plans will approximate $450 million during 2016. As a result of certain allowable administrative actions that occurred in June 2016, approximately $990 million of other postretirement benefit plan assets are no longer restricted for retiree benefits and became available to fund certain other health and welfare benefits. |
Other (Income) Expense, Net
Other (Income) Expense, Net | 9 Months Ended |
Sep. 30, 2016 | |
Other Income and Expenses [Abstract] | |
Other (Income) Expense, Net | Other (Income) Expense, Net Other (income) expense, net, consisted of: Three Months Ended Nine Months Ended ($ in millions) 2016 2015 2016 2015 Interest income $ (87 ) $ (68 ) $ (244 ) $ (214 ) Interest expense 170 165 513 503 Exchange losses 3 228 79 1,038 Equity income from affiliates (21 ) (63 ) (59 ) (210 ) Other, net (43 ) (432 ) (201 ) (493 ) $ 22 $ (170 ) $ 88 $ 624 The higher exchange losses in 2015 compared with 2016 are primarily related to the Venezuelan Bolívar. 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 then official (CENCOEX) rate of 6.30 VEF (Bolívar Fuertes) per U.S. dollar. Accordingly, during the second quarter of 2015, the Company recorded a charge of $715 million to devalue its net monetary assets in Venezuela to an amount that represented the Company’s estimate of the U.S. dollar amount that would ultimately be collected. Since January 2010, Venezuela has been designated hyperinflationary and, as a result, local foreign operations are remeasured in U.S. dollars with the impact recorded in results of operations. During the third quarter of 2015, the Company recorded additional exchange losses of $138 million in the aggregate reflecting the ongoing effect of translating transactions and net monetary assets consistent with the second quarter of 2015. The declines in equity income from affiliates in the third quarter and first nine months of 2016 as compared with the corresponding periods of 2015 were driven primarily by lower equity income from certain research investment funds. Other, net (as reflected in the table above) in the first nine months of 2016 includes a gain of $117 million related to the settlement of certain patent litigation (see Note 9). Other, net 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 2). 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. Interest paid for the nine months ended September 30, 2016 and 2015 was $470 million and $452 million , respectively. |
Taxes on Income
Taxes on Income | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Taxes on Income | Taxes on Income The effective income tax rates of 24.2% and 23.6% for the third quarter of 2016 and 2015 , respectively, and 24.7% and 24.2% for the first nine months of 2016 and 2015, 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 2016 also reflects the beneficial impact of orphan drug federal income tax credits, primarily for Keytruda . The effective income tax rate for the first nine months of 2015 reflects the favorable impact of a net benefit of $370 million related to the settlement of certain federal income tax issues. In addition, the effective income tax rate for the first nine months of 2015 reflects the unfavorable effects of non-tax deductible foreign exchange losses related to Venezuela (see Note 13) and a $75 million out-of-period discrete adjustment recorded in the second quarter related to deferred taxes associated with prior year restructuring activities. Management considered the discrete adjustment to be immaterial to current and prior period financial statements as reported. The Company is under examination by numerous tax authorities in various jurisdictions globally. The ultimate finalization of the Company’s examinations with relevant taxing authorities can include formal administrative and legal proceedings, which could have a significant impact on the timing of the reversal of unrecognized tax benefits. The Company believes that its reserves for uncertain tax positions are adequate to cover existing risks or exposures. However, there is one item that is currently under discussion with the Internal Revenue Service relating to the 2006 through 2008 examination. The Company has concluded that its position should be sustained upon audit. However, if this item were to result in an unfavorable outcome or settlement, it could have a material adverse impact on the Company’s financial position, liquidity and results of operations. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The calculations of earnings per share are as follows: Three Months Ended Nine Months Ended ($ and shares in millions except per share amounts) 2016 2015 2016 2015 Net income attributable to Merck & Co., Inc. $ 2,184 $ 1,826 $ 4,515 $ 3,465 Average common shares outstanding 2,765 2,814 2,769 2,825 Common shares issuable (1) 21 22 22 25 Average common shares outstanding assuming dilution 2,786 2,836 2,791 2,850 Basic earnings per common share attributable to Merck & Co., Inc. common shareholders $ 0.79 $ 0.65 $ 1.63 $ 1.23 Earnings per common share assuming dilution attributable to Merck & Co., Inc. common shareholders $ 0.78 $ 0.64 $ 1.62 $ 1.22 (1) Issuable primarily under share-based compensation plans. For the three months ended September 30, 2016 and 2015 , 4 million and 10 million , respectively, and for the first nine months of 2016 and 2015, 13 million and 7 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, 2016 | |
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, 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 ) (1) (16 ) (2) 46 (3) — (141 ) Tax 60 6 (22 ) — 44 Reclassification adjustments, net of taxes (111 ) (10 ) 24 — (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 ) Balance July 1, 2016, net of taxes $ 111 $ 167 $ (2,543 ) $ (1,821 ) $ (4,086 ) Other comprehensive income (loss) before reclassification adjustments, pretax (69 ) (22 ) (177 ) 70 (198 ) Tax 24 (3 ) 21 12 54 Other comprehensive income (loss) before reclassification adjustments, net of taxes (45 ) (25 ) (156 ) 82 (144 ) Reclassification adjustments, pretax (45 ) (1) (5 ) (2) 11 (3) — (39 ) Tax 16 — 1 — 17 Reclassification adjustments, net of taxes (29 ) (5 ) 12 — (22 ) Other comprehensive income (loss), net of taxes (74 ) (30 ) (144 ) 82 (166 ) Balance September 30, 2016, net of taxes $ 37 $ 137 $ (2,687 ) $ (1,739 ) $ (4,252 ) Nine Months Ended September 30, ($ in millions) Derivatives Investments Employee Benefit Plans Cumulative Translation Adjustment Accumulated Other Comprehensive Income (Loss) 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 ) (1) (78 ) (2) 154 (3) — (458 ) Tax 187 26 (64 ) — 149 Reclassification adjustments, net of taxes (347 ) (52 ) 90 — (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 ) Balance January 1, 2016, net of taxes $ 404 $ 41 $ (2,407 ) $ (2,186 ) $ (4,148 ) Other comprehensive income (loss) before reclassification adjustments, pretax (311 ) 108 (395 ) 424 (174 ) Tax 109 8 88 23 228 Other comprehensive income (loss) before reclassification adjustments, net of taxes (202 ) 116 (307 ) 447 54 Reclassification adjustments, pretax (254 ) (1) (26 ) (2) 25 (3) — (255 ) Tax 89 6 2 — 97 Reclassification adjustments, net of taxes (165 ) (20 ) 27 — (158 ) Other comprehensive income (loss), net of taxes (367 ) 96 (280 ) 447 (104 ) Balance September 30, 2016, net of taxes $ 37 $ 137 $ (2,687 ) $ (1,739 ) $ (4,252 ) (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, 2016 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company’s operations are principally managed on a products basis and include the Pharmaceutical, Animal Health, Alliances and Healthcare Services operating segments. The Animal Health, Healthcare Services 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 Company’s Healthcare Services segment provides services and solutions that focus on engagement, health analytics and clinical services to improve the value of care delivered to patients. During the third quarter of 2016, the Company made changes to the composition of the Animal Health segment that resulted in the inclusion of certain revenues and costs that were previously included in non-segment revenues and profits. Prior periods have been recast to reflect these changes on a comparable basis. Sales of the Company’s products were as follows: Three Months Ended Nine Months Ended ($ in millions) 2016 2015 2016 2015 Primary Care and Women’s Health Cardiovascular Zetia $ 671 $ 633 $ 1,985 $ 1,836 Vytorin 273 302 843 942 Diabetes Januvia 1,006 1,014 2,976 2,942 Janumet 548 562 1,624 1,625 General Medicine and Women’s Health NuvaRing 195 190 571 538 Implanon/Nexplanon 148 176 446 437 Dulera 97 133 331 383 Follistim AQ 101 95 268 288 Hospital and Specialty Hepatitis Zepatier 164 — 326 — HIV Isentress 372 377 1,050 1,137 Hospital Acute Care Cubicin 320 325 969 805 Noxafil 147 132 434 360 Invanz 152 153 409 424 Cancidas 142 139 406 436 Bridion 139 89 343 262 Primaxin 77 75 231 228 Immunology Remicade 311 442 999 1,398 Simponi 193 178 581 505 Oncology Keytruda 356 159 919 352 Emend 137 141 405 396 Temodar 78 83 216 238 Diversified Brands Respiratory Singulair 239 201 705 658 Nasonex 94 121 425 625 Other Cozaar/Hyzaar 131 150 389 524 Arcoxia 114 123 342 361 Fosamax 68 86 217 277 Zocor 54 56 150 168 Vaccines (1) Gardasil/Gardasil 9 860 625 1,631 1,410 ProQuad/M-M-R II /Varivax 496 390 1,236 1,096 RotaTeq 171 160 489 441 Zostavax 190 179 464 503 Pneumovax 23 175 138 403 354 Other pharmaceutical (2) 1,224 1,298 3,464 3,806 Total Pharmaceutical segment sales 9,443 8,925 26,247 25,755 Other segment sales (3) 977 903 2,862 2,745 Total segment sales 10,420 9,828 29,109 28,500 Other (4) 116 245 583 783 $ 10,536 $ 10,073 $ 29,692 $ 29,283 (1) These amounts do not reflect sales of vaccines sold in most major European markets through the Company’s joint venture, SPMSD, 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 SPMSD . In March 2016, Merck and Sanofi announced their intent to end the SPMSD joint venture (see Note 7). (2) Other pharmaceutical primarily reflects sales of other human health pharmaceutical products, including products within the franchises not listed separately . (3) Represents the non-reportable segments of Animal Health, Healthcare Services and Alliances. (4) Other is primarily comprised of miscellaneous corporate revenues, including revenue hedging activities, as well as third-party manufacturing sales . Other in the first nine months of 2016 also includes $75 million related to the sale of the U.S. marketing rights to certain products (see Note 2). A reconciliation of segment profits to Income before taxes is as follows: Three Months Ended Nine Months Ended ($ in millions) 2016 2015 2016 2015 Segment profits: Pharmaceutical segment $ 6,162 $ 5,641 $ 16,698 $ 16,088 Other segments 389 394 1,129 1,208 Total segment profits 6,551 6,035 17,827 17,296 Other profits 21 204 341 582 Unallocated: Interest income 87 68 244 214 Interest expense (170 ) (165 ) (513 ) (503 ) Equity income from affiliates (27 ) 25 (13 ) 161 Depreciation and amortization (365 ) (381 ) (1,228 ) (1,169 ) Research and development (1,444 ) (1,291 ) (4,651 ) (4,310 ) Amortization of purchase accounting adjustments (772 ) (1,180 ) (2,932 ) (3,658 ) Restructuring costs (161 ) (113 ) (386 ) (386 ) Gain on sale of certain migraine clinical development programs 40 250 40 250 Foreign currency devaluation related to Venezuela — — — (715 ) Other unallocated, net (873 ) (1,055 ) (2,714 ) (3,177 ) $ 2,887 $ 2,397 $ 6,015 $ 4,585 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 are primarily comprised of miscellaneous corporate profits, as well as operating profits related to third-party manufacturing sales. Other unallocated, net includes expenses from corporate and manufacturing cost centers, goodwill and product intangible asset impairment charges, gains or losses on sales of businesses, expense or income related to changes in the estimated fair value of contingent consideration, and other miscellaneous income or expense items. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recently Adopted and Issued Accounting Standards | Recently Adopted Accounting Standards In the first quarter of 2016, the Company adopted accounting guidance issued by the Financial Accounting Standards Board (FASB) in April 2015, which requires debt issuance costs to be presented as a direct deduction from the carrying amount of that debt on the balance sheet as opposed to being presented as a deferred charge. Approximately $100 million of debt issuance costs were reclassified in the first quarter of 2016 as a result of the adoption of the new standard. Prior period amounts have been recast to conform to the new presentation. In the second quarter of 2016, the Company elected to early adopt an accounting standards update issued by the FASB in March of 2016 intended to simplify the accounting and reporting for employee share-based payment transactions. Among other provisions, the new standard requires that excess tax benefits and deficiencies that arise upon vesting or exercise of share-based payments be recognized in the income statement (as opposed to previous guidance under which tax effects were recorded to Other paid-in-capital in certain instances). This aspect of the new guidance, which was required to be adopted prospectively, resulted in the recognition of $35 million and $64 million of excess tax benefits in Taxes on income for the third quarter and first nine months of 2016, respectively, arising from share-based payments. The new guidance also amended the presentation of certain share-based payment items in the statement of cash flows. Cash flows related to excess income tax benefits are now classified as an operating activity (formerly included as a financing activity). The Company elected to adopt this aspect of the new guidance prospectively. The standard also clarified that cash payments made to taxing authorities on the employees’ behalf for shares withheld should be presented as a financing activity. This aspect of the guidance was adopted retrospectively; accordingly, the Company reclassified $118 million of such payments from operating activities to financing activities in the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2015 to conform to the current presentation. The Company has elected to continue to estimate the impact of forfeitures when determining the amount of compensation cost to be recognized each period rather than account for them as they occur. Recently Issued Accounting Standards In May 2014, the 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 interim and annual 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. In January 2016, the FASB issued revised guidance for the accounting and reporting of financial instruments. The new guidance requires that equity investments with readily determinable fair values currently classified as available-for-sale be measured at fair value with changes in fair value recognized in net income. The new guidance also simplifies the impairment testing of equity investments without readily determinable fair values and changes certain disclosure requirements. This guidance is effective for interim and annual periods beginning in 2018. Early adoption is not permitted. The Company is currently assessing the impact of adoption on its consolidated financial statements. In February 2016, the FASB issued new accounting guidance for the accounting and reporting of leases. The new guidance requires that lessees recognize a right-of-use asset and a lease liability recorded on the balance sheet for each of its leases (other than leases that meet the definition of a short-term lease). Leases will be classified as either operating or finance. Operating leases will result in straight-line expense in the income statement (similar to current operating leases) while finance leases will result in more expense being recognized in the earlier years of the lease term (similar to current capital leases). The new guidance will be effective for interim and annual periods beginning in 2019. Early adoption is permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements. In June 2016, the FASB issued amended guidance on the accounting for credit losses on financial instruments within its scope. The guidance introduces an expected loss model for estimating credit losses, replacing the incurred loss model. The new guidance also changes the impairment model for available-for-sale debt securities, requiring the use of an allowance to record estimated credit losses (and subsequent recoveries). The new guidance is effective for interim and annual periods beginning in 2020, with earlier application permitted in 2019. The Company is currently evaluating the impact of adoption on its consolidated financial statements. In August 2016, the FASB issued guidance on the classification of certain cash receipts and payments in the statement of cash flows intended to reduce diversity in practice. The guidance is effective for interim and annual periods beginning in 2018. Early adoption is permitted. The guidance is to be applied retrospectively to all periods presented but may be applied prospectively if retrospective application would be impracticable. The Company is currently evaluating the effect of the standard on its Consolidated Statement of Cash Flows. In October 2016, the FASB issued guidance on the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. Under existing guidance, the recognition of current and deferred income taxes for an intra-entity asset transfer is prohibited until the asset has been sold to a third party. The new guidance will require the recognition of the income tax consequences of an intra-entity transfer of an asset (with the exception of inventory) when the intra-entity transfer occurs. The guidance is effective for interim and annual periods beginning in 2018. Early adoption is permitted. The new guidance is to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings in the beginning of the period of adoption. The Company does not anticipate the adoption of the new guidance will have a material effect on its financial statements. |
Legal defense costs | Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable. |
Acquisitions, Divestitures, R25
Acquisitions, Divestitures, Research Collaborations and License Agreements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Schedule of Fair Value of Assets Acquired and Liabilities Assumed | The estimated fair value of assets acquired and liabilities assumed from Cubist is as follows: ($ in 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 IPR&D 50 Other noncurrent assets 184 Current liabilities (1) (233 ) Deferred income tax liabilities (2,519 ) Long-term debt (1,900 ) Other noncurrent liabilities (1) (122 ) Total identifiable net assets 3,661 Goodwill (2) 4,670 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, except per share amounts) 2015 2015 Sales $ 10,073 $ 29,369 Net income attributable to Merck & Co., Inc. 1,833 3,645 Basic earnings per common share attributable to Merck & Co., Inc. common shareholders 0.65 1.29 Earnings per common share assuming dilution attributable to Merck & Co., Inc. common shareholders 0.65 1.28 |
Restructuring (Tables)
Restructuring (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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, 2016 Nine Months Ended September 30, 2016 ($ in millions) Separation Costs Accelerated Depreciation Other Total Separation Costs Accelerated Depreciation Other Total Materials and production $ — $ 18 $ 18 $ 36 $ — $ 69 $ 80 $ 149 Marketing and administrative — 1 — 1 — 8 83 91 Research and development — 14 — 14 — 133 — 133 Restructuring costs 61 — 100 161 172 — 214 386 $ 61 $ 33 $ 118 $ 212 $ 172 $ 210 $ 377 $ 759 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 Materials and production $ — $ 17 $ 53 $ 70 $ — $ 47 $ 233 $ 280 Marketing and administrative — 5 12 17 — 53 17 70 Research and development — 9 8 17 — 25 9 34 Restructuring costs 12 — 101 113 100 — 286 386 $ 12 $ 31 $ 174 $ 217 $ 100 $ 125 $ 545 $ 770 |
Charges and Spending Relating to Restructuring Activities by Program | The following table summarizes the charges and spending relating to restructuring program activities for the nine months ended September 30, 2016 : ($ in millions) Separation Costs Accelerated Depreciation Other Total Restructuring reserves January 1, 2016 $ 592 $ — $ 53 $ 645 Expense 172 210 377 759 (Payments) receipts, net (251 ) — (200 ) (451 ) Non-cash activity — (210 ) (164 ) (374 ) Restructuring reserves September 30, 2016 (1) $ 513 $ — $ 66 $ 579 (1) The remaining cash outlays are expected to be substantially completed by the end of 2017. |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Interest Rate Swaps Held | At September 30, 2016 , the Company was a party to 26 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. ($ in millions) September 30, 2016 Debt Instrument Par Value of Debt Number of Interest Rate Swaps Held Total Swap Notional Amount 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, 2016 December 31, 2015 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 (noncurrent) Other assets $ 158 $ — $ 5,200 $ 42 $ — $ 2,700 Interest rate swap contracts (current) Accrued and other current liabilities — — — — 1 1,000 Interest rate swap contracts (noncurrent) Other noncurrent liabilities — 1 1,000 — 23 3,500 Foreign exchange contracts (current) Other current assets 274 — 4,265 579 — 4,171 Foreign exchange contracts (noncurrent) Other assets 96 — 2,162 386 — 4,136 Foreign exchange contracts (current) Accrued and other current liabilities — 20 845 — 1 77 $ 528 $ 21 $ 13,472 $ 1,007 $ 25 $ 15,584 Derivatives Not Designated as Hedging Instruments Foreign exchange contracts (current) Other current assets $ 92 $ — $ 6,157 $ 212 $ — $ 8,783 Foreign exchange contracts (noncurrent) Other assets — — — 18 — 179 Foreign exchange contracts (current) Accrued and other current liabilities — 35 4,062 — 37 2,508 Foreign exchange contracts (noncurrent) Other noncurrent liabilities — 1 7 — 1 6 $ 92 $ 36 $ 10,226 $ 230 $ 38 $ 11,476 $ 620 $ 57 $ 23,698 $ 1,237 $ 63 $ 27,060 |
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, 2016 December 31, 2015 ($ in millions) Asset Liability Asset Liability Gross amounts recognized in the consolidated balance sheet $ 620 $ 57 $ 1,237 $ 63 Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet (50 ) (50 ) (59 ) (59 ) Cash collateral (received) posted (299 ) — (862 ) — Net amounts $ 271 $ 7 $ 316 $ 4 |
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) 2016 2015 2016 2015 Derivatives designated in a fair value hedging relationship Interest rate swap contracts Amount of loss (gain) recognized in Other (income) expense, net on derivatives (1) $ 59 $ (130 ) $ (139 ) $ (97 ) Amount of (gain) loss recognized in Other (income) expense, net on hedged item (1) (60 ) 125 135 91 Derivatives designated in foreign currency cash flow hedging relationships Foreign exchange contracts Amount of gain reclassified from AOCI to Sales (44 ) (170 ) (251 ) (528 ) Amount of loss (gain) recognized in OCI on derivatives 69 17 311 (464 ) 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 ) — (4 ) Amount of loss (gain) recognized in OCI on derivatives — 13 — (5 ) Derivatives not designated in a hedging relationship Foreign exchange contracts Amount of loss (gain) recognized in Other (income) expense, net on derivatives (3) 29 (155 ) (87 ) (360 ) Amount of gain recognized in Sales — — — (1 ) (1) There was $1 million and $5 million of ineffectiveness on the hedge during the third quarter of 2016 and 2015, respectively, and $4 million and $6 million of ineffectiveness on the hedge for the first nine months of 2016 and 2015, respectively. (2) There was no ineffectiveness on the hedge. Represents the amount excluded from hedge effectiveness testing. (3) These derivative contracts mitigate changes in the value of remeasured foreign currency denominated monetary assets and liabilities attributable to changes in foreign currency exchange rates. |
Information on Available-for-sale Investments | Information on investments in debt and equity securities is as follows: September 30, 2016 December 31, 2015 Fair Value Amortized Cost Gross Unrealized Fair Value Amortized Cost Gross Unrealized ($ in millions) Gains Losses Gains Losses Corporate notes and bonds $ 10,857 $ 10,791 $ 71 $ (5 ) $ 10,259 $ 10,299 $ 7 $ (47 ) U.S. government and agency securities 2,293 2,288 6 (1 ) 1,761 1,767 — (6 ) Commercial paper 1,516 1,516 — — 2,977 2,977 — — Asset-backed securities 1,397 1,394 4 (1 ) 1,284 1,290 — (6 ) Mortgage-backed securities 895 892 4 (1 ) 694 697 1 (4 ) Foreign government bonds 494 493 1 — 607 586 22 (1 ) Equity securities 410 316 102 (8 ) 534 409 125 — $ 17,862 $ 17,690 $ 188 $ (16 ) $ 18,116 $ 18,025 $ 155 $ (64 ) |
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, 2016 December 31, 2015 Assets Investments Corporate notes and bonds $ — $ 10,651 $ — $ 10,651 $ — $ 10,259 $ — $ 10,259 U.S. government and agency securities 30 1,950 — 1,980 — 1,761 — 1,761 Commercial paper — 1,516 — 1,516 — 2,977 — 2,977 Asset-backed securities (1) — 1,265 — 1,265 — 1,284 — 1,284 Mortgage-backed securities (1) — 663 — 663 — 694 — 694 Foreign government bonds — 493 — 493 — 607 — 607 Equity securities 249 — — 249 360 — — 360 279 16,538 — 16,817 360 17,582 — 17,942 Other assets (2) U.S. government and agency securities — 313 — 313 — — — — Mortgage-backed securities (1) — 232 — 232 — — — — Corporate notes and bonds — 206 — 206 — — — — Asset-backed securities (1) — 132 — 132 — — — — Foreign government bonds — 1 — 1 — — — — Equity securities 161 — — 161 155 19 — 174 161 884 — 1,045 155 19 — 174 Derivative assets (3) Purchased currency options — 399 — 399 — 1,041 — 1,041 Interest rate swaps — 158 — 158 — 42 — 42 Forward exchange contracts — 63 — 63 — 154 — 154 — 620 — 620 — 1,237 — 1,237 Total assets $ 440 $ 18,042 $ — $ 18,482 $ 515 $ 18,838 $ — $ 19,353 Liabilities Other liabilities Contingent consideration $ — $ — $ 894 $ 894 $ — $ — $ 590 $ 590 Derivative liabilities (3) Forward exchange contracts — 55 — 55 — 38 — 38 Written currency options — 1 — 1 — 1 — 1 Interest rate swaps — 1 — 1 — 24 — 24 — 57 — 57 — 63 — 63 Total liabilities $ — $ 57 $ 894 $ 951 $ — $ 63 $ 590 $ 653 (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 increase in investments included in Other assets reflects certain assets previously restricted for retiree benefits that became available to fund certain other health and welfare benefits during the second quarter of 2016 (see Note 12). (3) 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) 2016 2015 Fair value January 1 $ 590 $ 428 Changes in fair value (1) 29 8 Additions 300 228 Payments (25 ) (50 ) Fair value September 30 $ 894 $ 614 (1) Recorded in Research and development expenses and Materials and production costs. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consisted of: ($ in millions) September 30, 2016 December 31, 2015 Finished goods $ 1,421 $ 1,343 Raw materials and work in process 4,432 4,374 Supplies 175 168 Total (approximates current cost) 6,028 5,885 Increase to LIFO costs 320 384 $ 6,348 $ 6,269 Recognized as: Inventories $ 5,244 $ 4,700 Other assets 1,104 1,569 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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, 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 Other comprehensive loss, net of tax — — — — (250 ) — — — (250 ) 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 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 Balance at January 1, 2016 3,577 $ 1,788 $ 40,222 $ 45,348 $ (4,148 ) 796 $ (38,534 ) $ 91 $ 44,767 Net income attributable to Merck & Co., Inc. — — — 4,515 — — — — 4,515 Other comprehensive loss, net of tax — — — — (104 ) — — — (104 ) Cash dividends declared on common stock — — — (3,835 ) — — — — (3,835 ) Treasury stock shares purchased — — — — — 44 (2,418 ) — (2,418 ) Share-based compensation plans and other — — (325 ) — — (25 ) 1,235 — 910 Changes in noncontrolling ownership interests — — — — — — — 124 124 Net income attributable to noncontrolling interests — — — — — — — 13 13 Distributions attributable to noncontrolling interests — — — — — — — (15 ) (15 ) Balance at September 30, 2016 3,577 $ 1,788 $ 39,897 $ 46,028 $ (4,252 ) 815 $ (39,717 ) $ 213 $ 43,957 |
Share-Based Compensation Plans
Share-Based Compensation Plans (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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 Condensed Consolidated Statement of Income: Three Months Ended Nine Months Ended ($ in millions) 2016 2015 2016 2015 Pretax share-based compensation expense $ 77 $ 75 $ 225 $ 221 Income tax benefit (24 ) (23 ) (69 ) (69 ) Total share-based compensation expense, net of taxes $ 53 $ 52 $ 156 $ 152 |
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 2016 and 2015 was $5.89 and $6.46 per option, respectively, and was determined using the following assumptions: Nine Months Ended September 30, 2016 2015 Expected dividend yield 3.8 % 4.1 % Risk-free interest rate 1.4 % 1.7 % Expected volatility 19.6 % 19.9 % Expected life (years) 6.2 6.2 |
Pension and Other Postretirem31
Pension and Other Postretirement Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Pension Plans | |
Defined Benefit Plan Disclosure [Line Items] | |
Components of net cost of defined benefit plans | The Company has defined benefit pension plans covering eligible employees in the United States and in certain of its international subsidiaries. The net periodic benefit cost (credit) of such plans consisted of the following components: Three Months Ended Nine Months Ended 2016 2015 2016 2015 ($ in millions) U.S. International U.S. International U.S. International U.S. International Service cost $ 66 $ 59 $ 65 $ 61 $ 212 $ 179 $ 230 $ 190 Interest cost 116 51 108 52 342 155 326 156 Expected return on plan assets (203 ) (95 ) (203 ) (95 ) (623 ) (288 ) (614 ) (286 ) Net amortization 18 18 33 26 48 55 119 79 Termination benefits 6 1 2 — 11 2 20 1 Curtailments 3 (2 ) (1 ) (2 ) 3 (1 ) (10 ) (3 ) Settlements — — — 1 — — — 4 $ 6 $ 32 $ 4 $ 43 $ (7 ) $ 102 $ 71 $ 141 |
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 (credit) of such plans consisted of the following components: Three Months Ended Nine Months Ended ($ in millions) 2016 2015 2016 2015 Service cost $ 14 $ 22 $ 41 $ 61 Interest cost 19 28 62 83 Expected return on plan assets (19 ) (36 ) (88 ) (107 ) Net amortization (25 ) (13 ) (78 ) (44 ) Termination benefits 1 1 1 6 Curtailments (5 ) (1 ) (7 ) (8 ) $ (15 ) $ 1 $ (69 ) $ (9 ) |
Other (Income) Expense, Net (Ta
Other (Income) Expense, Net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Other Income and Expenses [Abstract] | |
Other (Income) Expense, Net | Other (income) expense, net, consisted of: Three Months Ended Nine Months Ended ($ in millions) 2016 2015 2016 2015 Interest income $ (87 ) $ (68 ) $ (244 ) $ (214 ) Interest expense 170 165 513 503 Exchange losses 3 228 79 1,038 Equity income from affiliates (21 ) (63 ) (59 ) (210 ) Other, net (43 ) (432 ) (201 ) (493 ) $ 22 $ (170 ) $ 88 $ 624 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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) 2016 2015 2016 2015 Net income attributable to Merck & Co., Inc. $ 2,184 $ 1,826 $ 4,515 $ 3,465 Average common shares outstanding 2,765 2,814 2,769 2,825 Common shares issuable (1) 21 22 22 25 Average common shares outstanding assuming dilution 2,786 2,836 2,791 2,850 Basic earnings per common share attributable to Merck & Co., Inc. common shareholders $ 0.79 $ 0.65 $ 1.63 $ 1.23 Earnings per common share assuming dilution attributable to Merck & Co., Inc. common shareholders $ 0.78 $ 0.64 $ 1.62 $ 1.22 (1) Issuable primarily under share-based compensation plans. |
Other Comprehensive Income (L34
Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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, 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 ) (1) (16 ) (2) 46 (3) — (141 ) Tax 60 6 (22 ) — 44 Reclassification adjustments, net of taxes (111 ) (10 ) 24 — (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 ) Balance July 1, 2016, net of taxes $ 111 $ 167 $ (2,543 ) $ (1,821 ) $ (4,086 ) Other comprehensive income (loss) before reclassification adjustments, pretax (69 ) (22 ) (177 ) 70 (198 ) Tax 24 (3 ) 21 12 54 Other comprehensive income (loss) before reclassification adjustments, net of taxes (45 ) (25 ) (156 ) 82 (144 ) Reclassification adjustments, pretax (45 ) (1) (5 ) (2) 11 (3) — (39 ) Tax 16 — 1 — 17 Reclassification adjustments, net of taxes (29 ) (5 ) 12 — (22 ) Other comprehensive income (loss), net of taxes (74 ) (30 ) (144 ) 82 (166 ) Balance September 30, 2016, net of taxes $ 37 $ 137 $ (2,687 ) $ (1,739 ) $ (4,252 ) Nine Months Ended September 30, ($ in millions) Derivatives Investments Employee Benefit Plans Cumulative Translation Adjustment Accumulated Other Comprehensive Income (Loss) 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 ) (1) (78 ) (2) 154 (3) — (458 ) Tax 187 26 (64 ) — 149 Reclassification adjustments, net of taxes (347 ) (52 ) 90 — (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 ) Balance January 1, 2016, net of taxes $ 404 $ 41 $ (2,407 ) $ (2,186 ) $ (4,148 ) Other comprehensive income (loss) before reclassification adjustments, pretax (311 ) 108 (395 ) 424 (174 ) Tax 109 8 88 23 228 Other comprehensive income (loss) before reclassification adjustments, net of taxes (202 ) 116 (307 ) 447 54 Reclassification adjustments, pretax (254 ) (1) (26 ) (2) 25 (3) — (255 ) Tax 89 6 2 — 97 Reclassification adjustments, net of taxes (165 ) (20 ) 27 — (158 ) Other comprehensive income (loss), net of taxes (367 ) 96 (280 ) 447 (104 ) Balance September 30, 2016, net of taxes $ 37 $ 137 $ (2,687 ) $ (1,739 ) $ (4,252 ) (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, 2016 | |
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) 2016 2015 2016 2015 Primary Care and Women’s Health Cardiovascular Zetia $ 671 $ 633 $ 1,985 $ 1,836 Vytorin 273 302 843 942 Diabetes Januvia 1,006 1,014 2,976 2,942 Janumet 548 562 1,624 1,625 General Medicine and Women’s Health NuvaRing 195 190 571 538 Implanon/Nexplanon 148 176 446 437 Dulera 97 133 331 383 Follistim AQ 101 95 268 288 Hospital and Specialty Hepatitis Zepatier 164 — 326 — HIV Isentress 372 377 1,050 1,137 Hospital Acute Care Cubicin 320 325 969 805 Noxafil 147 132 434 360 Invanz 152 153 409 424 Cancidas 142 139 406 436 Bridion 139 89 343 262 Primaxin 77 75 231 228 Immunology Remicade 311 442 999 1,398 Simponi 193 178 581 505 Oncology Keytruda 356 159 919 352 Emend 137 141 405 396 Temodar 78 83 216 238 Diversified Brands Respiratory Singulair 239 201 705 658 Nasonex 94 121 425 625 Other Cozaar/Hyzaar 131 150 389 524 Arcoxia 114 123 342 361 Fosamax 68 86 217 277 Zocor 54 56 150 168 Vaccines (1) Gardasil/Gardasil 9 860 625 1,631 1,410 ProQuad/M-M-R II /Varivax 496 390 1,236 1,096 RotaTeq 171 160 489 441 Zostavax 190 179 464 503 Pneumovax 23 175 138 403 354 Other pharmaceutical (2) 1,224 1,298 3,464 3,806 Total Pharmaceutical segment sales 9,443 8,925 26,247 25,755 Other segment sales (3) 977 903 2,862 2,745 Total segment sales 10,420 9,828 29,109 28,500 Other (4) 116 245 583 783 $ 10,536 $ 10,073 $ 29,692 $ 29,283 (1) These amounts do not reflect sales of vaccines sold in most major European markets through the Company’s joint venture, SPMSD, 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 SPMSD . In March 2016, Merck and Sanofi announced their intent to end the SPMSD joint venture (see Note 7). (2) Other pharmaceutical primarily reflects sales of other human health pharmaceutical products, including products within the franchises not listed separately . (3) Represents the non-reportable segments of Animal Health, Healthcare Services and Alliances. (4) Other is primarily comprised of miscellaneous corporate revenues, including revenue hedging activities, as well as third-party manufacturing sales . Other in the first nine months of 2016 also includes $75 million related to the sale of the U.S. marketing rights to certain products (see Note 2). |
Reconciliation of segment profits to income before taxes | A reconciliation of segment profits to Income before taxes is as follows: Three Months Ended Nine Months Ended ($ in millions) 2016 2015 2016 2015 Segment profits: Pharmaceutical segment $ 6,162 $ 5,641 $ 16,698 $ 16,088 Other segments 389 394 1,129 1,208 Total segment profits 6,551 6,035 17,827 17,296 Other profits 21 204 341 582 Unallocated: Interest income 87 68 244 214 Interest expense (170 ) (165 ) (513 ) (503 ) Equity income from affiliates (27 ) 25 (13 ) 161 Depreciation and amortization (365 ) (381 ) (1,228 ) (1,169 ) Research and development (1,444 ) (1,291 ) (4,651 ) (4,310 ) Amortization of purchase accounting adjustments (772 ) (1,180 ) (2,932 ) (3,658 ) Restructuring costs (161 ) (113 ) (386 ) (386 ) Gain on sale of certain migraine clinical development programs 40 250 40 250 Foreign currency devaluation related to Venezuela — — — (715 ) Other unallocated, net (873 ) (1,055 ) (2,714 ) (3,177 ) $ 2,887 $ 2,397 $ 6,015 $ 4,585 |
Basis of Presentation - Narrati
Basis of Presentation - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Mar. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Tax expense (benefit) | $ 699 | $ 566 | $ 1,487 | $ 1,108 | |
Accounting Standards Update 2015-03 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Unamortized debt issuance expense | $ 100 | ||||
Accounting Standards Update 2016-09 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Tax expense (benefit) | $ (35) | $ (64) | |||
Payments related to tax withholding for share-based compensation | $ 118 |
Acquisitions, Divestitures, R37
Acquisitions, Divestitures, Research Collaborations and License Agreements - Narrative (Details) | Jul. 31, 2015USD ($) | Jan. 21, 2015USD ($) | Jul. 31, 2016USD ($) | Jun. 30, 2016USD ($) | Jan. 31, 2016USD ($) | Jul. 31, 2015USD ($) | Feb. 28, 2015USD ($)renewal | Jun. 30, 2016USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Oct. 01, 2014USD ($) |
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [Line Items] | |||||||||||||
Contingent consideration | $ 894,000,000 | $ 590,000,000 | $ 614,000,000 | $ 428,000,000 | |||||||||
Goodwill | 18,260,000,000 | 17,723,000,000 | |||||||||||
Other noncurrent liabilities | $ 8,793,000,000 | $ 7,345,000,000 | |||||||||||
Agreement term | 2 years | ||||||||||||
Afferent Pharmaceuticals | |||||||||||||
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [Line Items] | |||||||||||||
Consideration transferred | $ 510,000,000 | ||||||||||||
Cash paid for acquisition of business | 487,000,000 | ||||||||||||
Amount of potential future additional payments for milestones, maximum | 750,000,000 | ||||||||||||
Contingent consideration | 223,000,000 | ||||||||||||
In-process research and development (IPR&D) | 779,000,000 | ||||||||||||
Deferred income tax liabilities | 258,000,000 | ||||||||||||
Other net assets | 29,000,000 | ||||||||||||
Goodwill | $ 183,000,000 | ||||||||||||
Discount rate | 12.00% | ||||||||||||
StayWell Company | |||||||||||||
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [Line Items] | |||||||||||||
Cash paid for acquisition of business | $ 150,000,000 | ||||||||||||
Deferred income tax liabilities | 84,000,000 | ||||||||||||
Goodwill | 275,000,000 | ||||||||||||
Intangible assets | 238,000,000 | ||||||||||||
Other net liabilities | 5,000,000 | ||||||||||||
Noncontrolling interest | $ 124,000,000 | ||||||||||||
Acquired finite-lived intangible assets, weighted average useful life | 10 years | ||||||||||||
Finite-lived intangible asset, useful life | 5 years | ||||||||||||
Fair value of debt assumed in business combination | $ 150,000,000 | ||||||||||||
Vallee SA | |||||||||||||
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [Line Items] | |||||||||||||
Percentage of voting interests to be acquired | 93.00% | ||||||||||||
Estimated future payment that will be made to acquire business | $ 400,000,000 | ||||||||||||
Moderna Therapeutics | |||||||||||||
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [Line Items] | |||||||||||||
Upfront and milestone payments | $ 200,000,000 | ||||||||||||
Bayer AG | |||||||||||||
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [Line Items] | |||||||||||||
Finite-lived intangible asset, useful life | 10 years 6 months | ||||||||||||
Potential future milestone payments | 775,000,000 | $ 775,000,000 | $ 1,100,000,000 | ||||||||||
Other noncurrent liabilities | 350,000,000 | 350,000,000 | |||||||||||
Amortization of intangible assets | 50,000,000 | ||||||||||||
Finite-lived intangible assets, net | 300,000,000 | 300,000,000 | |||||||||||
Bayer AG | Other noncurrent liabilities | |||||||||||||
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [Line Items] | |||||||||||||
Potential future milestone payments | $ 350,000,000 | $ 350,000,000 | |||||||||||
IOmet Pharma Ltd | |||||||||||||
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [Line Items] | |||||||||||||
Consideration transferred | $ 227,000,000 | ||||||||||||
Cash paid for acquisition of business | 150,000,000 | ||||||||||||
Amount of potential future additional payments for milestones, maximum | 250,000,000 | ||||||||||||
Contingent consideration | 77,000,000 | ||||||||||||
In-process research and development (IPR&D) | 155,000,000 | ||||||||||||
Goodwill | $ 46,000,000 | ||||||||||||
Discount rate | 10.50% | ||||||||||||
Deferred tax assets noncurrent | $ 26,000,000 | ||||||||||||
cCAM Biotherapeutics | |||||||||||||
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [Line Items] | |||||||||||||
Consideration transferred | $ 201,000,000 | ||||||||||||
Cash paid for acquisition of business | 96,000,000 | ||||||||||||
Amount of potential future additional payments for milestones, maximum | $ 510,000,000 | 510,000,000 | |||||||||||
Contingent consideration | 105,000,000 | 105,000,000 | |||||||||||
In-process research and development (IPR&D) | 180,000,000 | 180,000,000 | |||||||||||
Goodwill | $ 14,000,000 | 14,000,000 | |||||||||||
Discount rate | 10.50% | ||||||||||||
Other noncurrent assets | $ 7,000,000 | $ 7,000,000 | |||||||||||
NGM Biopharmaceuticals | |||||||||||||
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [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 (up to) | $ 250,000,000 | ||||||||||||
Agreement term | 5 years | ||||||||||||
Revenue cost allocation percentage (up to) | 50.00% | ||||||||||||
Times of agreement extension (in renewals) | renewal | 2 | ||||||||||||
Cubist Pharmaceuticals Inc | |||||||||||||
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [Line Items] | |||||||||||||
Consideration transferred | $ 8,300,000,000 | ||||||||||||
Cash paid for acquisition of business | 7,800,000,000 | ||||||||||||
In-process research and development (IPR&D) | 50,000,000 | ||||||||||||
Deferred income tax liabilities | 2,519,000,000 | ||||||||||||
Other net assets | 55,000,000 | ||||||||||||
Goodwill | $ 4,670,000,000 | ||||||||||||
Discount rate | 8.00% | ||||||||||||
Intangible assets | $ 6,923,000,000 | ||||||||||||
Other net liabilities | $ 122,000,000 | ||||||||||||
Acquired finite-lived intangible assets, weighted average useful life | 11 years | ||||||||||||
Other noncurrent assets | $ 184,000,000 | ||||||||||||
Fair value of debt assumed in business combination | 1,900,000,000 | ||||||||||||
Cubist Pharmaceuticals Inc | Other noncurrent liabilities | |||||||||||||
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [Line Items] | |||||||||||||
Contingent consideration | $ 50,000,000 |
Acquisitions, Divestitures, R38
Acquisitions, Divestitures, Research Collaborations and License Agreements - Divestitures Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Apr. 30, 2016 | Aug. 31, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Jul. 31, 2015 | |
corticotropin marketing rights | |||||||
Acquisitions, Divestitures, Research Collaborations and License Agreements Transactions [Line Items] | |||||||
Proceeds from sale of marketing rights | $ 75,000,000 | ||||||
CGRP receptor antagonists | |||||||
Acquisitions, Divestitures, Research Collaborations and License Agreements Transactions [Line Items] | |||||||
Total consideration received for sale of asset | $ 250,000,000 | ||||||
Proceeds from collaborators | $ 125,000,000 | ||||||
Amount of consideration received | $ 125,000,000 | ||||||
Gain (Loss) on disposition of intangible assets | $ 40,000,000 | $ 250,000,000 | $ 250,000,000 |
Acquisitions, Divestitures, R39
Acquisitions, Divestitures, Research Collaborations and License Agreements - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Jan. 21, 2015 | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [Line Items] | |||||
Goodwill | $ 18,260 | $ 17,723 | |||
Contingent consideration | $ 894 | $ 590 | $ 614 | $ 428 | |
Cubist Pharmaceuticals Inc | |||||
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [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 | ||||
IPR&D | 50 | ||||
Other noncurrent assets | 184 | ||||
Current liabilities | (233) | ||||
Deferred income tax liabilities | (2,519) | ||||
Long-term debt | (1,900) | ||||
Other noncurrent liabilities | (122) | ||||
Total identifiable net assets | 3,661 | ||||
Goodwill | 4,670 | ||||
Consideration transferred | $ 8,331 | ||||
Acquired finite-lived intangible assets, weighted average useful life | 11 years | ||||
Cubist Pharmaceuticals Inc | Other current liabilities | |||||
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [Line Items] | |||||
Contingent consideration | $ 73 | ||||
Cubist Pharmaceuticals Inc | Other noncurrent liabilities | |||||
Acquisitions Divestitures Research Collaborations And License Agreements Transactions [Line Items] | |||||
Contingent consideration | $ 50 |
Acquisitions, Divestitures, R40
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, 2015 | |
Business Combinations [Abstract] | ||
Sales | $ 10,073 | $ 29,369 |
Net income attributable to Merck & Co., Inc. | $ 1,833 | $ 3,645 |
Basic earnings per common share attributable to Merck & Co., Inc. common shareholders (in dollars per share) | $ 0.65 | $ 1.29 |
Earnings per common share assuming dilution attributable to Merck & Co. Inc. common shareholders (in dollars per share) | $ 0.65 | $ 1.28 |
Restructuring - Narrative (Deta
Restructuring - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($)position | Sep. 30, 2015USD ($)position | Sep. 30, 2016USD ($)position | Sep. 30, 2015USD ($)position | |
Restructuring and Related Activities [Abstract] | ||||
Total pretax restructuring costs | $ 212 | $ 217 | $ 759 | $ 770 |
Cumulative restructuring costs incurred to date since program inception | $ 12,200 | $ 12,200 | ||
Positions eliminated since inception of program (in positions) | position | 39,630 | 39,630 | ||
Estimated remaining costs related to restructuring program activities | $ 800 | $ 800 | ||
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 | 300 | 685 | 1,355 | 2,635 |
Restructuring - Charges Related
Restructuring - Charges Related to Restructuring Program Activities by Type of Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | $ 212 | $ 217 | $ 759 | $ 770 |
Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 61 | 12 | 172 | 100 |
Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 33 | 31 | 210 | 125 |
Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 118 | 174 | 377 | 545 |
Materials and production | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 36 | 70 | 149 | 280 |
Materials and production | Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 0 | 0 | 0 |
Materials and production | Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 18 | 17 | 69 | 47 |
Materials and production | Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 18 | 53 | 80 | 233 |
Marketing and administrative | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 1 | 17 | 91 | 70 |
Marketing and administrative | Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 0 | 0 | 0 |
Marketing and administrative | Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 1 | 5 | 8 | 53 |
Marketing and administrative | Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 12 | 83 | 17 |
Research and development | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 14 | 17 | 133 | 34 |
Research and development | Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 0 | 0 | 0 |
Research and development | Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 14 | 9 | 133 | 25 |
Research and development | Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 8 | 0 | 9 |
Restructuring costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 161 | 113 | 386 | 386 |
Restructuring costs | Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 61 | 12 | 172 | 100 |
Restructuring costs | Accelerated Depreciation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | 0 | 0 | 0 | 0 |
Restructuring costs | Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total pretax restructuring costs | $ 100 | $ 101 | $ 214 | $ 286 |
Restructuring - Charges and Spe
Restructuring - Charges and Spending Relating to Restructuring Activities by Program (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | $ 645 | |||
Expense | $ 212 | $ 217 | 759 | $ 770 |
(Payments) receipts, net | (451) | |||
Non-cash activity | (374) | |||
Restructuring reserve, ending balance | 579 | 579 | ||
Separation Costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 592 | |||
Expense | 61 | 12 | 172 | 100 |
(Payments) receipts, net | (251) | |||
Non-cash activity | 0 | |||
Restructuring reserve, ending balance | 513 | 513 | ||
Accelerated Depreciation | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 0 | |||
Expense | 33 | 31 | 210 | 125 |
(Payments) receipts, net | 0 | |||
Non-cash activity | (210) | |||
Restructuring reserve, ending balance | 0 | 0 | ||
Other | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 53 | |||
Expense | 118 | $ 174 | 377 | $ 545 |
(Payments) receipts, net | (200) | |||
Non-cash activity | (164) | |||
Restructuring reserve, ending balance | $ 66 | $ 66 |
Financial Instruments - Narrati
Financial Instruments - Narrative (Details) | 9 Months Ended | ||||
Sep. 30, 2016USD ($)interest_rate_swap | Sep. 30, 2015USD ($) | May 31, 2016USD ($)interest_rate_swap | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Derivative [Line Items] | |||||
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 | $ (60,000,000) | $ 255,000,000 | |||
Number of interest rate swaps held (in interest rate swaps) | interest_rate_swap | 26 | ||||
Derivative, notional amount | $ 23,698,000,000 | $ 27,060,000,000 | |||
Pretax net unrealized gains on derivatives maturing within next 12 months estimated to be reclassified from AOCI to sales | 52,000,000 | ||||
Available-for-sale debt securities included in Short-term investments | 5,200,000,000 | ||||
Available-for-sale debt securities maturing after one year through five years | 10,400,000,000 | ||||
Cash and cash equivalents | 7,907,000,000 | $ 7,548,000,000 | 8,524,000,000 | $ 7,441,000,000 | |
Cash equivalents | 7,200,000,000 | ||||
Fair value of loans payable and long-term debt, including current portion | 27,000,000,000 | 27,000,000,000 | |||
Carrying value of loans payable and long-term debt, including current portion | 25,100,000,000 | 26,400,000,000 | |||
Accounts receivable outstanding for more than one year | 125,000,000 | ||||
Cash collateral received from counterparties | $ 299,000,000 | $ 862,000,000 | |||
0.70% notes due 2016 | Interest rate swap contracts | |||||
Derivative [Line Items] | |||||
Number of interest rate swaps held (in interest rate swaps) | interest_rate_swap | 4 | ||||
Derivative, notional amount | $ 250,000,000 | ||||
Face amount | $ 1,000,000,000 | ||||
Stated interest rate | 0.70% | ||||
Maximum | |||||
Derivative [Line Items] | |||||
Maximum average period of maturities of contracts in years (less than) | 2 years |
Financial Instruments - Summary
Financial Instruments - Summary of Interest Rate Swaps Held (Details) | Sep. 30, 2016USD ($)interest_rate_swap | Dec. 31, 2015USD ($) |
Derivative [Line Items] | ||
Number of Interest Rate Swaps Held (in interest rate swaps) | interest_rate_swap | 26 | |
Total Swap Notional Amount | $ 23,698,000,000 | $ 27,060,000,000 |
1.30% notes due 2018 | Interest rate swap contracts | ||
Derivative [Line Items] | ||
Stated interest rate | 1.30% | |
Par Value of Debt | $ 1,000,000,000 | |
Number of Interest Rate Swaps Held (in interest rate swaps) | interest_rate_swap | 4 | |
Total Swap Notional Amount | $ 1,000,000,000 | |
5.00% notes due 2019 | Interest rate swap contracts | ||
Derivative [Line Items] | ||
Stated interest rate | 5.00% | |
Par Value of Debt | $ 1,250,000,000 | |
Number of Interest Rate Swaps Held (in interest rate swaps) | interest_rate_swap | 3 | |
Total Swap Notional Amount | $ 550,000,000 | |
1.85% notes due 2020 | Interest rate swap contracts | ||
Derivative [Line Items] | ||
Stated interest rate | 1.85% | |
Par Value of Debt | $ 1,250,000,000 | |
Number of Interest Rate Swaps Held (in interest rate swaps) | interest_rate_swap | 5 | |
Total Swap Notional Amount | $ 1,250,000,000 | |
3.875% notes due 2021 | Interest rate swap contracts | ||
Derivative [Line Items] | ||
Stated interest rate | 3.875% | |
Par Value of Debt | $ 1,150,000,000 | |
Number of Interest Rate Swaps Held (in interest rate swaps) | interest_rate_swap | 5 | |
Total Swap Notional Amount | $ 1,150,000,000 | |
2.40% notes due 2022 | Interest rate swap contracts | ||
Derivative [Line Items] | ||
Stated interest rate | 2.40% | |
Par Value of Debt | $ 1,000,000,000 | |
Number of Interest Rate Swaps Held (in interest rate swaps) | interest_rate_swap | 4 | |
Total Swap Notional Amount | $ 1,000,000,000 | |
2.35% notes due 2022 | Interest rate swap contracts | ||
Derivative [Line Items] | ||
Stated interest rate | 2.35% | |
Par Value of Debt | $ 1,250,000,000 | |
Number of Interest Rate Swaps Held (in interest rate swaps) | 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 (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | $ 620 | $ 1,237 |
Fair Value of Derivative, Liability | 57 | 63 |
U.S. Dollar Notional | 23,698 | 27,060 |
Derivatives Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 528 | 1,007 |
Fair Value of Derivative, Liability | 21 | 25 |
U.S. Dollar Notional | 13,472 | 15,584 |
Derivatives Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 92 | 230 |
Fair Value of Derivative, Liability | 36 | 38 |
U.S. Dollar Notional | 10,226 | 11,476 |
Interest rate swap contracts | Derivatives Designated as Hedging Instruments | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 158 | 42 |
U.S. Dollar Notional | 5,200 | 2,700 |
Interest rate swap contracts | Derivatives Designated as Hedging Instruments | Accrued and other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Liability | 0 | 1 |
U.S. Dollar Notional | 0 | 1,000 |
Interest rate swap contracts | Derivatives Designated as Hedging Instruments | Other noncurrent liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Liability | 1 | 23 |
U.S. Dollar Notional | 1,000 | 3,500 |
Foreign exchange contracts | Derivatives Designated as Hedging Instruments | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 96 | 386 |
U.S. Dollar Notional | 2,162 | 4,136 |
Foreign exchange contracts | Derivatives Designated as Hedging Instruments | Accrued and other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Liability | 20 | 1 |
U.S. Dollar Notional | 845 | 77 |
Foreign exchange contracts | Derivatives Designated as Hedging Instruments | Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 274 | 579 |
U.S. Dollar Notional | 4,265 | 4,171 |
Foreign exchange contracts | Derivatives Not Designated as Hedging Instruments | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 0 | 18 |
U.S. Dollar Notional | 0 | 179 |
Foreign exchange contracts | Derivatives Not Designated as Hedging Instruments | Accrued and other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Liability | 35 | 37 |
U.S. Dollar Notional | 4,062 | 2,508 |
Foreign exchange contracts | Derivatives Not Designated as Hedging Instruments | Other noncurrent liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Liability | 1 | 1 |
U.S. Dollar Notional | 7 | 6 |
Foreign exchange contracts | Derivatives Not Designated as Hedging Instruments | Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative, Asset | 92 | 212 |
U.S. Dollar Notional | $ 6,157 | $ 8,783 |
Financial Instruments - Informa
Financial Instruments - Information on Derivative Positions Subject to Master Netting Arrangements as if they were Presented on a Net Basis (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross amounts recognized in the consolidated balance sheet, Asset | $ 620 | $ 1,237 |
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet, Asset | (50) | (59) |
Cash collateral (received) posted, Asset | (299) | (862) |
Net amounts, Asset | 271 | 316 |
Gross amounts recognized in the consolidated balance sheet, Liability | 57 | 63 |
Gross amount subject to offset in master netting arrangements not offset in the consolidated balance sheet, Liability | (50) | (59) |
Cash collateral (received) posted, Liability | 0 | 0 |
Net amounts, Liability | $ 7 | $ 4 |
Financial Instruments - Locatio
Financial Instruments - Location and Pretax Gain or Loss Amounts for Derivatives (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative, net hedge ineffectiveness (gain) loss | $ (1) | $ (5) | $ (4) | $ (6) |
Interest rate swap contracts | Derivatives designated in a fair value hedging relationship | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of loss (gain) recognized in Other (income) expense, net on derivatives | 59 | (130) | (139) | (97) |
Amount of (gain) loss recognized in Other (income) expense, net on hedged item | (60) | 125 | 135 | 91 |
Foreign exchange contracts | Derivatives not designated in a hedging relationship | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of loss (gain) recognized in Other (income) expense, net on derivatives | 29 | (155) | (87) | (360) |
Amount of gain recognized in Sales | 0 | 0 | 0 | (1) |
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 | (44) | (170) | (251) | (528) |
Amount of loss (gain) recognized in OCI on derivatives | 69 | 17 | 311 | (464) |
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 | 0 | 13 | 0 | (5) |
Amount of gain recognized in Other (income) expense, net on derivatives | $ 0 | $ (1) | $ 0 | $ (4) |
Financial Instruments - Infor49
Financial Instruments - Information on Available-for-sale Investments (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | $ 17,862 | $ 18,116 |
Amortized Cost | 17,690 | 18,025 |
Gross Unrealized Gains | 188 | 155 |
Gross Unrealized Losses | (16) | (64) |
Commercial paper | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | 1,516 | 2,977 |
Amortized Cost | 1,516 | 2,977 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Corporate notes and bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | 10,857 | 10,259 |
Amortized Cost | 10,791 | 10,299 |
Gross Unrealized Gains | 71 | 7 |
Gross Unrealized Losses | (5) | (47) |
U.S. government and agency securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | 2,293 | 1,761 |
Amortized Cost | 2,288 | 1,767 |
Gross Unrealized Gains | 6 | 0 |
Gross Unrealized Losses | (1) | (6) |
Asset-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | 1,397 | 1,284 |
Amortized Cost | 1,394 | 1,290 |
Gross Unrealized Gains | 4 | 0 |
Gross Unrealized Losses | (1) | (6) |
Mortgage-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | 895 | 694 |
Amortized Cost | 892 | 697 |
Gross Unrealized Gains | 4 | 1 |
Gross Unrealized Losses | (1) | (4) |
Foreign government bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | 494 | 607 |
Amortized Cost | 493 | 586 |
Gross Unrealized Gains | 1 | 22 |
Gross Unrealized Losses | 0 | (1) |
Equity securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value | 410 | 534 |
Amortized Cost | 316 | 409 |
Gross Unrealized Gains | 102 | 125 |
Gross Unrealized Losses | $ (8) | $ 0 |
Financial Instruments - Financi
Financial Instruments - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Millions | 9 Months Ended | |||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | |
Assets | ||||
Investments | $ 17,862 | $ 18,116 | ||
Derivative assets | 620 | 1,237 | ||
Liabilities | ||||
Contingent consideration | 894 | 590 | $ 614 | $ 428 |
Derivative liabilities | 57 | 63 | ||
Commercial paper | ||||
Assets | ||||
Investments | 1,516 | 2,977 | ||
Corporate notes and bonds | ||||
Assets | ||||
Investments | 10,857 | 10,259 | ||
U.S. government and agency securities | ||||
Assets | ||||
Investments | 2,293 | 1,761 | ||
Asset-backed securities | ||||
Assets | ||||
Investments | $ 1,397 | 1,284 | ||
Liabilities | ||||
Primary weighted average life of collateral | 5 years | |||
Mortgage-backed securities | ||||
Assets | ||||
Investments | $ 895 | 694 | ||
Foreign government bonds | ||||
Assets | ||||
Investments | 494 | 607 | ||
Equity securities | ||||
Assets | ||||
Investments | 410 | 534 | ||
Fair Value, Measurements, Recurring | ||||
Assets | ||||
Investments | 16,817 | 17,942 | ||
Other assets | 1,045 | 174 | ||
Derivative assets | 620 | 1,237 | ||
Total assets | 18,482 | 19,353 | ||
Liabilities | ||||
Contingent consideration | 894 | 590 | ||
Derivative liabilities | 57 | 63 | ||
Total liabilities | 951 | 653 | ||
Fair Value, Measurements, Recurring | Purchased currency options | ||||
Assets | ||||
Derivative assets | 399 | 1,041 | ||
Liabilities | ||||
Derivative liabilities | 1 | 1 | ||
Fair Value, Measurements, Recurring | Foreign exchange contracts | ||||
Assets | ||||
Derivative assets | 63 | 154 | ||
Liabilities | ||||
Derivative liabilities | 55 | 38 | ||
Fair Value, Measurements, Recurring | Interest rate swap contracts | ||||
Assets | ||||
Derivative assets | 158 | 42 | ||
Liabilities | ||||
Derivative liabilities | 1 | 24 | ||
Fair Value, Measurements, Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Investments | 279 | 360 | ||
Other assets | 161 | 155 | ||
Derivative assets | 0 | 0 | ||
Total assets | 440 | 515 | ||
Liabilities | ||||
Contingent consideration | 0 | 0 | ||
Derivative liabilities | 0 | 0 | ||
Total liabilities | 0 | 0 | ||
Fair Value, Measurements, Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1) | Purchased currency options | ||||
Assets | ||||
Derivative assets | 0 | 0 | ||
Liabilities | ||||
Derivative liabilities | 0 | 0 | ||
Fair Value, Measurements, Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1) | Foreign exchange contracts | ||||
Assets | ||||
Derivative assets | 0 | 0 | ||
Liabilities | ||||
Derivative liabilities | 0 | 0 | ||
Fair Value, Measurements, Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1) | Interest rate swap contracts | ||||
Assets | ||||
Derivative assets | 0 | 0 | ||
Liabilities | ||||
Derivative liabilities | 0 | 0 | ||
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 16,538 | 17,582 | ||
Other assets | 884 | 19 | ||
Derivative assets | 620 | 1,237 | ||
Total assets | 18,042 | 18,838 | ||
Liabilities | ||||
Contingent consideration | 0 | 0 | ||
Derivative liabilities | 57 | 63 | ||
Total liabilities | 57 | 63 | ||
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Purchased currency options | ||||
Assets | ||||
Derivative assets | 399 | 1,041 | ||
Liabilities | ||||
Derivative liabilities | 1 | 1 | ||
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Foreign exchange contracts | ||||
Assets | ||||
Derivative assets | 63 | 154 | ||
Liabilities | ||||
Derivative liabilities | 55 | 38 | ||
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Interest rate swap contracts | ||||
Assets | ||||
Derivative assets | 158 | 42 | ||
Liabilities | ||||
Derivative liabilities | 1 | 24 | ||
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Other assets | 0 | 0 | ||
Derivative assets | 0 | 0 | ||
Total assets | 0 | 0 | ||
Liabilities | ||||
Contingent consideration | 894 | 590 | ||
Derivative liabilities | 0 | 0 | ||
Total liabilities | 894 | 590 | ||
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Purchased currency options | ||||
Assets | ||||
Derivative assets | 0 | 0 | ||
Liabilities | ||||
Derivative liabilities | 0 | 0 | ||
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Foreign exchange contracts | ||||
Assets | ||||
Derivative assets | 0 | 0 | ||
Liabilities | ||||
Derivative liabilities | 0 | 0 | ||
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Interest rate swap contracts | ||||
Assets | ||||
Derivative assets | 0 | 0 | ||
Liabilities | ||||
Derivative liabilities | 0 | 0 | ||
Fair Value, Measurements, Recurring | Commercial paper | ||||
Assets | ||||
Investments | 1,516 | 2,977 | ||
Fair Value, Measurements, Recurring | Commercial paper | Quoted Prices In Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Fair Value, Measurements, Recurring | Commercial paper | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 1,516 | 2,977 | ||
Fair Value, Measurements, Recurring | Commercial paper | Significant Unobservable Inputs (Level 3) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Fair Value, Measurements, Recurring | Corporate notes and bonds | ||||
Assets | ||||
Investments | 10,651 | 10,259 | ||
Other assets | 206 | 0 | ||
Fair Value, Measurements, Recurring | Corporate notes and bonds | Quoted Prices In Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Other assets | 0 | 0 | ||
Fair Value, Measurements, Recurring | Corporate notes and bonds | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 10,651 | 10,259 | ||
Other assets | 206 | 0 | ||
Fair Value, Measurements, Recurring | Corporate notes and bonds | Significant Unobservable Inputs (Level 3) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Other assets | 0 | 0 | ||
Fair Value, Measurements, Recurring | U.S. government and agency securities | ||||
Assets | ||||
Investments | 1,980 | 1,761 | ||
Other assets | 313 | 0 | ||
Fair Value, Measurements, Recurring | U.S. government and agency securities | Quoted Prices In Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Investments | 30 | 0 | ||
Other assets | 0 | 0 | ||
Fair Value, Measurements, Recurring | U.S. government and agency securities | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 1,950 | 1,761 | ||
Other assets | 313 | 0 | ||
Fair Value, Measurements, Recurring | U.S. government and agency securities | Significant Unobservable Inputs (Level 3) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Other assets | 0 | 0 | ||
Fair Value, Measurements, Recurring | Asset-backed securities | ||||
Assets | ||||
Investments | 1,265 | 1,284 | ||
Other assets | 132 | 0 | ||
Fair Value, Measurements, Recurring | Asset-backed securities | Quoted Prices In Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Other assets | 0 | 0 | ||
Fair Value, Measurements, Recurring | Asset-backed securities | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 1,265 | 1,284 | ||
Other assets | 132 | 0 | ||
Fair Value, Measurements, Recurring | Asset-backed securities | Significant Unobservable Inputs (Level 3) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Other assets | 0 | 0 | ||
Fair Value, Measurements, Recurring | Mortgage-backed securities | ||||
Assets | ||||
Investments | 663 | 694 | ||
Other assets | 232 | 0 | ||
Fair Value, Measurements, Recurring | Mortgage-backed securities | Quoted Prices In Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Other assets | 0 | 0 | ||
Fair Value, Measurements, Recurring | Mortgage-backed securities | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 663 | 694 | ||
Other assets | 232 | 0 | ||
Fair Value, Measurements, Recurring | Mortgage-backed securities | Significant Unobservable Inputs (Level 3) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Other assets | 0 | 0 | ||
Fair Value, Measurements, Recurring | Foreign government bonds | ||||
Assets | ||||
Investments | 493 | 607 | ||
Other assets | 1 | 0 | ||
Fair Value, Measurements, Recurring | Foreign government bonds | Quoted Prices In Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Other assets | 0 | 0 | ||
Fair Value, Measurements, Recurring | Foreign government bonds | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 493 | 607 | ||
Other assets | 1 | 0 | ||
Fair Value, Measurements, Recurring | Foreign government bonds | Significant Unobservable Inputs (Level 3) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Other assets | 0 | 0 | ||
Fair Value, Measurements, Recurring | Equity securities | ||||
Assets | ||||
Investments | 249 | 360 | ||
Other assets | 161 | 174 | ||
Fair Value, Measurements, Recurring | Equity securities | Quoted Prices In Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Investments | 249 | 360 | ||
Other assets | 161 | 155 | ||
Fair Value, Measurements, Recurring | Equity securities | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Other assets | 0 | 19 | ||
Fair Value, Measurements, Recurring | Equity securities | Significant Unobservable Inputs (Level 3) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Other assets | $ 0 | $ 0 |
Financial Instruments - Infor51
Financial Instruments - Information About Changes in Liabilities for Contingent Consideration (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Fair value, beginning balance | $ 590 | $ 428 |
Changes in fair value | 29 | 8 |
Additions | 300 | 228 |
Payments | (25) | (50) |
Fair value, ending balance | $ 894 | $ 614 |
Inventories - Inventories (Deta
Inventories - Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 1,421 | $ 1,343 |
Raw materials and work in process | 4,432 | 4,374 |
Supplies | 175 | 168 |
Total (approximates current cost) | 6,028 | 5,885 |
Increase to LIFO costs | 320 | 384 |
Total current and noncurrent inventories | 6,348 | 6,269 |
Recognized as: | ||
Inventories | 5,244 | 4,700 |
Other Assets | $ 1,104 | $ 1,569 |
Inventories - Narrative (Detail
Inventories - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Inventory [Line Items] | ||
Other Assets | $ 1,104 | $ 1,569 |
Inventories Not Expected to be Sold Within One Year | ||
Inventory [Line Items] | ||
Other Assets | 1,000 | 1,500 |
Inventories Produced in Preparation for Product Launches | ||
Inventory [Line Items] | ||
Other Assets | $ 56 | $ 63 |
Other Intangibles - Finite-Live
Other Intangibles - Finite-Lived Intangible Assets Narrative (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible asset impairment charges related to marketed products | $ 347 |
Zontivity | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible asset impairment charges related to marketed products | 252 |
Grastek/Ragwitek | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible asset impairment charges related to marketed products | $ 95 |
Other Intangibles - Indefinite-
Other Intangibles - Indefinite-Lived Intangible Assets Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Indefinite-lived Intangible Assets [Line Items] | ||
In-process research and development impairment charges | $ 225 | $ 62 |
House Dust Mite | ||
Indefinite-lived Intangible Assets [Line Items] | ||
In-process research and development impairment charges | 112 | |
Next Generation Ring | ||
Indefinite-lived Intangible Assets [Line Items] | ||
In-process research and development impairment charges | $ 79 | |
surotomycin | ||
Indefinite-lived Intangible Assets [Line Items] | ||
In-process research and development impairment charges | $ 50 |
Joint Ventures and Other Equi56
Joint Ventures and Other Equity Method Affiliates - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Jun. 30, 2014 | |
Equity Income from Affiliates [Line Items] | |||||
Equity income from affiliates | $ 21 | $ 63 | $ 59 | $ 210 | |
Sanofi Pasteur MSD | |||||
Equity Income from Affiliates [Line Items] | |||||
Sales of products marketed by the joint venture | $ 351 | $ 318 | 725 | $ 655 | |
AstraZeneca LP | |||||
Equity Income from Affiliates [Line Items] | |||||
Portion of exercise price that was deferred | $ 327 | ||||
Additional income recognized related to option exercise | $ 76 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) | 1 Months Ended | ||
Nov. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Nov. 30, 2016EUR (€) | |
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ | $ 6,000,000,000 | ||
Debt instrument, term | 5 years | ||
Subsequent Event | |||
Debt Instrument [Line Items] | |||
Face amount | € 1,000,000,000 | ||
Proceeds from debt, net of issuance costs | $ | $ 1,100,000,000 | ||
Subsequent Event | 0.50% euro-denominated notes due 2024 | |||
Debt Instrument [Line Items] | |||
Face amount | € 500,000,000 | ||
Stated interest rate | 0.50% | ||
Subsequent Event | 1.375% euro-denominated notes due 2036 | |||
Debt Instrument [Line Items] | |||
Face amount | € 500,000,000 | ||
Stated interest rate | 1.375% |
Contingencies - Vioxx Litigatio
Contingencies - Vioxx Litigation - Narrative (Details) | Jun. 28, 2016USD ($) | Mar. 31, 2016USD ($) | Sep. 30, 2016USD ($)legalmatter |
Loss Contingencies [Line Items] | |||
Settlement agreement amount for (against) the company | $ (200,000,000) | ||
Cases Brought by State Attorneys General | ALASKA | |||
Loss Contingencies [Line Items] | |||
Settlement agreement amount for (against) the company | $ 15,250,000 | ||
Cases Brought by State Attorneys General | MONTANA | |||
Loss Contingencies [Line Items] | |||
Settlement agreement amount for (against) the company | 16,700,000 | ||
Vioxx Securities Lawsuit | |||
Loss Contingencies [Line Items] | |||
Insurance proceeds | 380,000,000 | ||
Vioxx Securities Lawsuit | Maximum | |||
Loss Contingencies [Line Items] | |||
Upper limits of Directors and Officers insurance coverage | $ 145,000,000 | ||
Vioxx | Cases alleging economic loss | |||
Loss Contingencies [Line Items] | |||
Loss contingency, pending claims, number (in legal matters) | legalmatter | 1 | ||
Settlement agreement amount for (against) the company | $ 23,000,000 | ||
Net cash payment for litigation settlement | 700,000 | ||
Vioxx | Vioxx Securities Lawsuit Settlement Class Fund | |||
Loss Contingencies [Line Items] | |||
Settlement agreement amount for (against) the company | 830,000,000 | ||
Vioxx | Vioxx Securities Lawsuit Fee/Expense Settlement Fund | |||
Loss Contingencies [Line Items] | |||
Settlement agreement amount for (against) the company | $ 222,000,000 | 232,000,000 | |
Vioxx | Vioxx Securities Lawsuit | |||
Loss Contingencies [Line Items] | |||
Net cash payment for litigation settlement | $ 680,000,000 |
Contingencies - Fosamax Litigat
Contingencies - Fosamax Litigation - Narrative (Details) $ in Millions | 1 Months Ended | 9 Months Ended | ||||||
Mar. 31, 2016USD ($) | Jun. 30, 2015legalmatter | Jul. 31, 2014USD ($) | Mar. 31, 2014legalmatter | Dec. 31, 2013USD ($)legalmatter | Sep. 30, 2016legalmatter | Jul. 31, 2015legalmatter | Nov. 30, 2013legalmatter | |
Loss Contingencies [Line Items] | ||||||||
Settlement agreement amount for (against) the company | $ | $ 200 | |||||||
Fosamax | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number (in legal matters) | 4,310 | |||||||
Fosamax | Federal | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number (in legal matters) | 3 | |||||||
Loss contingency, claims dismissed, number (in legal matters) | 540 | 650 | 540 | |||||
Loss contingency, claims on appeal, number (in legal matters) | 515 | |||||||
Fosamax | New Jersey | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number (in legal matters) | 2,940 | |||||||
Loss contingency, initial cases selected for review, number (in legal matters) | 30 | |||||||
Loss contingency, subsequent cases selected for review, number (in legal matters) | 50 | 25 | 50 | |||||
Fosamax | California State Court | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number (in legal matters) | 285 | |||||||
Loss contingency, initial cases selected for review, number (in legal matters) | 10 | |||||||
Fosamax | Other State Court | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number (in legal matters) | 5 | |||||||
Fosamax | ONJ Litigation | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number (in legal matters) | 20 | |||||||
Settlement agreement amount for (against) the company | $ | $ (27.3) | $ (27.7) | ||||||
Number of claims settled (in legal matters) | 1,200 | |||||||
Percentage of participation in litigation settlement | 95.00% | |||||||
Fosamax | Femur Fracture Litigation | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, pending claims, number (in legal matters) | 4,290 |
Contingencies - Januvia_Janumet
Contingencies - Januvia/Janumet Litigation - Narrative (Details) - Januvia - legalmatter | 1 Months Ended | |
Nov. 30, 2015 | Sep. 30, 2016 | |
Loss Contingencies [Line Items] | ||
Loss contingency, pending claims, number (in legal matters) | 1,140 | |
Loss contingency, claims dismissed, number (in legal matters) | 1,100 | |
Cases Company Agreed ToToll Statute Of Limitations | ||
Loss Contingencies [Line Items] | ||
Loss contingency, pending claims, number (in legal matters) | 50 | |
Other State Court | ||
Loss Contingencies [Line Items] | ||
Loss contingency, pending claims, number (in legal matters) | 9 |
Contingencies - Propecia_Prosca
Contingencies - Propecia/Proscar Litigation - Narrative (Details) | 9 Months Ended |
Sep. 30, 2016Plaintifflegalmatter | |
Propecia | |
Loss Contingencies [Line Items] | |
Loss contingency, pending claims, number (in legal matters) | 1,370 |
Propecia | Cases alleging cancer | |
Loss Contingencies [Line Items] | |
Number of plaintiffs | Plaintiff | 50 |
Propecia/Proscar | Other State Court | Massachusetts | |
Loss Contingencies [Line Items] | |
Loss contingency, pending claims, number (in legal matters) | 1 |
Propecia/Proscar | Other State Court | New York | |
Loss Contingencies [Line Items] | |
Loss contingency, pending claims, number (in legal matters) | 1 |
Contingencies - Patent Litigati
Contingencies - Patent Litigation - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended |
Mar. 31, 2016 | Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Gain (loss) related to litigation settlement | $ 117 | |
Judgment awarded to Merck | $ 200 | |
Percentage of settlement to be paid to third-party | 20.00% |
Contingencies - Legal Defense R
Contingencies - Legal Defense Reserves - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Legal Defense Costs | ||
Loss Contingencies [Line Items] | ||
Legal defense costs reserve | $ 200 | $ 245 |
Equity - Shareholders' Equity (
Equity - Shareholders' Equity (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Shares, Beginning Balance (shares) | 3,577,103,522 | |||
Equity, Beginning Balance | $ 44,767 | $ 48,791 | ||
Net Income Attributable to Merck & Co., Inc. | $ 2,184 | $ 1,826 | 4,515 | 3,465 |
Other comprehensive income (loss) | (104) | (250) | ||
Cash dividends declared on common stock | (3,835) | (3,826) | ||
Treasury stock shares purchased | (2,418) | (3,005) | ||
Share-based compensation plans and other | 910 | 577 | ||
Changes in noncontrolling ownership interests | 124 | |||
Changes in noncontrolling ownership interests | (76) | |||
Net income attributable to noncontrolling interests | $ 4 | 5 | 13 | 12 |
Distributions attributable to noncontrolling interests | $ (15) | (9) | ||
Shares, Ending balance (shares) | 3,577,103,522 | 3,577,103,522 | ||
Equity, Ending Balance | $ 43,957 | $ 45,679 | $ 43,957 | $ 45,679 |
Common Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Shares, Beginning Balance (shares) | 3,577,000,000 | 3,577,000,000 | ||
Equity, Beginning Balance | $ 1,788 | $ 1,788 | ||
Shares, Ending balance (shares) | 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 | 40,222 | 40,423 | ||
Share-based compensation plans and other | (325) | (263) | ||
Changes in noncontrolling ownership interests | (21) | |||
Equity, Ending Balance | 39,897 | 40,139 | 39,897 | 40,139 |
Retained Earnings | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Equity, Beginning Balance | 45,348 | 46,021 | ||
Net Income Attributable to Merck & Co., Inc. | 4,515 | 3,465 | ||
Cash dividends declared on common stock | (3,835) | (3,826) | ||
Equity, Ending Balance | 46,028 | 45,660 | 46,028 | 45,660 |
Accumulated Other Comprehensive Loss | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Equity, Beginning Balance | (4,148) | (4,323) | ||
Other comprehensive income (loss) | (104) | (250) | ||
Equity, Ending Balance | $ (4,252) | $ (4,573) | $ (4,252) | $ (4,573) |
Treasury Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Shares, Beginning Balance (shares) | 796,000,000 | 739,000,000 | ||
Equity, Beginning Balance | $ (38,534) | $ (35,262) | ||
Treasury stock shares purchased, Shares (shares) | 44,000,000 | 53,000,000 | ||
Treasury stock shares purchased | $ (2,418) | $ (3,005) | ||
Share-based compensation plans and other, Shares (shares) | (25,000,000) | (17,000,000) | ||
Share-based compensation plans and other | $ 1,235 | $ 840 | ||
Shares, Ending balance (shares) | 815,000,000 | 775,000,000 | 815,000,000 | 775,000,000 |
Equity, Ending Balance | $ (39,717) | $ (37,427) | $ (39,717) | $ (37,427) |
Non- Controlling Interests | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Equity, Beginning Balance | 91 | 144 | ||
Changes in noncontrolling ownership interests | 124 | |||
Changes in noncontrolling ownership interests | (55) | |||
Net income attributable to noncontrolling interests | 13 | 12 | ||
Distributions attributable to noncontrolling interests | (15) | (9) | ||
Equity, Ending Balance | $ 213 | $ 92 | $ 213 | $ 92 |
Share-Based Compensation Plan65
Share-Based Compensation Plans - Amounts of Share-Based Compensation Cost Recorded in Consolidated Statement of Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Pretax share-based compensation expense | $ 77 | $ 75 | $ 225 | $ 221 |
Income tax benefit | (24) | (23) | (69) | (69) |
Total share-based compensation expense, net of taxes | $ 53 | $ 52 | $ 156 | $ 152 |
Share-Based Compensation Plan66
Share-Based Compensation Plans - Narrative (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
RSUs granted (in shares) | 6 | 4 |
Weighted-average fair value per RSU granted (in dollars per share) | $ 54.61 | $ 59.79 |
Options granted (in shares) | 6 | 5 |
Weighted- average exercise price of options granted in period (in dollars per share) | $ 54.62 | $ 59.82 |
Weighted- average fair value per option granted (in dollars per share) | $ 5.89 | $ 6.46 |
Total pretax unrecognized compensation expense related to nonvested stock options, RSU and PSU awards | $ 524 | |
Weighted average period in years of recognition for nonvested stock options, RSU and PSU awards | 2 years 1 month 6 days |
Share-Based Compensation Plan67
Share-Based Compensation Plans - Assumptions Used to Determine Weighted-Average Fair Value of Options Granted (Details) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Expected dividend yield | 3.80% | 4.10% |
Risk-free interest rate | 1.40% | 1.70% |
Expected volatility | 19.60% | 19.90% |
Expected life (years) | 6 years 2 months 12 days | 6 years 2 months 12 days |
Pension and Other Postretirem68
Pension and Other Postretirement Benefit Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
U.S. | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 66 | $ 65 | $ 212 | $ 230 |
Interest cost | 116 | 108 | 342 | 326 |
Expected return on plan assets | (203) | (203) | (623) | (614) |
Net amortization | 18 | 33 | 48 | 119 |
Termination benefits | 6 | 2 | 11 | 20 |
Curtailments | 3 | (1) | 3 | (10) |
Settlements | 0 | 0 | 0 | 0 |
Net periodic benefit cost | 6 | 4 | (7) | 71 |
International | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 59 | 61 | 179 | 190 |
Interest cost | 51 | 52 | 155 | 156 |
Expected return on plan assets | (95) | (95) | (288) | (286) |
Net amortization | 18 | 26 | 55 | 79 |
Termination benefits | 1 | 0 | 2 | 1 |
Curtailments | (2) | (2) | (1) | (3) |
Settlements | 0 | 1 | 0 | 4 |
Net periodic benefit cost | 32 | 43 | 102 | 141 |
Other Postretirement Benefit Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 14 | 22 | 41 | 61 |
Interest cost | 19 | 28 | 62 | 83 |
Expected return on plan assets | (19) | (36) | (88) | (107) |
Net amortization | (25) | (13) | (78) | (44) |
Termination benefits | 1 | 1 | 1 | 6 |
Curtailments | (5) | (1) | (7) | (8) |
Net periodic benefit cost | $ (15) | $ 1 | $ (69) | $ (9) |
Pension and Other Postretirem69
Pension and Other Postretirement Benefit Plans - Narrative (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Assets no longer subject to restriction | |
Defined Benefit Plan Disclosure [Line Items] | |
Benefit plan assets | $ 990 |
International | |
Defined Benefit Plan Disclosure [Line Items] | |
Expected company contributions to international pension plans in 2016 | $ 450 |
Other (Income) Expense, Net (De
Other (Income) Expense, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Other Income and Expenses [Abstract] | ||||
Interest income | $ (87) | $ (68) | $ (244) | $ (214) |
Interest expense | 170 | 165 | 513 | 503 |
Exchange losses | 3 | 228 | 79 | 1,038 |
Equity income from affiliates | (21) | (63) | (59) | (210) |
Other, net | (43) | (432) | (201) | (493) |
Other (income) expense, net | $ 22 | $ (170) | $ 88 | $ 624 |
Other (Income) Expense, Net - N
Other (Income) Expense, Net - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | |
Component of Other Income / Expense of Nonoperating [Line Items] | |||||
Foreign currency devaluation related to Venezuela | $ 0 | $ 715 | |||
Gain (loss) related to litigation settlement | 117 | ||||
Noncash contribution expense | 78 | ||||
Interest paid | $ 470 | 452 | |||
CGRP receptor antagonists | |||||
Component of Other Income / Expense of Nonoperating [Line Items] | |||||
Gain (Loss) on disposition of intangible assets | $ 40 | $ 250 | $ 250 | ||
VENEZUELA | |||||
Component of Other Income / Expense of Nonoperating [Line Items] | |||||
Foreign currency exchange rate, translation | 6.30 | 6.30 | |||
Foreign currency devaluation related to Venezuela | $ 138 | $ 715 |
Taxes on Income - Narrative (De
Taxes on Income - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 24.20% | 23.60% | 24.70% | 24.20% |
Income Tax [Line Items] | ||||
Tax expense (benefit) | $ 699 | $ 566 | $ 1,487 | $ 1,108 |
Deferred other tax expense (benefit) | 75 | |||
Internal Revenue Service (IRS) | ||||
Income Tax [Line Items] | ||||
Tax expense (benefit) | $ (370) |
Earnings Per Share - Calculatio
Earnings Per Share - Calculations of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Net Income Attributable to Merck & Co., Inc. | $ 2,184 | $ 1,826 | $ 4,515 | $ 3,465 |
Average common shares outstanding (in shares) | 2,765 | 2,814 | 2,769 | 2,825 |
Common shares issuable (in shares) | 21 | 22 | 22 | 25 |
Average common shares outstanding assuming dilution (in shares) | 2,786 | 2,836 | 2,791 | 2,850 |
Basic earnings per common share attributable to Merck & Co., Inc. common shareholders (in dollars per share) | $ 0.79 | $ 0.65 | $ 1.63 | $ 1.23 |
Earnings per common share assuming dilution attributable to Merck & Co., Inc. common shareholders (in dollars per share) | $ 0.78 | $ 0.64 | $ 1.62 | $ 1.22 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
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 (shares) | 4 | 10 | 13 | 7 |
Other Comprehensive Income (L75
Other Comprehensive Income (Loss) - Changes in AOCI by Component (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), beginning balance | $ (4,086) | $ (4,332) | $ (4,148) | $ (4,323) |
Other comprehensive income (loss) before reclassification adjustments, pretax | (198) | (181) | (174) | 319 |
Tax | 54 | 37 | 228 | (260) |
Other comprehensive income (loss) before reclassification adjustments, net of taxes | (144) | (144) | 54 | 59 |
Reclassification adjustments, pretax | (39) | (141) | (255) | (458) |
Tax | 17 | 44 | 97 | 149 |
Reclassification adjustments, net of taxes | (22) | (97) | (158) | (309) |
Other comprehensive income (loss), net of taxes | (166) | (241) | (104) | (250) |
Accumulated Other Comprehensive Income (Loss), ending balance | (4,252) | (4,573) | (4,252) | (4,573) |
Derivatives | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), beginning balance | 111 | 606 | 404 | 530 |
Other comprehensive income (loss) before reclassification adjustments, pretax | (69) | (16) | (311) | 464 |
Tax | 24 | 9 | 109 | (159) |
Other comprehensive income (loss) before reclassification adjustments, net of taxes | (45) | (7) | (202) | 305 |
Reclassification adjustments, pretax | (45) | (171) | (254) | (534) |
Tax | 16 | 60 | 89 | 187 |
Reclassification adjustments, net of taxes | (29) | (111) | (165) | (347) |
Other comprehensive income (loss), net of taxes | (74) | (118) | (367) | (42) |
Accumulated Other Comprehensive Income (Loss), ending balance | 37 | 488 | 37 | 488 |
Investments | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), beginning balance | 167 | 143 | 41 | 111 |
Other comprehensive income (loss) before reclassification adjustments, pretax | (22) | (81) | 108 | 18 |
Tax | (3) | 24 | 8 | (1) |
Other comprehensive income (loss) before reclassification adjustments, net of taxes | (25) | (57) | 116 | 17 |
Reclassification adjustments, pretax | (5) | (16) | (26) | (78) |
Tax | 0 | 6 | 6 | 26 |
Reclassification adjustments, net of taxes | (5) | (10) | (20) | (52) |
Other comprehensive income (loss), net of taxes | (30) | (67) | 96 | (35) |
Accumulated Other Comprehensive Income (Loss), ending balance | 137 | 76 | 137 | 76 |
Employee Benefit Plans | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), beginning balance | (2,543) | (2,909) | (2,407) | (2,986) |
Other comprehensive income (loss) before reclassification adjustments, pretax | (177) | 3 | (395) | 18 |
Tax | 21 | 2 | 88 | (2) |
Other comprehensive income (loss) before reclassification adjustments, net of taxes | (156) | 5 | (307) | 16 |
Reclassification adjustments, pretax | 11 | 46 | 25 | 154 |
Tax | 1 | (22) | 2 | (64) |
Reclassification adjustments, net of taxes | 12 | 24 | 27 | 90 |
Other comprehensive income (loss), net of taxes | (144) | 29 | (280) | 106 |
Accumulated Other Comprehensive Income (Loss), ending balance | (2,687) | (2,880) | (2,687) | (2,880) |
Cumulative Translation Adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated Other Comprehensive Income (Loss), beginning balance | (1,821) | (2,172) | (2,186) | (1,978) |
Other comprehensive income (loss) before reclassification adjustments, pretax | 70 | (87) | 424 | (181) |
Tax | 12 | 2 | 23 | (98) |
Other comprehensive income (loss) before reclassification adjustments, net of taxes | 82 | (85) | 447 | (279) |
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 | 82 | (85) | 447 | (279) |
Accumulated Other Comprehensive Income (Loss), ending balance | $ (1,739) | $ (2,257) | $ (1,739) | $ (2,257) |
Segment Reporting - Sales of Co
Segment Reporting - Sales of Company's Products (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Sales | $ 10,536 | $ 10,073 | $ 29,692 | $ 29,283 |
corticotropin marketing rights | ||||
Segment Reporting Information [Line Items] | ||||
Proceeds from sale of marketing rights | 75 | |||
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 10,420 | 9,828 | 29,109 | 28,500 |
Operating Segments | Total Pharmaceutical segment sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 9,443 | 8,925 | 26,247 | 25,755 |
Operating Segments | Total Pharmaceutical segment sales | Zetia | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 671 | 633 | 1,985 | 1,836 |
Operating Segments | Total Pharmaceutical segment sales | Vytorin | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 273 | 302 | 843 | 942 |
Operating Segments | Total Pharmaceutical segment sales | Januvia | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 1,006 | 1,014 | 2,976 | 2,942 |
Operating Segments | Total Pharmaceutical segment sales | Janumet | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 548 | 562 | 1,624 | 1,625 |
Operating Segments | Total Pharmaceutical segment sales | NuvaRing | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 195 | 190 | 571 | 538 |
Operating Segments | Total Pharmaceutical segment sales | Implanon/Nexplanon | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 148 | 176 | 446 | 437 |
Operating Segments | Total Pharmaceutical segment sales | Dulera | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 97 | 133 | 331 | 383 |
Operating Segments | Total Pharmaceutical segment sales | Follistim AQ | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 101 | 95 | 268 | 288 |
Operating Segments | Total Pharmaceutical segment sales | Zepatier | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 164 | 0 | 326 | 0 |
Operating Segments | Total Pharmaceutical segment sales | Isentress | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 372 | 377 | 1,050 | 1,137 |
Operating Segments | Total Pharmaceutical segment sales | Cubicin | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 320 | 325 | 969 | 805 |
Operating Segments | Total Pharmaceutical segment sales | Noxafil | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 147 | 132 | 434 | 360 |
Operating Segments | Total Pharmaceutical segment sales | Invanz | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 152 | 153 | 409 | 424 |
Operating Segments | Total Pharmaceutical segment sales | Cancidas | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 142 | 139 | 406 | 436 |
Operating Segments | Total Pharmaceutical segment sales | Bridion | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 139 | 89 | 343 | 262 |
Operating Segments | Total Pharmaceutical segment sales | Primaxin | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 77 | 75 | 231 | 228 |
Operating Segments | Total Pharmaceutical segment sales | Remicade | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 311 | 442 | 999 | 1,398 |
Operating Segments | Total Pharmaceutical segment sales | Simponi | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 193 | 178 | 581 | 505 |
Operating Segments | Total Pharmaceutical segment sales | Keytruda | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 356 | 159 | 919 | 352 |
Operating Segments | Total Pharmaceutical segment sales | Emend | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 137 | 141 | 405 | 396 |
Operating Segments | Total Pharmaceutical segment sales | Temodar | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 78 | 83 | 216 | 238 |
Operating Segments | Total Pharmaceutical segment sales | Singulair | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 239 | 201 | 705 | 658 |
Operating Segments | Total Pharmaceutical segment sales | Nasonex | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 94 | 121 | 425 | 625 |
Operating Segments | Total Pharmaceutical segment sales | Cozaar/Hyzaar | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 131 | 150 | 389 | 524 |
Operating Segments | Total Pharmaceutical segment sales | Arcoxia | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 114 | 123 | 342 | 361 |
Operating Segments | Total Pharmaceutical segment sales | Fosamax | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 68 | 86 | 217 | 277 |
Operating Segments | Total Pharmaceutical segment sales | Zocor | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 54 | 56 | 150 | 168 |
Operating Segments | Total Pharmaceutical segment sales | Gardasil/Gardasil 9 | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 860 | 625 | 1,631 | 1,410 |
Operating Segments | Total Pharmaceutical segment sales | ProQuad/M-M-R II/Varivax | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 496 | 390 | 1,236 | 1,096 |
Operating Segments | Total Pharmaceutical segment sales | RotaTeq | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 171 | 160 | 489 | 441 |
Operating Segments | Total Pharmaceutical segment sales | Zostavax | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 190 | 179 | 464 | 503 |
Operating Segments | Total Pharmaceutical segment sales | Pneumovax 23 | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 175 | 138 | 403 | 354 |
Operating Segments | Total Pharmaceutical segment sales | Other Pharmaceutical | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 1,224 | 1,298 | 3,464 | 3,806 |
Operating Segments | Other segment sales | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 977 | 903 | 2,862 | 2,745 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Sales | $ 116 | $ 245 | $ 583 | $ 783 |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of Segment Profits to Income Before Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Income Before Taxes | $ 2,887 | $ 2,397 | $ 6,015 | $ 4,585 |
Interest income | 87 | 68 | 244 | 214 |
Interest expense | (170) | (165) | (513) | (503) |
Equity income from affiliates | 21 | 63 | 59 | 210 |
Depreciation and amortization | (4,286) | (4,815) | ||
Research and development | (1,664) | (1,500) | (5,475) | (4,906) |
Restructuring costs | (161) | (113) | (386) | (386) |
Foreign currency devaluation related to Venezuela | 0 | (715) | ||
Total segment profits | ||||
Segment Reporting Information [Line Items] | ||||
Income Before Taxes | 6,551 | 6,035 | 17,827 | 17,296 |
Total segment profits | Pharmaceutical segment | ||||
Segment Reporting Information [Line Items] | ||||
Income Before Taxes | 6,162 | 5,641 | 16,698 | 16,088 |
Total segment profits | Other segments | ||||
Segment Reporting Information [Line Items] | ||||
Income Before Taxes | 389 | 394 | 1,129 | 1,208 |
Other profits (losses) | ||||
Segment Reporting Information [Line Items] | ||||
Income Before Taxes | 21 | 204 | 341 | 582 |
Unallocated: | ||||
Segment Reporting Information [Line Items] | ||||
Interest income | 87 | 68 | 244 | 214 |
Interest expense | (170) | (165) | (513) | (503) |
Equity income from affiliates | (27) | 25 | (13) | 161 |
Depreciation and amortization | (365) | (381) | (1,228) | (1,169) |
Research and development | (1,444) | (1,291) | (4,651) | (4,310) |
Amortization of purchase accounting adjustments | (772) | (1,180) | (2,932) | (3,658) |
Restructuring costs | (161) | (113) | (386) | (386) |
Gain on sale of certain migraine clinical development programs | 40 | 250 | 40 | 250 |
Foreign currency devaluation related to Venezuela | 0 | 0 | 0 | (715) |
Other unallocated, net | $ (873) | $ (1,055) | $ (2,714) | $ (3,177) |