Merck & Co. 8K Results of Operations and Financial Condition | MRK 27 Oct 14

Exhibit 99.2

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1a

	2014												2013																		% Change
	1Q			2Q			3Q			Sep YTD			1Q			2Q			3Q			Sep YTD			4Q			Full Year			3Q		Sep YTD

Sales	$	10,264		$	10,934		$	10,557		$	31,755		$	10,671		$	11,010		$	11,032		$	32,713		$	11,319		$	44,033		-4	%	-3	%

Costs, Expenses and Other
Materials and production	3,903			4,893			4,223			13,019			3,959			4,284			4,104			12,347			4,607			16,954			3	%	5	%
Marketing and administrative	2,734			2,973			2,975			8,681			2,987			3,140			2,803			8,929			2,982			11,911			6	%	-3	%
Research and development	1,574			1,664			1,659			4,897			1,907			2,101			1,660			5,668			1,836			7,503			—		-14	%
Restructuring costs	125			163			376			664			119			155			870			1,144			565			1,709			-57	%	-42	%
Equity income from affiliates	(124		)	(92		)	(24		)	(241		)	(133		)	(116		)	(102		)	(351		)	(53		)	(404		)	-76	%	-31	%
Other (income) expense, net	(39		)	(558		)	(142		)	(737		)	282			201			172			656			157			815			*		*
Income Before Taxes	2,091			1,891			1,490			5,472			1,550			1,245			1,525			4,320			1,225			5,545			-2	%	27	%
Income Tax Provision (Benefit)	360			(142		)	648			865			(66		)	310			375			618			410			1,028
Net Income	1,731			2,033			842			4,607			1,616			935			1,150			3,702			815			4,517			-27	%	24	%
Less: Net Income (Loss) Attributable to Noncontrolling Interests	26			29			(53		)	3			23			29			26			79			34			113
Net Income Attributable to Merck & Co., Inc.	$	1,705		$	2,004		$	895		$	4,604		$	1,593		$	906		$	1,124		$	3,623		$	781		$	4,404		-20	%	27	%
Earnings per Common Share Assuming Dilution	$	0.57		$	0.68		$	0.31		$	1.57		$	0.52		$	0.30		$	0.38		$	1.20		$	0.26		$	1.47		-18	%	31	%

Average Shares Outstanding Assuming Dilution	2,971			2,949			2,911			2,942			3,053			3,010			2,960			3,007			2,959			2,996
Tax Rate	17.2		%	-7.5		%	43.5		%	15.8		%	-4.3		%	24.9		%	24.6		%	14.3		%	33.5		%	18.5		%

* 100% or greater

Sum of quarterly amounts may not equal year-to-date amounts due to rounding.

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME

GAAP TO NON-GAAP RECONCILIATION

THIRD QUARTER 2013

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2c

				Acquisition and
				Divestiture-		Restructuring		Adjustment
	GAAP			Related Costs (1)		Costs (2)		Subtotal			Non-GAAP

Sales	$	11,032									$	11,032

Costs, Expenses and Other
Materials and production	4,104			1,176		57		1,233			2,871
Marketing and administrative	2,803			20		31		51			2,752
Research and development	1,660					9		9			1,651
Restructuring costs	870					870		870			—
Equity income from affiliates	(102		)								(102		)
Other (income) expense, net	172										172
Income Before Taxes	1,525			(1,196	)	(967	)	(2,163		)	3,688
Taxes on Income	375							(558		)(3)	933
Net Income	1,150							(1,605		)	2,755
Less: Net Income Attributable to Noncontrolling Interests	26										26
Net Income Attributable to Merck & Co., Inc.	$	1,124						$	(1,605	)	$	2,729
Earnings per Common Share Assuming Dilution	$	0.38									$	0.92

Average Shares Outstanding Assuming Dilution	2,960										2,960
Tax Rate	24.6		%								25.3		%

Merck is providing non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s performance. This information should be considered in addition to, but not in lieu of, information prepared in accordance with GAAP.

(1) Amounts included in materials and production costs reflect expenses for the amortization of intangible assets recognized as a result of mergers and acquisitions. Amounts included in marketing and administrative expenses reflect merger integration costs.

(2) Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to actions under the company’s formal restructuring programs.

(3) Represents the estimated tax impact on the reconciling items, as well as a net benefit of approximately $165 million related to the settlements of certain federal income tax issues.

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME

GAAP TO NON-GAAP RECONCILIATION

NINE MONTHS ENDED SEPTEMBER 30, 2013

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2d

				Acquisition and
				Divestiture-		Restructuring		Certain Other		Adjustment
	GAAP			Related Costs (1)		Costs (2)		Items		Subtotal			Non-GAAP

Sales	$	32,713											$	32,713

Costs, Expenses and Other
Materials and production	12,347			3,875		193				4,068			8,279
Marketing and administrative	8,929			62		64				126			8,803
Research and development	5,668			264		38				302			5,366
Restructuring costs	1,144					1,144				1,144			—
Equity income from affiliates	(351		)										(351		)
Other (income) expense, net	656							(13	)	(13		)	669
Income Before Taxes	4,320			(4,201	)	(1,439	)	13		(5,627		)	9,947
Taxes on Income	618									(1,406		)(3)	2,024
Net Income	3,702									(4,221		)	7,923
Less: Net Income Attributable to Noncontrolling Interests	79												79
Net Income Attributable to Merck & Co., Inc.	$	3,623								$	(4,221	)	$	7,844
Earnings per Common Share Assuming Dilution	$	1.20											$	2.61

Average Shares Outstanding Assuming Dilution	3,007												3,007
Tax Rate	14.3		%										20.3		%

(1) Amounts included in materials and production costs reflect expenses of $3.5 billion for the amortization of intangible assets recognized as a result of mergers and acquisitions, as well as $330 million of impairment charges on product intangibles. Amounts included in marketing and administrative expenses reflect merger integration costs. Amounts included in research and development expenses represent in-process research and development (“IPR&D”) impairment charges.

(3) Represents the estimated tax impact on the reconciling items, as well as net benefits of approximately $325 million related to the settlements of certain federal income tax issues.

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

THIRD QUARTER 2014

(AMOUNTS IN MILLIONS)

Table 3a

	Global					U.S.					International
	3Q 2014		3Q 2013		% Change	3Q 2014		3Q 2013		% Change	3Q 2014		3Q 2013		% Change
TOTAL SALES (1)	$	10,557	$	11,032	-4	$	4,409	$	4,905	-10	$	6,148	$	6,127

PHARMACEUTICAL	9,134		9,475		-4	3,837		4,148		-8	5,297		5,327		-1

Primary Care and Women’s Health
Cardiovascular
Zetia	660		662			361		369		-2	298		293		2
Vytorin	369		396		-7	133		165		-19	236		232		2

Diabetes & Obesity
Januvia / Janumet	1,439		1,369		5	740		701		6	698		668		4

General Medicine & Women’s Health
NuvaRing	186		170		9	119		106		12	67		64		4
Implanon / Nexplanon	158		96		65	93		50		86	65		46		42
Dulera	124		82		51	117		78		51	6		4		61
Follistim AQ	97		124		-22	39		55		-29	58		69		-16

Hospital and Specialty
Hepatitis
PegIntron	84		104		-19	4		9		-59	81		95		-15
Victrelis	27		121		-78			45		*	27		75		-64

HIV
Isentress	412		427		-3	207		227		-9	205		199		3

Acute Care
Cancidas	183		151		21	4		7		-49	179		144		24
Invanz	141		130		9	72		70		3	69		59		17
Noxafil	107		75		42	40		23		73	67		52		29
Bridion	90		75		20						90		75		20
Primaxin	91		88		4	1		8		-93	91		80		13

Immunology
Remicade	604		574		5						604		574		5
Simponi	170		126		35						170		126		35

Other
Cosopt / Trusopt	34		104		-68	1		5		-84	33		100		-67

Oncology
Emend	136		123		11	80		73		9	56		49		13
Temodar	88		162		-46	1		71		-99	87		91		-4

Diversified Brands
Respiratory
Nasonex	261		297		-12	154		179		-14	107		118		-9
Singulair	218		280		-22	5		29		-83	214		252		-15
Clarinex	49		54		-10	7		6		4	42		48		-12

Other
Cozaar / Hyzaar	195		238		-18	6		11		-44	188		227		-17
Arcoxia	132		112		18						132		112		18
Fosamax	114		140		-19	3		7		-52	111		133		-17
Propecia	66		71		-7	5		7		-30	61		64		-4
Zocor	61		65		-6	5		6		-14	56		59		-5
Remeron	47		44		7	1		1		-8	46		43		7

Vaccines
Gardasil	590		665		-11	511		548		-7	79		117		-33
ProQuad, M-M-R II and Varivax	421		421			377		386		-2	44		35		26
RotaTeq	174		201		-14	126		154		-19	48		47		3
Zostavax	181		185		-2	149		169		-12	32		16		*
Pneumovax 23	197		193		2	150		149		1	48		44		7

Other Pharmaceutical (2)	1,228		1,350		-9	326		433		-25	902		916		-2

ANIMAL HEALTH	885		800		11	216		208		4	669		591		13

CONSUMER CARE	401		443		-9	262		282		-7	139		160		-13
Claritin OTC	110		123		-11	75		90		-17	35		33		4

Other Revenues (3)	137		314		-56	94		266		-65	43		48		-10
Astra	1		220		-99	1		220		-99

* 100% or greater

(1) Only select products are shown.

(2) Includes Pharmaceutical products not individually shown above. Other Vaccines sales included in Other Pharmaceutical were $116 million and $127 million on a global basis for third quarter 2014 and 2013, respectively.

(3) Other revenues are comprised primarily of alliance revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities. On October 1, 2013, the company divested a substantial portion of its third-party manufacturing sales. On June 30, 2014, AstraZeneca exercised its option to buy Merck’s interest in a subsidiary and through it, Merck’s interest in Nexium and Prilosec. As a result, the company no longer records supply sales for these products.

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

SEPTEMBER YEAR-TO-DATE 2014

(AMOUNTS IN MILLIONS)

Table 3b

	Global					U.S.					International
	Sep YTD 14		Sep YTD 13		% Change	Sep YTD 14		Sep YTD 13		% Change	Sep YTD 14		Sep YTD 13		% Change
TOTAL SALES (1)	$	31,755	$	32,713	-3	$	12,983	$	13,727	-5	$	18,772	$	18,987	-1

PHARMACEUTICAL	26,672		27,677		-4	10,429		11,093		-6	16,243		16,584		-2

Primary Care and Women’s Health
Cardiovascular
Zetia	1,988		1,941		2	1,093		1,054		4	895		887		1
Vytorin	1,146		1,207		-5	410		491		-16	736		716		3

Diabetes & Obesity
Januvia / Janumet	4,350		4,208		3	2,229		2,167		3	2,121		2,041		4

General Medicine & Women’s Health
NuvaRing	531		492		8	334		303		10	198		190		4
Implanon / Nexplanon	379		282		34	220		144		53	159		139		14
Dulera	328		229		43	312		218		43	16		11		52
Follistim AQ	309		380		-19	103		158		-34	206		222		-7

Hospital and Specialty
Hepatitis
PegIntron	300		372		-19	16		31		-49	284		341		-17
Victrelis	132		347		-62	5		134		-96	128		213		-40

HIV
Isentress	1,255		1,201		4	626		633		-1	629		569		11

Acute Care
Cancidas	505		477		6	15		22		-33	491		455		8
Invanz	390		360		8	195		185		5	195		175		11
Noxafil	280		212		32	95		63		50	185		149		24
Bridion	245		206		19						245		206		19
Primaxin	243		256		-5	4		15		-76	239		241		-1

Immunology
Remicade	1,815		1,651		10						1,815		1,651		10
Simponi	500		354		41						500		354		41

Other
Cosopt / Trusopt	232		313		-26	2		13		-86	230		299		-23

Oncology
Emend	402		373		8	228		213		7	174		160		9
Temodar	264		596		-56	5		287		-98	259		310		-16

Diversified Brands
Respiratory
Nasonex	830		1,008		-18	428		506		-15	402		501		-20
Singulair	773		898		-14	18		45		-60	755		853		-12
Clarinex	180		180			18		14		32	162		166		-2

Other
Cozaar / Hyzaar	614		760		-19	20		26		-23	594		734		-19
Arcoxia	400		354		13						400		354		13
Fosamax	358		421		-15	13		16		-21	346		405		-15
Propecia	197		206		-4	14		18		-22	183		188		-3
Zocor	194		221		-12	15		18		-16	179		204		-12
Remeron	137		150		-8	3		4		-20	134		146		-8

Vaccines
Gardasil	1,382		1,438		-4	1,075		1,047		3	307		390		-21
ProQuad, M-M-R II and Varivax	1,027		1,032		-1	894		933		-4	133		99		34
RotaTeq	490		507		-3	357		382		-7	133		125		6
Zostavax	479		494		-3	393		443		-11	86		51		69
Pneumovax 23	400		412		-3	318		315		1	82		97		-15
Other Pharmaceutical (2)	3,617		4,139		-13	971		1,195		-19	2,642		2,942		-10

ANIMAL HEALTH	2,569		2,491		3	578		658		-12	1,992		1,833		9

CONSUMER CARE (3)	1,531		1,504		2	1,058		1,073		-1	473		431		10
Claritin OTC	433		379		14	324		343		-6	109		36		*

Other Revenues (4)	983		1,041		-5	919		902		2	64		139		-54
Astra	465		727		-36	465		727		-36

* 100% or greater

(1) Only select products are shown.

(2) Includes Pharmaceutical products not individually shown above. Other Vaccines sales included in Other Pharmaceutical were $291 million and $267 million on a global basis for September YTD 2014 and 2013, respectively.

(3) September YTD 2013 includes a reduction to Consumer Care sales that reflects the termination in China of distribution arrangements and a reversal of sales previously made to those distributors, together with associated termination costs.

(4) Other revenues are comprised primarily of alliance revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities. On October 1, 2013, the company divested a substantial portion of its third-party manufacturing sales. On June 30, 2014, AstraZeneca exercised its option to buy Merck’s interest in a subsidiary and through it, Merck’s interest in Nexium and Prilosec. As a result, the company no longer records supply sales for these products. Other revenues in September YTD 2014 include $232 million of revenue recognized in connection with the sale of U.S. Saphris rights.

MERCK & CO., INC.

PHARMACEUTICAL GEOGRAPHIC SALES

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3c

																															%	%
	2014												2013																		Change	Change
	1Q 2014			2Q 2014			3Q 2014			Sep YTD			1Q 2013			2Q 2013			3Q 2013			Sep YTD			4Q 2013			Full Year			3Q	Sep YTD
TOTAL PHARMACEUTICAL	$	8,451		$	9,087		$	9,134		$	26,672		$	8,891		$	9,310		$	9,475		$	27,677		$	9,760		$	37,437		-4	-4

United States	3,130			3,462			3,837			10,429			3,256			3,689			4,148			11,093			3,761			14,854			-8	-6
% Pharmaceutical Sales	37.0		%	38.1		%	42.0		%	39.1		%	36.6		%	39.6		%	43.8		%	40.1		%	38.5		%	39.7		%

Europe (1)	2,478			2,537			2,297			7,312			2,465			2,343			2,276			7,084			2,535			9,619			1	3
% Pharmaceutical Sales	29.3		%	27.9		%	25.2		%	27.4		%	27.7		%	25.2		%	24.0		%	25.6		%	26.0		%	25.7		%

Japan	835			859			730			2,423			1,034			948			893			2,875			1,074			3,949			-18	-16
% Pharmaceutical Sales	9.9		%	9.5		%	8.0		%	9.1		%	11.6		%	10.2		%	9.4		%	10.4		%	11.0		%	10.5		%

Asia Pacific	809			840			878			2,528			822			874			799			2,495			870			3,365			10	1
% Pharmaceutical Sales	9.6		%	9.2		%	9.6		%	9.5		%	9.2		%	9.4		%	8.4		%	9.0		%	8.9		%	9.0		%

China	282			309			318			909			271			297			242			810			293			1,103			32	12

Latin America	538			668			673			1,879			596			676			628			1,899			667			2,567			7	-1
% Pharmaceutical Sales	6.4		%	7.3		%	7.4		%	7.0		%	6.7		%	7.3		%	6.6		%	6.9		%	6.8		%	6.9		%

Eastern Europe/Middle East Africa	415			459			443			1,317			439			479			431			1,349			534			1,883			3	-2
% Pharmaceutical Sales	4.9		%	5.1		%	4.9		%	4.9		%	4.9		%	5.1		%	4.5		%	4.9		%	5.5		%	5.0		%

Canada	200			218			218			636			245			257			253			755			276			1,030			-14	-16
% Pharmaceutical Sales	2.4		%	2.4		%	2.4		%	2.4		%	2.8		%	2.8		%	2.7		%	2.7		%	2.8		%	2.8		%

Other	46			44			58			148			34			45			47			127			43			170			22	16
% Pharmaceutical Sales	0.5		%	0.5		%	0.6		%	0.6		%	0.4		%	0.5		%	0.5		%	0.5		%	0.4		%	0.5		%

(1) Europe primarily represents all European Union countries and the European Union accession markets.

MERCK & CO., INC.

THIRD QUARTER 2014

EQUITY INCOME / JV SALES / OTHER (INCOME) EXPENSE, NET - GAAP

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 4

EQUITY INCOME FROM AFFILIATES

					Sep YTD		Sep YTD
	3Q14		3Q13		2014		2013
ASTRAZENECA LP (1)	$	—	$	72	$	192	$	302
Other (2)	24		30		49		49
TOTAL	$	24	$	102	$	241	$	351

(1) Effective July 1, 2014, the Company no longers records equity income from AstraZeneca LP.

(2) Includes results for Sanofi Pasteur MSD.

SANOFI PASTEUR MSD JOINT VENTURE SALES DETAIL

All sales reported here are end-market JV sales, presented on a “NET” basis.

					Sep YTD		Sep YTD
	3Q14		3Q13		2014		2013
GARDASIL	$	73	$	87	$	192	$	221
ZOSTAVAX	60		41		97		41
FLU VACCINES	92		93		92		93
OTHER VIRAL VACCINES	21		23		67		79
ROTATEQ	16		14		48		41
HEPATITIS VACCINES	10		8		27		23
Other Vaccines	125		126		304		331
TOTAL SANOFI PASTEUR MSD SALES	$	397	$	392	$	827	$	829

OTHER (INCOME) EXPENSE, NET

							Sep YTD			Sep YTD
	3Q14			3Q13			2014			2013
INTEREST INCOME	$	(69	)	$	(67	)	$	(190	)	$	(189	)
INTEREST EXPENSE	191			215			567			600
EXCHANGE LOSSES	61			11			114			278
Other, net (1)	(325		)	13			(1,228		)	(33		)
TOTAL	$	(142	)	$	172		$	(737	)	$	656

(1) Other, net in the third quarter and first nine months of 2014 includes a $396 million gain on the sale of certain ophthalmic products in several international markets. Other, net in the first nine months of 2014 also includes a $741 million gain on AstraZeneca’s option exercise.

Merck & Co. (MRK) 8-KResults of Operations and Financial Condition