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

Exhibit 99.2

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1a

	2015			2014															% Change
	1Q			1Q			2Q			3Q			4Q			Dec YTD			1Q
Sales	$	9,425		$	10,264		$	10,934		$	10,557		$	10,482		$	42,237		-8	%
Costs, Expenses and Other
Materials and production	3,569			3,903			4,893			4,223			3,749			16,768			-9	%
Marketing and administrative	2,601			2,734			2,973			2,975			2,924			11,606			-5	%
Research and development	1,737			1,574			1,664			1,659			2,283			7,180			10	%
Restructuring costs	82			125			163			376			349			1,013			-34	%
Other (income) expense, net (1)	55			(163		)	(650		)	(166		)	(10,634		)	(11,613		)	*
Income Before Taxes	1,381			2,091			1,891			1,490			11,811			17,283			-34	%
Income Tax Provision (Benefit)	423			360			(142		)	648			4,484			5,349
Net Income	958			1,731			2,033			842			7,327			11,934			-45	%
Less: Net Income (Loss) Attributable to Noncontrolling Interests	5			26			29			(53		)	11			14
Net Income Attributable to Merck & Co., Inc.	$	953		$	1,705		$	2,004		$	895		$	7,316		$	11,920		-44	%
Earnings per Common Share Assuming Dilution	$	0.33		$	0.57		$	0.68		$	0.31		$	2.54		$	4.07		-42	%
Average Shares Outstanding Assuming Dilution	2,865			2,971			2,949			2,911			2,880			2,928
Tax Rate	30.6		%	17.2		%	-7.5		%	43.5		%	38.0		%	30.9		%

* 100% or greater

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

(1) Other (income) expense, net includes equity income from affiliates.  Prior periods have been reclassified to conform to the current presentation.

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME

GAAP TO NON-GAAP RECONCILIATION

FIRST QUARTER 2014

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2b

				Acquisition and
				Divestiture-		Restructuring		Adjustment
	GAAP			Related Costs (1)		Costs (2)		Subtotal		Non-GAAP
Sales	$	10,264								$	10,264
Costs, Expenses and Other
Materials and production	3,903			1,126		119		1,245		2,658
Marketing and administrative	2,734			11		31		42		2,692
Research and development	1,574					51		51		1,523
Restructuring costs	125					125		125		—
Other (income) expense, net (4)	(163		)							(163		)
Income Before Taxes	2,091			(1,137	)	(326	)	(1,463	)	3,554
Taxes on Income	360							(567	)(3)	927
Net Income	1,731							(896	)	2,627
Less: Net Income Attributable to Noncontrolling Interests	26									26
Net Income Attributable to Merck & Co., Inc.	$	1,705						(896	)	$	2,601
Earnings per Common Share Assuming Dilution	$	0.57								$	0.88
Average Shares Outstanding Assuming Dilution	2,971									2,971
Tax Rate	17.2		%							26.1		%

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 acquisitions. Amounts included in marketing and administrative expenses reflect integration costs.

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

(3) Represents the estimated tax impact on the reconciling items, as well as a benefit of approximately $300 million associated with a capital loss generated in the quarter.

(4) Other (income) expense, net includes equity income from affiliates.

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

FIRST QUARTER 2015

(AMOUNTS IN MILLIONS)

Table 3a

	Global					U.S.					International
	1Q 2015		1Q 2014		% Change	1Q 2015		1Q 2014		% Change	1Q 2015		1Q 2014		% Change
TOTAL SALES (1)	$	9,425	$	10,264	-8	$	3,953	$	4,146	-5	$	5,472	$	6,119	-11
PHARMACEUTICAL	8,266		8,451		-2	3,637		3,130		16	4,629		5,321		-13
Primary Care and Women’s Health
Cardiovascular
Zetia	568		611		-7	345		323		7	223		288		-23
Vytorin	320		361		-11	111		120		-8	209		241		-13
Diabetes
Januvia	884		858		3	501		474		6	383		384
Janumet	509		476		7	212		213			297		263		13
General Medicine & Women’s Health
NuvaRing	166		168		-1	112		103		9	54		65		-17
Implanon / Nexplanon	137		102		35	84		60		41	53		42		26
Dulera	130		102		28	125		97		29	5		5		8
Follistim AQ	82		110		-26	34		34			47		76		-38
Hospital and Specialty
Hepatitis
PegIntron	56		112		-50			4		*	56		108		-48
HIV
Isentress	385		390		-1	187		190		-2	198		199
Hospital Acute Care
Cubicin(2)	187		5		*	166					21		5		*
Cancidas	163		166		-2	6		7		-10	157		159		-2
Invanz	132		114		15	67		60		12	65		55		19
Noxafil	111		74		50	45		20		*	66		55		21
Bridion	85		73		17						85		73		17
Primaxin	65		71		-8	3		3		-12	62		68		-8
Immunology
Remicade	501		604		-17						501		604		-17
Simponi	158		157		1						158		157		1
Oncology
Emend	122		122			78		70		12	43		52		-16
Keytruda	83				*	66				*	16				*
Temodar	74		83		-10						74		83		-10
Diversified Brands
Respiratory
Nasonex	289		312		-7	143		133		7	146		179		-18
Singulair	245		271		-9	6		5		22	240		266		-10
Clarinex	51		62		-18	5		6		-19	46		55		-17
Other
Cozaar / Hyzaar	185		205		-10	8		6		33	177		199		-11
Arcoxia	123		128		-4						123		128		-4
Fosamax	94		123		-24	3		4		-25	91		119		-24
Propecia	53		74		-28	4		5		-17	49		69		-28
Zocor	49		64		-24	5		5		7	44		60		-26
Vaccines
Gardasil / Gardasil 9	359		383		-6	295		271		9	64		113		-43
ProQuad, M-M-R II and Varivax	348		280		24	308		240		28	40		39		1
RotaTeq	192		169		14	157		130		21	35		39		-9
Zostavax	175		142		23	151		129		17	24		13		84
Pneumovax 23	110		101		9	77		83		-7	33		18		89
Other Pharmaceutical (3)	1,075		1,378		-22	333		335		-1	742		1,042		-29
ANIMAL HEALTH	829		813		2	203		177		15	626		636		-2
CONSUMER CARE (4)	2		546		*	0		390		*	2		156		-99
Other Revenues (5)	328		454		-28	113		448		-75	215		6		*

* 100% or greater

(1) Only select products are shown.

(2) Cubicin results for the first quarter 2015 represent sales for the two months following Merck’s acquisition of Cubist. Cubicin sales for 2014 represent the previous licensing agreement in Japan prior to the acquisition.

(3) Includes Pharmaceutical products not individually shown above. Other Vaccines sales included in Other Pharmaceutical were $78 million and $98 million on a global basis for first quarter 2015 and 2014, respectively.

(4) On October 1, 2014, the company divested the Consumer Care business to Bayer.

(5) Other revenues are comprised primarily of alliance revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities. Other revenues in 2014 include $232 million of revenue recognized in connection with the sale of U.S. Saphris rights. 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.

PHARMACEUTICAL GEOGRAPHIC SALES

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3b

	2015			2014															% Change
	1Q			1Q			2Q			3Q			4Q			Full Year			1Q
TOTAL PHARMACEUTICAL	$	8,266		$	8,451		$	9,087		$	9,134		$	9,370		$	36,042		-2
United States	3,637			3,130			3,462			3,837			3,786			14,214			16
% Pharmaceutical Sales	44.0		%	37.0		%	38.1		%	42.0		%	40.4		%	39.4		%
Europe (1)	2,024			2,478			2,537			2,297			2,269			9,581			-18
% Pharmaceutical Sales	24.5		%	29.3		%	27.9		%	25.2		%	24.2		%	26.6		%
Japan	627			835			859			730			965			3,389			-25
% Pharmaceutical Sales	7.6		%	9.9		%	9.5		%	8.0		%	10.3		%	9.4		%
Asia Pacific	809			809			840			878			910			3,438			0
% Pharmaceutical Sales	9.8		%	9.6		%	9.2		%	9.6		%	9.7		%	9.5		%
China	318			282			309			318			332			1,242			13
Latin America	630			538			668			673			678			2,557			17
% Pharmaceutical Sales	7.6		%	6.4		%	7.3		%	7.4		%	7.2		%	7.1		%
Eastern Europe/Middle East Africa	321			415			459			443			500			1,817			-23
% Pharmaceutical Sales	3.9		%	4.9		%	5.1		%	4.9		%	5.3		%	5.0		%
Canada	170			200			218			218			218			854			-15
% Pharmaceutical Sales	2.1		%	2.4		%	2.4		%	2.4		%	2.3		%	2.4		%
Other	48			46			44			58			44			192			4
% Pharmaceutical Sales	0.6		%	0.5		%	0.5		%	0.6		%	0.5		%	0.5		%

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

MERCK & CO., INC.

FIRST QUARTER 2015

OTHER (INCOME) EXPENSE, NET - GAAP

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 4

OTHER (INCOME) EXPENSE, NET

	1Q15			1Q14
INTEREST INCOME	$	(74	)	$	(61	)
INTEREST EXPENSE	164			188
EXCHANGE LOSSES	95			34
EQUITY INCOME FROM AFFILIATES (1)	(145		)	(124		)
Other, net	15			(200		)
TOTAL	$	55		$	(163	)

(1) Includes the performance of the company’s joint ventures and other equity method affiliates, including the Sanofi Pasteur MSD partnership, certain investment funds, as well as AstraZeneca LP until the termination of that relationship on June 30, 2014. Equity income from AstraZeneca LP was $98 million in the first quarter of 2014.