Merck Announces Fourth-Quarter and Full-Year 2013 Financial Results

  Merck Announces Fourth-Quarter and Full-Year 2013 Financial Results

  *Fourth-Quarter 2013 Non-GAAP EPS Increased by 6 Percent Over Prior Year to
    $0.88, Excluding Certain Items; GAAP EPS Decreased by 13 Percent to $0.26.
    Full-Year 2013 Non-GAAP EPS of $3.49, Excluding Certain Items; GAAP EPS of
    $1.47.
  *Fourth-Quarter 2013 Worldwide Sales Were $11.3 Billion, a Decrease of 4
    Percent Reflecting Unfavorable Impact of Patent Expiries and a 3 Percent
    Negative Impact from Foreign Exchange.
  *Full-Year 2013 Worldwide Sales Were $44.0 Billion, a Decrease of 7 Percent
    Reflecting Unfavorable Impact of Patent Expiries and a 2 Percent Negative
    Impact from Foreign Exchange.
  *Strong Full-Year Sales Growth for GARDASIL, REMICADE, SIMPONI, ISENTRESS,
    ZOSTAVAX and the Diabetes Franchise.
  *Returned $11 Billion to Shareholders in 2013 Through Dividends and Share
    Repurchases.
  *Accelerated Development Program for MK-3475, Including Announcement of
    Four Collaborations to Evaluate Novel Combination Regimens, Initiation of
    a Phase I Study in 20 New Cancer Types and Rolling Submission of a BLA to
    the FDA.
  *2014 Full-Year Non-GAAP EPS Target of $3.35 to $3.53, Excluding Certain
    Items; GAAP EPS Range of $2.15 to $2.47.

Business Wire

WHITEHOUSE STATION, N.J. -- February 5, 2014

Merck (NYSE:MRK), known as MSD outside the United States and Canada, today
announced financial results for the fourth quarter and full year of 2013.

                                                            
                                  Fourth   Fourth   Year Ended  Year Ended
                                  Quarter   Quarter   Dec. 31,     Dec. 31,
$ in millions, except EPS        2013     2012     2013        2012
amounts
Sales                            $11,319  $11,738  $44,033     $47,267
GAAP EPS                         0.26     0.30     1.47        2.00
Non-GAAP EPS that excludes       0.88     0.83     3.49        3.82
items listed below^1
GAAP Net Income^2                781      908      4,404       6,168
Non-GAAP Net Income that         2,599    2,540    10,443      11,743
excludes items listed below^1,2

Non-GAAP (generally accepted accounting principles) earnings per share (EPS)
for the fourth quarter of $0.88 and $3.49 for the full year of 2013 exclude
acquisition-related costs, restructuring costs and certain other items.

A reconciliation of GAAP to non-GAAP net income and EPS is provided in the
tables that follow.

                                                      
$ in millions, except EPS amounts      Fourth Quarter   Year Ended
                                                       Dec. 31,  Dec. 31,
                                       2013    2012    2013      2012
EPS                                                          
GAAP EPS                              $0.26   $0.30   $1.47     $2.00
Difference^3                          0.62    0.53    2.02      1.82
Non-GAAP EPS that excludes items      $0.88   $0.83   $3.49     $3.82
listed below^1
                                                                             
Net Income                                                   
GAAP net income^2                     $781    $908    $4,404    $6,168
Difference                            1,818   1,632   6,039     5,575
Non-GAAP net income that excludes     $2,599  $2,540  $10,443   $11,743
items listed below^1,2
                                                                             
Decrease (Increase) in Net Income                            
Due to Excluded Items:
Acquisition-related costs^4.          $1,348  $1,298  $5,549    $5,344
Restructuring costs                   962     254     2,401     999
Other^5                               –       493     (13)      493
Net decrease (increase) in income     2,310   2,045   7,937     6,836
before taxes
Income tax (benefit) expense^6        (492)   (413)   (1,898)   (1,261)
Decrease (increase) in net income     $1,818  $1,632  $6,039    $5,575

“In 2013 we took decisive action to sharpen our focus, reduce our cost
structure and advance our innovative research and development,” said Kenneth
C. Frazier, chairman and chief executive officer, Merck. “This year we are
excited about the potential of our near- and long-term pipeline, poised for
long-term growth and committed to providing continued value to patients,
customers and our shareholders.”

Select Revenue Highlights

Worldwide sales were $11.3 billion for the fourth quarter of 2013, a decrease
of 4 percent, which includes a 3 percent negative impact from foreign exchange
compared with the fourth quarter of 2012. Full-year 2013 worldwide sales were
$44.0 billion, a decrease of 7 percent, which includes a 2 percent negative
impact from foreign exchange, compared to full-year 2012.

The following table reflects sales of the company's top human health
pharmaceutical products, as well as total sales of animal health and consumer
care products.

                                                                       
                                                     Year     Year            
                 Fourth    Fourth             Change     Ended     Ended              Change
$ in millions    Quarter   Quarter            Ex-        Dec.      Dec.               Ex-
                                                         31,       31,
               2013     2012     Change  Exchange  2013     2012     Change  Exchange
Total Sales     $11,319  $11,738  -4%     -1%       $44,033  $47,267  -7%     -5%
Pharmaceutical  9,760    10,085   -3%     0%        37,437   40,601   -8%     -5%
JANUVIA         1,121    1,134    -1%     4%        4,004    4,086    -2%     3%
ZETIA           716      676      6%      9%        2,658    2,567    4%      6%
REMICADE        620      549      13%     9%        2,271    2,076    9%      7%
GARDASIL        394      442      -11%    -9%       1,831    1,631    12%     14%
JANUMET         503      452      11%     11%       1,829    1,659    10%     10%
ISENTRESS       442      381      16%     16%       1,643    1,515    8%      9%
VYTORIN         436      435      0%      -1%       1,643    1,747    -6%     -6%
NASONEX         327      308      6%      10%       1,335    1,268    5%      8%
PROQUAD, M-M-R  273      306      -11%    -10%      1,306    1,273    3%      3%
II and VARIVAX
SINGULAIR       298      480      -38%    -31%      1,196    3,853    -69%    -66%
Animal Health   871      898      -3%     -1%       3,362    3,399    -1%     1%
Consumer Care   390      395      -1%     1%        1,894    1,952    -3%     -2%
Other Revenues  298      360      -17%    -19%      1,340    1,315    2%      -1%

Pharmaceutical Revenue Performance

Fourth-quarter pharmaceutical sales declined 3 percent to $9.8 billion,
including a 3 percent negative impact due to foreign exchange. Strong sales
growth for REMICADE (infliximab), ISENTRESS (raltegravir), SIMPONI
(golimumab), JANUMET (sitagliptin and metformin HCI) and ZOSTAVAX (zoster
vaccine live) offset the expected declines in sales of SINGULAIR (montelukast
sodium), MAXALT (rizatriptan benzoate) and TEMODAR (temozolomide) following
loss of market exclusivity. Full-year pharmaceutical sales declined 8 percent
to $37.4 billion, including a 3 percent negative impact due to foreign
exchange.

Sales from emerging markets grew 2 percent, including a 6 percent negative
impact due to foreign exchange, and accounted for approximately 21 percent of
pharmaceutical sales in the fourth quarter. Sales growth in the emerging
markets was driven by vaccines, acute care and diabetes products. Full-year
sales from emerging markets grew 3 percent, including a 4 percent negative
impact due to foreign exchange.

Worldwide sales of the combined diabetes franchise of JANUVIA
(sitagliptin)/JANUMET, medicines that help lower blood sugar levels in adults
with type 2 diabetes, were $1.6 billion in the fourth quarter of 2013, growing
2 percent compared to the prior year quarter, including a negative 4 percent
impact from foreign exchange, primarily driven by growth in Europe and the
emerging markets. The combined franchise had sales of $5.8 billion for the
full year of 2013, an increase of 2 percent compared with the prior year,
including a negative 3 percent impact from foreign exchange.

Sales of ZETIA (ezetimibe) and VYTORIN (ezetimibe/simvastatin), medicines for
lowering LDL cholesterol, were $1.2 billion in the fourth quarter, growing 4
percent compared to the prior year quarter, including a 1 percent negative
impact from foreign exchange. The combined ZETIA/VYTORIN franchise had sales
of $4.3 billion for the full year of 2013, comparable to the prior year.

Combined sales of REMICADE and SIMPONI, treatments for inflammatory diseases,
increased 19 percent to $766 million for the fourth quarter of 2013, including
a 4 percent benefit from foreign exchange. Global combined sales for the full
year increased to $2.8 billion, 15 percent over the prior year, including a 2
percent benefit from foreign exchange. These increases were driven by market
growth trends and continued launch activities for SIMPONI. SIMPONI sales were
$500 million for the full year of 2013.

Sales recorded by Merck for GARDASIL [Human Papillomavirus Quadrivalent (Types
6, 11, 16, and 18) Vaccine, Recombinant], a vaccine to help prevent certain
diseases caused by four types of human papillomavirus (HPV), decreased 11
percent to $394 million for the fourth quarter, including a 2 percent negative
impact from foreign exchange. This decrease was driven by lower sales in the
United States as a result of the timing of public sector purchases and in
Japan reflecting the government’s decision to suspend active promotion of HPV
vaccines. These declines were partially offset by growth in the emerging
markets. Worldwide sales of GARDASIL recorded by Merck for the full year were
$1.8 billion, a 12 percent increase compared to the prior year, including a 2
percent unfavorable impact from foreign exchange.

Sales of ISENTRESS, an HIV integrase inhibitor for use in combination with
other antiretroviral agents for the treatment of HIV-1 infection, increased 16
percent to $442 million in the fourth quarter driven by growth in most
markets. Global sales of ISENTRESS for the full year of 2013 were $1.6
billion, an 8 percent increase compared to 2012.

Worldwide sales of SINGULAIR, a once-a-day oral medicine for the chronic
treatment of asthma and the relief of symptoms of allergic rhinitis, declined
38 percent to $298 million in the fourth quarter. Full-year 2013 worldwide
sales for SINGULAIR were $1.2 billion, a 69 percent decrease compared to the
prior year. The patent for SINGULAIR expired in the United States in August
2012 and in major European markets in February 2013.

Sales recorded by Merck for ZOSTAVAX, a vaccine for the prevention of herpes
zoster, grew 18 percent to $264 million in the fourth quarter compared to the
prior year quarter, driven by new launches, primarily in Asia. Global sales of
ZOSTAVAX recorded by Merck for the full year of 2013 grew 16 percent to $758
million.

Animal Health Revenue Performance

Global sales of Animal Health products totaled $871 million for the fourth
quarter of 2013, a 3 percent decline compared with the same period last year,
including a 2 percent negative impact due to foreign exchange. Revenue
performance in the quarter reflects lower sales of ruminant products, which
were partially offset by growth in poultry and aqua products. Global sales for
the full year of 2013 were $3.4 billion, a decline of 1 percent, including a 2
percent negative impact from foreign exchange, when compared with 2012. Lower
sales of ruminant products were partially offset by growth in companion animal
and poultry products. During the third quarter of 2013, Merck Animal Health
voluntarily suspended the sale of ZILMAX (zilpaterol hydrochloride), a feed
supplement for beef cattle, in the United States and Canada.

Consumer Care Revenue Performance

Fourth-quarter global sales of Consumer Care were $390 million, a decrease of
1 percent, including a 2 percent negative impact from foreign exchange,
compared to the fourth quarter of 2012. Full-year 2013 global sales were $1.9
billion, a 3 percent decrease compared to full-year 2012, including a 1
percent negative impact due to foreign exchange.

Other Revenue Performance

Other revenues – primarily comprised of alliance revenue, miscellaneous
corporate revenues and third-party manufacturing sales – decreased 17 percent
to $298 million in the fourth quarter driven by lower revenue from AstraZeneca
(AZ) recorded by Merck as well as by lower third-party manufacturing sales.
Other revenues increased 2 percent to $1.3 billion for the full year of 2013.
Merck anticipates that AZ will exercise its option to buy Merck’s interest in
a subsidiary and, through it, Merck’s interest in Nexium and Prilosec. If AZ
does so, as of July 1, 2014, Merck will no longer record equity income from AZ
and supply sales to AZ are expected to terminate. The company recorded $920
million of revenue and $352 million of equity income from AZ for the full year
of 2013.

Fourth-Quarter and Full-Year Expense and Other Information

The costs detailed below totaled $10.0 billion on a GAAP basis for the fourth
quarter of 2013 and include $2.3 billion of acquisition-related costs and
restructuring costs.


$ in millions                                              
                                  Acquisition-                
                                   Related        Restructuring
Fourth Quarter 2013      GAAP    Costs(4)      Costs          Non-GAAP(1)
Materials and            $4,607  $1,301        $253           $3,053
production
Marketing and            2,982   32            81             2,869
administrative
Research and             1,836   15            63             1,758
development
Restructuring costs      565     –             565            –
Fourth Quarter 2012                                        
Materials and            $4,160  $1,185        $40            $2,935
production
Marketing and            3,390   89            20             3,281
administrative
Research and             2,224   24            3              2,197
development
Restructuring costs      191     –             191            –

The costs detailed below totaled $38.1 billion on a GAAP basis for full-year
2013 and include $8.0 billion of acquisition-related costs and restructuring
costs.


$ in millions                                              
                                  Acquisition-                
Year Ended                         Related        Restructuring
Dec. 31, 2013           GAAP     Costs(4)      Costs          Non-GAAP(1)
Materials and           $16,954  $5,176        $446           $11,332
production
Marketing and           11,911   94            145            11,672
administrative
Research and            7,503    279           101            7,123
development
Restructuring costs     1,709    –             1,709          –
Year Ended
                                                           
Dec. 31, 2012
Materials and           $16,446  $4,872        $188           $11,386
production
Marketing and           12,776   272           90             12,414
administrative
Research and            8,168    200           57             7,911
development
Restructuring costs     664      –             664            –

The gross margin was 59.3 percent for the fourth quarter of 2013 compared to
64.6 percent for last year’s fourth quarter, reflecting unfavorable impacts of
13.7 and 10.4 percentage points, respectively, from the acquisition-related
and restructuring costs noted above. The gross margin was 61.5 percent for the
full year of 2013 compared to 65.2 percent for the full year of 2012,
reflecting unfavorable impacts of 12.8 and 10.7 percentage points,
respectively, from the acquisition-related and restructuring costs noted
above. The non-GAAP gross margin declines in the fourth quarter and full year
of 2013 reflect the unfavorable impacts of recent patent expiries, product mix
and continued pricing pressure in mature markets.

Marketing and administrative expenses, on a non-GAAP basis, were $2.9 billion
in the fourth quarter of 2013, a decrease from $3.3 billion in last year’s
fourth quarter. Full-year marketing and administrative expenses in 2013, on a
non-GAAP basis, were $11.7 billion, a decrease from $12.4 billion in 2012. The
declines were primarily due to productivity measures and the beneficial impact
of foreign exchange.

Research and development (R&D) expenses, on a non-GAAP basis, were $1.8
billion in the fourth quarter of 2013, a decrease from $2.2 billion in the
fourth quarter of 2012. For full-year 2013, these expenses, on a non-GAAP
basis, were $7.1 billion, a decrease from $7.9 billion in 2012. The declines
reflect targeted reductions and lower clinical development spend as a result
of portfolio prioritization and increased focus on the company’s key
therapeutic opportunities, as well as lower payments for licensing activity.

Equity income from affiliates was $53 million for the fourth quarter and $404
million for the full year, which primarily reflects partnerships with AZ and
Sanofi Pasteur.

Other (income) expense, net, was $157 million of expense in the fourth quarter
of 2013 compared with $669 million of expense in last year’s fourth quarter,
and for the full-year 2013 was $815 million of expense compared with $1.1
billion of expense in 2012. The fourth quarter of 2012 includes a $493 million
net charge related to the settlement of certain shareholder litigation.

Key Developments

Clinical

  *Accelerated development program for MK-3475, the company’s anti-PD-1
    immunotherapy, including announcement of four collaborations to evaluate
    novel combination regimens and initiation of a Phase I study in 20 new
    cancer types;
  *Interim data for MK-5172/MK-8742, the company’s investigational oral
    combination regimen for treatment of chronic hepatitis C virus (HCV),
    presented at the 2013 American Association for the Study of Liver Diseases
    Annual Meeting  showed sustained virologic response in 100 percent of
    patients reaching post-treatment follow-up week 12 in two of the three
    combination arms studied;
  *MK-5172/MK-8742 advanced into Phase IIB in a diverse range of chronic HCV
    patients;
  *Interim data for MK-3475, presented at the 10^th International Congress of
    the Society for Melanoma Research, showed an estimated survival rate of 81
    percent at one year in patients with advanced melanoma;
  *Phase III data on V503, the company’s 9-valent HPV vaccine candidate,
    showed prevention of 97 percent of cervical, vaginal and vulvar
    pre-cancers caused by five additional HPV types;
  *Phase III trials for MK-8931, the company’s investigational BACE inhibitor
    for Alzheimer’s disease, were initiated; and
  *BACE inhibitor dosing in Phase III study of prodromal disease patientsis
    planned.

Regulatory

  *Breakthrough Therapy designation was granted by U.S. Food and Drug
    Administration (FDA) for MK-5172/MK-8742;
  *FDA advisory committee recommended approval of vorapaxar, Merck’s
    investigational antiplatelet medicine; and
  *FDA advisory committee discussed GRASTEK (Timothy Grass Pollen Allergen
    Extract) and RAGWITEK (Short Ragweed Pollen Allergen Extract), Merck’s
    investigational sublingual allergy immunotherapy tablets.

Business

  *$11 billion returned to shareholders in 2013 through dividends and share
    repurchases;
  *Divested a portion of the company’s U.S. ophthalmics business; and
  *In January 2014, sold the U.S. marketing rights for SAPHRIS; announced
    plans to divest Sirna Therapeutics, Inc. to Alnylam Pharmaceuticals, Inc.

Looking Ahead

  *Rolling submission for MK-3475 in patients with advanced melanoma who have
    previously been treated with ipilimumab to be completed in first half of
    2014; and
  *New Drug Applications anticipated to the FDA for odanacatib for
    osteoporosis, suvorexant for insomnia and sugammadex sodium injection for
    reversal of neuromuscular blockade induced by rocuronium or vecuronium.
  *Anticipate regulatory actions for:

       *V503 (submitted Biologics License Application to the FDA in 2013);
       *Vintafolide in the European Union for use in platinum-resistant
         ovarian cancer;
       *Vorapaxar for the reduction of atherothrombotic events when added to
         standard of care in patients with a history of heart attack and no
         history of stroke or transient ischemic attack;
       *NOXAFIL IV for fungal infections;
       *Vaniprevir in Japan for the treatment of chronic HCV;
       *Allergy immunotherapies GRASTEK and RAGWITEK;

  *Exploring strategic options for the company’s Animal Health and Consumer
    Care businesses to determine the most value-creating option for each and
    could reach different decisions about the two businesses. The company
    expects to complete the process and take action, if any, in 2014; and
  *Merck will hold an R&D event for investors and media scheduled for May 6,
    2014.^6

Fnancial Targets

Merck expects full-year 2014 non-GAAP EPS to be between $3.35 and $3.53, and
2014 GAAP EPS to be between $2.15 and $2.47. The 2014 non-GAAP range excludes
acquisition-related costs and costs related to restructuring programs, as well
as potential gains associated with the expected termination of the AZ joint
venture.The 2014 EPS targets (both non-GAAP and GAAP) include a potential
devaluation of the Venezuelan Bolivar.

Merck expects full-year 2014 revenues to be between $42.4 billion and $43.2
billion at today’s currency rates.This includes the expectation that AZ will
elect to end the partnership between the companies at mid-year, as well as
lost revenue from patent expirations across multiple markets and recently
announced product divestitures.

In addition, the company expects full-year 2014 non-GAAP marketing and
administrative as well as R&D expenses to be below 2013 levels due to
continuing prioritization and focused spending on core product lines and
upcoming launches.

The company expects its full-year 2014 non-GAAP tax rate to be in the range of
24 to 26 percent; the rate does not include a 2014 benefit of an R&D tax
credit.

A reconciliation of anticipated 2014 EPS as reported in accordance with GAAP
to non-GAAP EPS that excludes certain items is provided in the table below.

                                                
$ in millions, except EPS amounts               Full-Year 2014
GAAP EPS                                        $2.15 to $2.47
Difference^3                                    1.20 to 1.06
Non-GAAP EPS that excludes items listed below   $3.35 to $3.53
                                                 
Acquisition-related costs^4                     $4,600 to $4,350
Restructuring costs                             1,300 to 1,000
Gain on AZ option exercise                      (700) to (725)
Net decrease (increase) in income before taxes  5,200 to 4,625
Estimated income tax (benefit) expense          (1,675) to (1,535)
Decrease (increase) in net income               $3,525 to $3,090

Total Employees

As of Dec. 31, 2013, Merck had approximately 76,000 employees worldwide. In
addition, the company’s joint ventures in China and Brazil, which are included
in the consolidated results of Merck, had about 1,300 employees.

Earnings Conference Call

Investors are invited to a live audio webcast of Merck's fourth-quarter
earnings conference call today at 8:00 a.m. EST by visiting Merck's website,
www.merck.com/investors/events-and-presentations/home.html. Institutional
investors and analysts can participate in the call by dialing (706) 758-9927
or (877) 381-5782 and using ID code number 26402847. Journalists are invited
to monitor the call by dialing (706) 758-9928 or (800) 399-7917 and using ID
code number 26402847. Journalists who wish to ask questions are requested to
contact a member of Merck's Media Relations team at the conclusion of the
call.

About Merck

Today's Merck is a global healthcare leader working to help the world be well.
Merck is known as MSD outside the United States and Canada. Through our
prescription medicines, vaccines, biologic therapies, and consumer care and
animal health products, we work with customers and operate in more than 140
countries to deliver innovative health solutions. We also demonstrate our
commitment to increasing access to healthcare through far-reaching policies,
programs and partnerships. For more information, visit www.merck.com and
connect with us on Twitter, Facebook and YouTube.

Merck Forward-Looking Statement

This news release includes “forward-looking statements” within the meaning of
the safe harbor provisions of the United States Private Securities Litigation
Reform Act of 1995. These statements are based upon the current beliefs and
expectations of Merck’s management and are subject to significant risks and
uncertainties. There can be no guarantees with respect to pipeline products
that the products will receive the necessary regulatory approvals or that they
will prove to be commercially successful.If underlying assumptions prove
inaccurate or risks or uncertainties materialize, actual results may differ
materially from those set forth in the forward-looking statements.

Risks and uncertainties include but are not limited to, general industry
conditions and competition; general economic factors, including interest rate
and currency exchange rate fluctuations; the impact of pharmaceutical industry
regulation and health care legislation in the United States and
internationally; global trends toward health care cost containment;
technological advances, new products and patents attained by competitors;
challenges inherent in new product development, including obtaining regulatory
approval; Merck’s ability to accurately predict future market conditions;
manufacturing difficulties or delays; financial instability of international
economies and sovereign risk; dependence on the effectiveness of Merck’s
patents and other protections for innovative products; and the exposure to
litigation, including patent litigation, and/or regulatory actions.

Merck undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or otherwise.
Additional factors that could cause results to differ materially from those
described in the forward-looking statements can be found in Merck’s 2012
Annual Report on Form 10-K and the company’s other filings with the Securities
and Exchange Commission (SEC) available at the SEC’s Internet site
(www.sec.gov).

^1 Merck is providing certain 2013 and 2012 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. For a
description of the items, see Tables 2a and 2b, including the related
footnotes, attached to this release.

^2 Net income attributable to Merck & Co., Inc.

^3 Represents the difference between calculated GAAP EPS and calculated
non-GAAP EPS, which may be different than the amount calculated by dividing
the impact of the excluded items by the weighted-average shares for the
period.

^4 Includes expenses for the amortization of intangible assets recognized as a
result of mergers and acquisitions, as well as intangible asset impairment
charges. Also includes integration and other costs associated with mergers and
acquisitions.

^5 Amount for 2012 represents a net charge related to the settlement of
certain shareholder litigation.

^6 Includes an estimated income tax (benefit) expense on the reconciling
items. In addition, the full year amount for 2013 includes net benefits of
approximately $325 million related to the settlements of certain federal
income tax issues.


MERCK & CO., INC.
CONSOLIDATED STATEMENT OF OPERATIONS - GAAP
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 1
                                                                           
                                                                         
                 GAAP                              GAAP                      
                                          %        Full Year   Full Year    %
                                           Change                             Change
                 4Q13        4Q12                 2013        2012         
                                                                       
Sales            $ 11,319     $ 11,738     -4   %   $ 44,033     $ 47,267     -7   %
                                                                              
Costs,
Expenses and
Other
Materials and
production         4,607        4,160      11   %     16,954       16,446     3    %
^(1)
Marketing and
administrative     2,982        3,390      -12  %     11,911       12,776     -7   %
^(1)
Research and
development        1,836        2,224      -17  %     7,503        8,168      -8   %
^(1)
Restructuring      565          191        *          1,709        664        *
costs ^(2)
Equity income
from               (53    )     (231   )   -77  %     (404   )     (642   )   -37  %
affiliates
^(3)
Other (income)
expense, net       157          669        -77  %     815          1,116      -27  %
^(1) (4)
Income Before      1,225        1,335      -8   %     5,545        8,739      -37  %
Taxes
Income Tax         410          385                   1,028        2,440
Provision
Net Income         815          950        -14  %     4,517        6,299      -28  %
Less: Net
Income
Attributable       34           42                    113          131
to
Noncontrolling
Interests
Net Income
Attributable     $ 781        $ 908        -14  %   $ 4,404      $ 6,168      -29  %
to Merck &
Co., Inc.
Earnings per
Common Share     $ 0.26     $ 0.30      -13  %   $ 1.47     $ 2.00      -27  %
Assuming
Dilution
                                                            
Average Shares
Outstanding        2,959        3,074                 2,996        3,076
Assuming
Dilution
Tax Rate ^(5)     33.5   %   28.8   %             18.5   %   27.9   %
                                                                              

* 100% or greater

(1) Amounts include the impact of acquisition-related costs, restructuring
costs and certain other items. See accompanying tables for details.

(2) Represents separation and other related costs associated with
restructuring activities under the company's formal restructuring programs.

(3) Primarily reflects equity income from the AstraZeneca LP and Sanofi
Pasteur MSD partnerships.

(4) Other (income) expense, net in the fourth quarter and full year of 2012
reflect a $493 million net charge related to the settlement of certain
shareholder litigation.

(5) The effective tax rate for the full year of 2013 reflects net benefits
from the settlements of certain federal income tax issues, reductions in tax
reserves upon expiration of applicable statute of limitations and the
favorable impact of tax legislation enacted in the first quarter of 2013. The
effective tax rates for the fourth quarter and full year of 2012 reflect a
favorable ruling on a state tax matter. In addition, the effective tax rate
for the full year of 2012 reflects the favorable impacts of a settlement with
a foreign tax authority and the realization of foreign tax credits.

MERCK & CO., INC.
CONSOLIDATED STATEMENT OF OPERATIONS
GAAP TO NON-GAAP RECONCILIATION
FOURTH QUARTER 2013
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 2a
                                                                     
                              Acquisition-   Restructuring   Adjustment
                 GAAP         Related        Costs^(2)       Subtotal         Non-GAAP
                              Costs^(1)
                                                                             
Sales            $ 11,319                                                     $ 11,319
                                                                              
Costs,
Expenses and
Other
Materials and      4,607      1,301          253               1,554            3,053
production
Marketing and      2,982      32             81                113              2,869
administrative
Research and       1,836      15             63                78               1,758
development
Restructuring      565                       565               565              -
costs
Equity income
from               (53    )                                    -                (53    )
affiliates
Other (income)     157                                         -                157
expense, net
Income Before      1,225      (1,348   )     (962     )        (2,310 )         3,535
Taxes
Taxes on           410                                         (492   )^(3)     902
Income
Net Income         815                                         (1,818 )         2,633
Less: Net
Income
Attributable       34                                          -                34
to
Noncontrolling
Interests
Net Income
Attributable     $ 781                                       $ (1,818 )       $ 2,599
to Merck &
Co., Inc.
Earnings per
Common Share     $ 0.26                                                      $ 0.88   
Assuming
Dilution
                                                                             
Average Shares
Outstanding        2,959                                                        2,959
Assuming
Dilution
Tax Rate          33.5   %                                                    25.5   %
                                                                                       

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.


MERCK & CO., INC.
CONSOLIDATED STATEMENT OF OPERATIONS
GAAP TO NON-GAAP RECONCILIATION
FULL YEAR 2013
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 2b
                                                                             
                              Acquisition-   Restructuring   Certain   Adjustment
                                                             Other
                 GAAP         Related        Costs^(2)       Items     Subtotal         Non-GAAP
                              Costs^(1)
                                                                                       
Sales            $ 44,033                                                               $ 44,033
                                                                                        
Costs,
Expenses and
Other
Materials and      16,954     5,176          446                         5,622            11,332
production
Marketing and      11,911     94             145                         239              11,672
administrative
Research and       7,503      279            101                         380              7,123
development
Restructuring      1,709                     1,709                       1,709            -
costs
Equity income
from               (404   )                                              -                (404   )
affiliates
Other (income)     815                                       (13  )      (13    )         828
expense, net
Income Before      5,545      (5,549   )     (2,401    )     13          (7,937 )         13,482
Taxes
Taxes on           1,028                                                 (1,898 )^(3)     2,926
Income
Net Income         4,517                                                 (6,039 )         10,556
Less: Net
Income
Attributable       113                                                   -                113
to
Noncontrolling
Interests
Net Income
Attributable     $ 4,404                                               $ (6,039 )       $ 10,443
to Merck &
Co., Inc.
Earnings per
Common Share     $ 1.47                                                                $ 3.49   
Assuming
Dilution
                                                                                       
Average Shares
Outstanding        2,996                                                                  2,996
Assuming
Dilution
Tax Rate          18.5   %                                                              21.7   %
                                                                                                 

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 of
$4.7 billion for the amortization of intangible assets recognized as a result
of mergers and acquisitions, as well as $486 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.

(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
net benefits of approximately $325 million related to the settlements of
certain federal income tax issues.


MERCK & CO., INC.
FRANCHISE / KEY PRODUCT SALES
(AMOUNTS IN MILLIONS)
Table 3
                                                                                                                
                 2013                                              2012                                              %       %
                                                                                                                     Change   Change
                 1Q       2Q       3Q       4Q       Full      1Q       2Q       3Q       4Q       Full      4Q      Full
                                                         Year                                              Year               Year
TOTAL SALES      $10,671  $11,010  $11,032  $11,319  $44,033   $11,731  $12,311  $11,488  $11,738  $47,267   -4      -7
^(1)
PHARMACEUTICAL   8,891    9,310    9,475    9,760    37,437    10,082   10,560   9,875    10,085   40,601    -3      -8
                                                                                                                                     
Primary Care
and Women's
Health
Cardiovascular
Zetia            629       650       662       716       2,658     614       632       645       676       2,567     6        4
Vytorin          394       417       396       436       1,643     444       445       423       435       1,747              -6
                                                                                                                                     
Diabetes &
Obesity
Januvia          884       1,072     927       1,121     4,004     919       1,058     975       1,134     4,086     -1       -2
Janumet          409       474       442       503       1,829     392       411       405       452       1,659     11       10
                                                                                                                                     
Respiratory
Nasonex          385       325       297       327       1,335     375       293       292       308       1,268     6        5
Singulair        337       281       280       298       1,196     1,340     1,431     602       480       3,853     -38      -69
Dulera           68        79        82        95        324       39        50        52        67        207       42       56
Asmanex          40        49        43        51        184       48        51        42        44        185       17       -1
                                                                                                                                     
Women's Health
& Endocrine
NuvaRing         151       171       170       193       686       146       157       156       164       623       17       10
Fosamax          137       144       140       139       560       184       186       152       154       676       -10      -17
Follistim AQ     122       134       124       101       481       116       125       111       116       468       -13      3
Implanon         84        102       96        120       403       76        85        93        94        348       28       16
Cerazette        61        48        51        50        208       67        72        64        68        271       -28      -23
                                                                                                                                     
Other
Arcoxia          121       121       112       131       484       112       117       109       115       453       13       7
Avelox           36        29        38        37        140       73        44        30        55        201       -32      -31
                                                                                                                                     
Hospital and
Specialty
                                                                                                                                     
Immunology
Remicade         549       527       574       620       2,271     519       518       490       549       2,076     13       9
Simponi          108       120       126       146       500       74        76        86        95        331       53       51
                                                                                                                                     
Infectious
Disease
Isentress        362       412       427       442       1,643     337       398       399       381       1,515     16       8
Cancidas         162       163       151       183       660       145       166       163       145       619       26       7
PegIntron        126       142       104       124       496       162       183       165       143       653       -13      -24
Invanz           110       120       130       128       488       101       110       118       116       445       10       10
Victrelis        110       116       121       81        428       111       126       149       115       502       -29      -15
Noxafil          65        71        75        98        309       59        66        66        68        258       44       20
                                                                                                                                     
Oncology
Temodar          216       219       162       111       708       237       225       227       229       917       -51      -23
Emend            116       135       123       134       507       102       145       111       131       489       2        4
                                                                                                                                     
Other
Cosopt /         105       103       104       103       416       124       105       102       113       444       -9       -6
Trusopt
Bridion          63        69        75        82        288       58        60        68        75        261       10       10
Integrilin       47        48        45        46        186       53        60        48        51        211       -9       -12
                                                                                                                                     
Diversified
Brands
Cozaar /         267       255       238       246       1,006     336       337       295       315       1,284     -22      -22
Hyzaar
Primaxin         84        85        88        79        335       88        104       109       83        384       -5       -13
Zocor            82        74        65        79        301       103       96        86        98        383       -19      -21
Propecia         68        67        71        77        283       108       100       104       112       424       -31      -33
Clarinex         61        64        54        55        235       134       140       64        56        393       -1       -40
Remeron          52        53        44        56        206       57        66        52        57        232       -1       -11
Claritin Rx      76        40        36        52        204       87        48        47        63        244       -16      -16
Proscar          39        58        38        48        183       51        55        55        56        217       -15      -15
Maxalt           40        43        40        25        149       156       154       166       162       638       -85      -77
                                                                                                                                     
Vaccines
Gardasil         390       383       665       394       1,831     284       324       581       442       1,631     -11      12
ProQuad, M-M-R   272       339       421       273       1,306     255       316       396       306       1,273     -11      3
II and Varivax
Zostavax         168       141       185       264       758       76        148       202       225       651       18       16
Pneumovax 23     111       108       193       241       653       112       101       160       208       580       16       13
RotaTeq          162       144       201       129       636       142       142       150       168       601       -23      6
                                                                                                                                     
Other
Pharmaceutical   1,022     1,115     1,059     1,126     4,316     1,066     1,034     1,065     1,161     4,333     -3
^(2)
                                                                                                                                     
                                                                                                                                     
ANIMAL HEALTH    840       851       800       871       3,362     821       865       815       898       3,399     -3       -1
                                                                                                                                     
CONSUMER CARE    571       490       443       390       1,894     554       552       451       395       1,952     -1       -3
^(3)
Claritin OTC     177       78        123       92        471       169       145       118       100       532       -8       -12
                                                                                                                                     
Other Revenues   369       359       314       298       1,340     274       333       347       360       1,315     -17      2
^(4)
Astra            262      245      220      193      920       186      223      255      251      915       -23     1
                                                                                                                                     

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

^(1) Only select products are shown.

^(2) Includes Pharmaceutical products not individually shown above. Other
Vaccines sales included in Other Pharmaceutical were $53 million, $86 million,
$127 million, and $101 million for the first, second, third, and fourth
quarters of 2013. Other Vaccines sales included in Other Pharmaceutical were
$60 million, $75 million, $116 million, and $69 million for the first, second,
third, and fourth quarters of 2012, respectively.

^(3) The decrease in Consumer Care sales in the second quarter and full year
of 2013 resulted from the ongoing 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. In addition, Other revenues in
the fourth quarter and full year of 2013 reflect $50 million of revenue for
the out-license of a pipeline compound.

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Contact:

Merck
Media:
Kelley Dougherty, 908- 423-4291
Steve Cragle, 908-423-3461
or
Investors:
Carol Ferguson, 908-423-4465
Joe Romanelli, 908-423-5185
 
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