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Segment Reporting
 3 Months Ended
Mar. 31, 2024
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
The Company’s operations are principally managed on a product basis and include two operating segments, Pharmaceutical and Animal Health, both of which are reportable segments.
The Pharmaceutical segment includes human health pharmaceutical and vaccine products. 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. Human health vaccine products consist of preventive pediatric, adolescent and adult vaccines. The Company sells these human health vaccines primarily to physicians, wholesalers, distributors and government entities. A large component of pediatric and adolescent vaccine sales are made 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 Animal Health segment discovers, develops, manufactures and markets a wide range of veterinary pharmaceutical and vaccine products, as well as health management solutions and services, for the prevention, treatment and control of disease in all major livestock and companion animal species. The Company also offers an extensive suite of digitally connected identification, traceability and monitoring products. The Company sells its products to veterinarians, distributors, animal producers, farmers and pet owners.
Sales of the Company’s products were as follows:
Three Months Ended March 31,
20242023
 ($ in millions)U.S.Int’lTotalU.S.Int’lTotal
Pharmaceutical:
Oncology
Keytruda$4,119 $2,828 $6,947 $3,485 $2,310 $5,795 
Alliance revenue-Lynparza (1)
135 157 292 142 133 275 
Alliance revenue-Lenvima (1)
173 82 255 153 79 232 
Welireg77 7 85 41 1 42 
Alliance revenue-Reblozyl (2)
58 12 71 30 12 43 
Vaccines
Gardasil/Gardasil 9
488 1,761 2,249 416 1,556 1,972 
ProQuad/M-M-R II/Varivax
438 133 570 421 107 528 
Vaxneuvance161 58 219 94 13 106 
RotaTeq149 67 216 180 117 297 
Pneumovax 23
6 55 61 40 56 96 
Hospital Acute Care
Bridion329 111 440 276 210 487 
Prevymis74 100 174 54 75 129 
Dificid68 5 73 62 3 65 
Zerbaxa33 23 56 27 23 50 
Noxafil8 48 56 14 46 60 
Cardiovascular
Alliance revenue-Adempas/Verquvo (3)
90 8 98 83 16 99 
Adempas— 70 70 — 59 59 
Virology
Lagevrio45 305 350 (2)394 392 
Isentress/Isentress HD
50 61 111 52 71 123 
Delstrigo
12 44 56 11 33 44 
Pifeltro
29 13 42 24 10 34 
Neuroscience
Belsomra15 32 46 16 40 56 
Immunology
Simponi— 184 184 — 180 180 
Remicade— 39 39 — 51 51 
Diabetes
Januvia183 236 419 271 280 551 
Janumet39 212 251 56 272 329 
Other pharmaceutical (4)
157 419 576 171 457 626 
Total Pharmaceutical segment sales6,936 7,070 14,006 6,117 6,604 12,721 
Animal Health:
Livestock166 683 850 174 676 849 
Companion Animal308 354 661 308 334 642 
Total Animal Health segment sales474 1,037 1,511 482 1,010 1,491 
Total segment sales7,410 8,107 15,517 6,599 7,614 14,212 
Other (5)
68 190 258 60 214 275 
 $7,478 $8,297 $15,775 $6,659 $7,828 $14,487 
U.S. plus international may not equal total due to rounding.
(1)    Alliance revenue for Lynparza and Lenvima represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs (see Note 3).
(2)    Alliance revenue for Reblozyl represents royalties (see Note 3).
(3)    Alliance revenue for Adempas/Verquvo represents Merck’s share of profits from sales in Bayer’s marketing territories, which are product sales net of cost of sales and commercialization costs (see Note 3).
(4)    Other pharmaceutical primarily reflects sales of other human health pharmaceutical products, including products within the franchises not listed separately.
(5)    Other is primarily comprised of miscellaneous corporate revenue, including revenue hedging activities which increased sales by $54 million and $99 million for the three months ended March 31, 2024 and 2023, respectively, as well as revenue from third-party manufacturing arrangements (including sales to Organon). Other for the three months ended March 31, 2024 and 2023 also includes $61 million and $51 million, respectively, related to upfront and milestone payments received by Merck for out-licensing arrangements.
Product sales are recorded net of the provision for discounts, including chargebacks, which are customer discounts that occur when a contracted customer purchases through an intermediary wholesale purchaser, and rebates that are owed based upon definitive contractual agreements or legal requirements with private sector and public sector (Medicaid and Medicare Part D) benefit providers, after the final dispensing of the product by a pharmacy to a benefit plan participant. These discounts, in the aggregate, reduced U.S. sales by $3.2 billion and $3.1 billion for the three months ended March 31, 2024 and 2023, respectively.
Consolidated sales by geographic area where derived are as follows:
Three Months Ended
March 31,
($ in millions)20242023
United States$7,478 $6,659 
Europe, Middle East and Africa3,563 3,303 
China1,772 1,715 
Japan821 758 
Latin America796 661 
Asia Pacific (other than China and Japan)724 846 
Other621 545 
 $15,775 $14,487 
A reconciliation of segment profits to Income Before Taxes is as follows:
 Three Months Ended
March 31,
($ in millions)20242023
Segment profits:
Pharmaceutical segment$10,904 $9,140 
Animal Health segment555 566 
Total segment profits11,459 9,706 
Other profits146 164 
Unallocated:
Interest income73 112 
Interest expense(303)(242)
Amortization(473)(543)
Depreciation(452)(398)
Research and development(3,851)(4,147)
Restructuring costs(123)(67)
Charge for Zetia antitrust litigation settlements— (573)
Other unallocated, net(806)(362)
 $5,670 $3,650 
Pharmaceutical segment profits are comprised of segment sales less standard costs, as well as selling, general and administrative expenses directly incurred by the segment. Animal Health segment profits are comprised of segment sales, less all cost of sales, as well as selling, general and administrative expenses and research and development costs directly incurred by the segment. For internal management reporting presented to the chief operating decision maker, Merck does not allocate the remaining cost of sales not included in segment profits as described above, research and development expenses incurred by Merck Research Laboratories, the Company’s research and development division that focuses on human health-related activities, or general and administrative expenses not directly incurred by the segments, 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 intangible assets and amortization of purchase accounting adjustments are not allocated to segments.
Other profits are primarily comprised of miscellaneous corporate profits, as well as operating profits (losses) related to third-party manufacturing arrangements.
Other unallocated, net, includes expenses from corporate and manufacturing cost centers, intangible asset impairment charges, gains or losses on sales of businesses, expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration, and other miscellaneous income or expense items.