Merck & Company, Inc. · NYSE:MRK
Merck & — Q4 2018 Earnings Presentation
21 slides from Merck &'s earnings presentation, February 2019
Slide 1: 4Q & Full-Year 2018 Earnings Call
4Q & FULL-YEAR 2018 EARNINGS CALL February 2019
Slide 2: Forward-Looking Statement
We are an innovative, global healthcare leader, committed to improving health and well-being around the world. Forward-Looking Statement This presentation of Merck & Co., Inc., Kenilworth, N.J., USA (the “Company”) includes “forward-looking statements” within the meaning of the safe harbor provision
Slide 3: Strategy in Action
STRATEGY IN ACTION Merck is well-positioned for growth and value Mission Vision Execution creation by addressing To discover, develop and Committed to being the Proven strategy to deliver provide innovative products premier, research-intensive growth and create long-term unmet medical needs, and ser
Slide 4: Significant Achievements in 2018
SIGNIFICANT ACHIEVEMENTS IN 2018 … Generated meaningful growth in sales and earnings … REINFORCE CONFIDENCE IN OUR Cemented leadership in immuno- oncology LONG-TERM OUTLOOK • Driving revenue growth Advanced pipeline of innovative through a proven strategy therapies • Investing in innovation Invested
Slide 5: 2018 Pipeline Highlights
2018 PIPELINE HIGHLIGHTS REMARKABLE PROGRESS TOWARD BRINGING INNOVATIONS TO PEOPLE ACROSS THE GLOBE • ONCOLOGY: • 6 new KEYTRUDA indications approved in the U.S.: 1L NSQ NSCLC, 1L SQ NSCLC, 2L Hepatocellular, 3L Cervical, 1L+ Merkel Cell and PMBCL • 5 new KEYTRUDA indications approved in Japan • 3 n
Slide 6: Financial Highlights
€ MERCK INVENTING FOR LIFE FINANCIAL HIGHLIGHTS
Slide 7: Financial Summary – 4th Quarter
FINANCIAL SUMMARY – 4TH QUARTER DELIVERED 8 PERCENT REVENUE GROWTH AND 11 PERCENT NON-GAAP EPS GROWTH IN Q4 2018 (EX-FX) $ in millions, except EPS amounts Change Q4 2018 Q4 2017 Change Ex-Exchange Sales $10,998 $10,433 5% 8% GAAP net income (loss) 1 1,827 (1,046) > 100% > 100% Non-GAAP net income th
Slide 8: Key Growth Drivers - Quarterly
KEY GROWTH DRIVERS - QUARTERLY WORLDWIDE QUARTERLY MOMENTUM ACROSS BEST-IN-CLASS PRODUCTS AND PILLARS KEYTRUDA GARDASIL $2,500 $1,000 66% 32% $2,000 $750 17% $1,500 169% 40% 9% $500 $1,000 $2,151 $835 125% $633 $1,297 $250 $497 $542 $500 NM $483 $0 $214 $0 4Q15 4Q16 4Q17 4Q18 4Q15 4Q16 4Q17 4Q18 BRI
Slide 9: Financial Summary – Full Year
FINANCIAL SUMMARY – FULL YEAR DELIVERED 5 PERCENT REVENUE GROWTH AND 11 PERCENT NON-GAAP EPS GROWTH IN 2018 (EX-FX) $ in millions, except EPS amounts Change 2018 2017 Change Ex-Exchange Sales $42,294 $40,122 5% 5% GAAP net income 1 6,220 2,394 > 100% > 100% Non-GAAP net income that excludes certain
Slide 10: Key Growth Drivers - Annual
KEY GROWTH DRIVERS - ANNUAL DRIVING STRONG MOMENTUM OVER PAST FOUR YEARS KEYTRUDA GARDASIL $7,500 88% $4,000 37% $5,000 6% 172% 10% 14% $7,171 $2,000 $3,151 $2,500 148% $3,809 $2,173 $2,308 $1,908 NM $1,402 $0 $566 $0 2015 2016 2017 2018 2015 2016 2017 2018 BRIDION ANIMAL HEALTH $1,000 30% 9% $4,500
Slide 11: Investing in the Business
INVESTING IN THE BUSINESS WHILE DRIVING TOP AND BOTTOM LINE GROWTH SG&A REVENUE Non-GAAP SG&A as % of Sales Billions $47 27% GUIDANCE RANGE $43.2B - $44.7B $45 26% $43 $42.3B 25% DIVESTITURES $41 $2.7B 24% $39 23% $37 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 R&D Non-GAAP EPS Non-GAAP R
Slide 12: Balanced Approach to Capital Allocation
BALANCED APPROACH TO CAPITAL ALLOCATION INVESTING IN THE BUSINESS AND CREATING VALUE FOR SHAREHOLDERS Commitment to the Dividend Capital Investments $2.30 +15% $16.0B Dollars per share $2.00 +2% +2% +2% +2% +2% +2% +11% $2.20 $1.70 Over 5 years, including expanding $1.88 $1.92 $1.84 $1.68 $1.72 $1.7
Slide 13: Focused Investment in R&D Creates Sustainable Value
FOCUSED INVESTMENT IN R&D CREATES SUSTAINABLE VALUE LONDON Committed to being the premier, research-intensive biopharmaceutical company, focused on the critical innovations that will address areas of unmet need • Product portfolio and pipeline is built on the allocation of capital and resources towa
Slide 14: Full-Year 2019 Guidance
FULL-YEAR 2019 GUIDANCE 2019 GUIDANCE 2019 KEY ASSUMPTIONS $43.2B - $44.7B Revenue • Assumes approximately 1% negative FX impact +2% to +6% (+3% to +7% ex-FX) Non-GAAP • Improved product mix offset by price, royalties, FX and Roughly in line with 2018 Gross Margin 1 collaboration milestones Non-GAAP
Slide 15: What to Watch
WHAT TO WATCH KEY CLINICAL & REGULATORY CATALYSTS THROUGH 2020 Oncology Clinical Readouts Vaccines, Hospital/Specialty and Other Clinical Readouts KN-204 cHL (Ph3) MK-8591 Combination with doravirine/3TC (Ph2) KN-604 SCLC (Ph3) MK-7264 Endometriosis-related Pain (Ph2) KN-240 2L+ HCC (Ph3) 2019 V114
Slide 16: Merck Pipeline
MERCK PIPELINE Phase 2 Phase 3 Under Regulatory Review ONCOLOGY ONCOLOGY ONCOLOGY KEYTRUDA LENVIMA KEYTRUDA LENVIMA KEYTRUDA Cutaneous Squamous Cell Non Small Cell Lung Breast Endometrial Squamous NSCLC* Carcinoma Biliary Tract Colorectal Renal Hepatocellular Carcinoma* Advanced Solid Tumors Esophag
Slide 17: Corporate Responsibility That Creates Sustainable Value
CORPORATE RESPONSIBILITY THAT CREATES SUSTAINABLE VALUE CORPORATE RESPONSIBILITY IS AT THE HEART OF MERCK’S MISSION TO DISCOVER, DEVELOP AND PROVIDE INNOVATIVE PRODUCTS AND SERVICES THAT SAVE AND IMPROVE LIVES Access to Increasing access to health advances Merck’s efforts to serve more patients • Lo
Slide 18: We try never to forget that medicine is for the people
We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. — GEORGE W. MERCK
Slide 19: Thank You
Thank You. € MERCK INVENTING FOR LIFE
Slide 20: Appendix
O MERCK APPENDIX
Slide 21: Pension Accounting Standard Restatement
PENSION ACCOUNTING STANDARD RESTATEMENT MILLIONS 2014 2015 2016 2017 GAAP Non-GAAP GAAP Non-GAAP GAAP Non-GAAP GAAP Non-GAAP Cost of Sales 16,903 11,167 15,043 9,813 14,030 9,814 12,912 9,587 SG&A 11,816 11,189 10,508 9,994 10,017 9,844 10,074 10,028 R&D 7,290 6,642 6,796 6,705 10,261 6,967 10,339 7