[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) [Consolidated Statement of Income (GAAP)](index=1&type=section&id=Consolidated%20Statement%20of%20Income%20%28GAAP%29) Merck's Q2 and YTD 2025 GAAP results show declining sales and net income, with increased R&D expenses | Metric | 2Q 2025 (Millions) | 2Q 2024 (Millions) | % Change (2Q) | YTD 2025 (Millions) | YTD 2024 (Millions) | % Change (YTD) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Sales | $15,806 | $16,112 | -2% | $31,335 | $31,887 | -2% | | Net Income Attributable to Merck & Co., Inc. | $4,427 | $5,455 | -19% | $9,506 | $10,217 | -7% | | Earnings per Common Share Assuming Dilution | $1.76 | $2.14 | -18% | $3.77 | $4.02 | -6% | | Cost of sales | $3,557 | $3,745 | -5% | $6,976 | $7,285 | -4% | | Research and development | $4,048 | $3,500 | 16% | $7,669 | $7,492 | 2% | | Income Before Taxes | $4,999 | $6,006 | -17% | $10,902 | $11,675 | -7% | | Tax Rate | 11.4% | 9.1% | - | 12.7% | 12.4% | - - Research and development expenses increased by **16% in Q2 2025 to $4,048 million** and by **2% YTD 2025 to $7,669 million**, indicating continued investment in innovation despite overall sales decline[2](index=2&type=chunk) [GAAP to Non-GAAP Reconciliation](index=2&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation) This section reconciles GAAP to non-GAAP measures, excluding specific items to highlight core business performance, with non-GAAP figures generally higher due to adjustments | Metric | GAAP 2Q 2024 (Millions) | Non-GAAP 2Q 2024 (Millions) | GAAP YTD 2024 (Millions) | Non-GAAP YTD 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Net Income Attributable to Merck & Co., Inc. | $5,455 | $5,809 | $10,217 | $11,087 | | Earnings per Common Share Assuming Dilution | $2.14 | $2.28 | $4.02 | $4.36 | | Tax Rate | 9.1% | 14.1% | 12.4% | 15.0% | - Non-GAAP adjustments primarily exclude expenses for amortization of intangible assets in cost of sales and R&D, integration/transaction costs in SG&A, employee separation costs, and accelerated depreciation from restructuring programs[6](index=6&type=chunk)[7](index=7&type=chunk) - A significant tax benefit was recognized due to a reduction in reserves for unrecognized income tax benefits resulting from the expiration of the statute of limitations for assessments related to the 2019 federal tax return year[8](index=8&type=chunk) [Product and Segment Sales Analysis](index=3&type=section&id=Product%20and%20Segment%20Sales%20Analysis) [Franchise / Key Product Sales - Second Quarter 2025](index=3&type=section&id=Franchise%20%2F%20Key%20Product%20Sales%20-%20Second%20Quarter%202025) Q2 2025 global sales decreased by 2% due to international declines, despite strong U.S. growth and Keytruda's performance, while Gardasil/Gardasil 9 sales significantly dropped | Product/Segment | Global 2Q 2025 (Millions) | Global 2Q 2024 (Millions) | % Change (Global) | U.S. 2Q 2025 (Millions) | U.S. 2Q 2024 (Millions) | % Change (U.S.) | International 2Q 2025 (Millions) | International 2Q 2024 (Millions) | % Change (International) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | TOTAL SALES | $15,806 | $16,112 | -2% | $8,836 | $7,876 | 12% | $6,969 | $8,236 | -15% | | PHARMACEUTICAL | $14,050 | $14,408 | -2% | $8,328 | $7,399 | 13% | $5,722 | $7,009 | -18% | | Keytruda | $7,956 | $7,270 | 9% | $4,749 | $4,412 | 8% | $3,207 | $2,858 | 12% | | Gardasil/Gardasil 9 | $1,126 | $2,478 | -55% | $545 | $536 | 2% | $581 | $1,941 | -70% | | Winrevair | $336 | $70 | * | $323 | $70 | * | $12 | - | - | | ANIMAL HEALTH | $1,646 | $1,482 | 11% | $499 | $455 | 9% | $1,147 | $1,027 | 12% | | Other Revenues | $110 | $222 | -50% | $9 | $22 | -59% | $100 | $200 | -50% | - Winrevair, a new cardiovascular product, showed exceptional growth, increasing from **$70 million in Q2 2024 to $336 million in Q2 2025 globally**[10](index=10&type=chunk) - The significant decline in Gardasil/Gardasil 9 sales, particularly **internationally (-70%)**, was a major factor in the overall pharmaceutical sales decrease[10](index=10&type=chunk) [Franchise / Key Product Sales - June Year-to-Date 2025](index=5&type=section&id=Franchise%20%2F%20Key%20Product%20Sales%20-%20June%20Year-to-Date%202025) YTD 2025 global sales decreased by 2%, driven by international declines, while U.S. sales and Keytruda grew, and Winrevair showed strong performance despite Gardasil/Gardasil 9's significant drop | Product/Segment | Global YTD 2025 (Millions) | Global YTD 2024 (Millions) | % Change (Global) | U.S. YTD 2025 (Millions) | U.S. YTD 2024 (Millions) | % Change (U.S.) | International YTD 2025 (Millions) | International YTD 2024 (Millions) | % Change (International) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | TOTAL SALES | $31,335 | $31,887 | -2% | $17,359 | $15,354 | 13% | $13,977 | $16,533 | -15% | | PHARMACEUTICAL | $27,688 | $28,415 | -3% | $16,254 | $14,336 | 13% | $11,434 | $14,079 | -19% | | Keytruda | $15,161 | $14,217 | 7% | $9,057 | $8,531 | 6% | $6,104 | $5,686 | 7% | | Gardasil/Gardasil 9 | $2,453 | $4,727 | -48% | $1,082 | $1,024 | 6% | $1,371 | $3,702 | -63% | | Winrevair | $615 | $70 | * | $591 | $70 | * | $24 | - | - | | ANIMAL HEALTH | $3,234 | $2,993 | 8% | $1,001 | $929 | 8% | $2,233 | $2,064 | 8% | | Other Revenues | $413 | $479 | -14% | $104 | $89 | 17% | $310 | $390 | -21% | - Winrevair's year-to-date sales reached **$615 million**, demonstrating continued strong performance since its introduction[20](index=20&type=chunk) - Total Vaccines sales globally decreased by **29.7% YTD 2025 ($4,977 million)** compared to YTD 2024 (**$7,080 million**), primarily due to the decline in Gardasil/Gardasil 9[24](index=24&type=chunk) [Pharmaceutical Geographic Sales](index=7&type=section&id=Pharmaceutical%20Geographic%20Sales) Global pharmaceutical sales declined in Q2 and YTD 2025, with strong U.S. growth offset by a dramatic 77% drop in China, primarily due to Gardasil/Gardasil 9 sales | Region | 2Q 2025 (Millions) | 2Q 2024 (Millions) | % Change (2Q) | YTD 2025 (Millions) | YTD 2024 (Millions) | % Change (YTD) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | TOTAL PHARMACEUTICAL | $14,050 | $14,408 | -2% | $27,688 | $28,415 | -3% | | United States | $8,328 | $7,399 | 13% | $16,254 | $14,336 | 13% | | China | $407 | $1,790 | -77% | $1,075 | $3,534 | -70% | | Eastern Europe/Middle East/Africa | $451 | $353 | 28% | $886 | $747 | 19% | - The decline in China's pharmaceutical sales is largely attributed to Gardasil/Gardasil 9 sales, which were **$0 in Q2 2025** compared to **$1,312 million in Q2 2024**[31](index=31&type=chunk) - The U.S. market's share of pharmaceutical sales increased from **51.4% in Q2 2024 to 59.3% in Q2 2025**, highlighting its growing importance[30](index=30&type=chunk) [Other Financial Details](index=8&type=section&id=Other%20Financial%20Details) [Other (Income) Expense, Net (GAAP)](index=8&type=section&id=Other%20%28Income%29%20Expense%2C%20Net%20%28GAAP%29) Other (income) expense, net, shifted to a net expense in Q2 and YTD 2025, driven by increased exchange losses and reduced miscellaneous income | Item | 2Q 2025 (Millions) | 2Q 2024 (Millions) | YTD 2025 (Millions) | YTD 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Interest income | $(69) | $(69) | $(178) | $(141) | | Interest expense | $305 | $310 | $618 | $613 | | Exchange losses | $78 | $60 | $167 | $144 | | Income from investments in equity securities, net | $(100) | $(56) | $(189) | $(200) | | Net periodic defined benefit plan (credit) cost other than service cost | $(152) | $(159) | $(300) | $(319) | | Other, net | $(69) | $(44) | $(161) | $(85) | | Total | $(7) | $42 | $(43) | $12 | - Exchange losses increased from **$60 million in Q2 2024 to $78 million in Q2 2025**, and from **$144 million YTD 2024 to $167 million YTD 2025**[33](index=33&type=chunk) - Net income from investments in equity securities decreased from **$(56) million in Q2 2024 to $(100) million in Q2 2025**, indicating a decline in investment performance[33](index=33&type=chunk)

默沙东(MRK.N)2025年Q2营收158.1亿美元，去年同期161.12亿美元，市场预期158.94亿美元。 （文章来源：金十数据） ...

美国制药巨头默克公司宣布裁员计划，预计通过重组节省30亿美元成本。默克公司还更新了全年销售指 引，预计全年销售额为643亿美元至653亿美元，此前预计为641亿美元至656亿美元。 ...

Merck is slashing $3 billion from its annual spending as it braces for off-brand competition to its cancer drug Keytruda, the best-selling medicine in the world https://t.co/paQo9bLw7J ...

默沙东(MRK.N)2025年Q2营收158.1亿美元，去年同期161.12亿美元，市场预期158.94亿美元。 ...

二季度经调整后每股收益2.13美元，上年同期2.28美元。 默沙东二季度销售额158.1亿美元，预估157.7亿美元。 ...

Core Viewpoint - Merck & Co. is implementing a $3 billion cost-cutting initiative by the end of 2027 to reinvest in new product launches and its drug pipeline, in response to upcoming revenue losses from the patent expiration of Keytruda in 2028 and external pressures such as tariffs on pharmaceuticals [1][2][3]. Cost-Cutting and Restructuring - The multi-year optimization initiative aims to redirect investments from mature business areas to new growth drivers, facilitating portfolio transformation and innovation-driven growth [3]. - A new restructuring program has been approved, which will eliminate certain administrative, sales, and research and development positions, reduce global real estate, and pare back the manufacturing network, expected to generate around $1.7 billion in annual cost savings by the end of 2027 [4]. - The total pretax costs related to the restructuring program are estimated to be approximately $3 billion, with a $649 million charge recorded in the second quarter [5]. Financial Performance - In the second quarter, Merck's revenue fell short of Wall Street estimates for the first time since April 2021, reporting $15.81 billion compared to the expected $15.89 billion [5][10]. - The company posted a net income of $4.43 billion, or $1.76 per share, down from $5.46 billion, or $2.14 per share, in the same period last year [9]. - Adjusted earnings per share for the second quarter were $2.13, which may not be directly comparable to estimates of $2.01 [11]. Sales and Guidance - While Keytruda sales grew, Merck faced challenges with Gardasil sales in China, leading to a halt in shipments until at least mid-2025 due to high inventories and soft demand [6][7]. - Merck has narrowed its full-year guidance for 2025 adjusted earnings to between $8.87 and $8.97 per share and revenue expectations to between $64.3 billion and $65.3 billion [8].

Core Insights - The Chinese pharmaceutical industry is experiencing a resurgence after three years of stagnation, driven by high-value licensing deals from multinational pharmaceutical companies [1][2] - There is a significant interest from overseas investors in Chinese biopharmaceutical companies, with a notable increase in licensing agreements and IPO activities [2][8] - The trend of "licensing out" Chinese drug candidates to foreign companies is becoming more common, providing Chinese firms with milestone payments and a share of sales revenue [4][6] Group 1: Market Dynamics - As of mid-July, approximately 288 companies are waiting for IPOs in Hong Kong, many of which are biopharmaceutical firms seeking to list under the 18A rule [1][8] - The Hong Kong medical sector has seen a 54% increase this year, significantly outperforming the MSCI China Index, which rose by 17% [8] - The average price-to-earnings (PE) ratio for the sector is around 30 times, placing it in the 15th percentile of its valuation range over the past five years [8] Group 2: Investment Trends - U.S. investment banks are playing a crucial role in facilitating these licensing deals and IPOs, with cornerstone investors contributing 42% of IPO financing this year, two-thirds of which comes from overseas [1][12] - The trend of U.S. pharmaceutical companies seeking to lower costs through partnerships with Chinese firms is expected to continue, especially in light of U.S. drug pricing policies [2][6] Group 3: Licensing Agreements - The number of licensing transactions from China has increased significantly, with 35 deals in 2023 and projected to reach 43 in 2024, alongside a total upfront payment of $2.957 billion in 2023 [3][6] - Notable licensing agreements include Akeso's ivonescimab, which was licensed to Summit Therapeutics for a total value of $5 billion, marking one of the largest overseas licensing deals in Chinese biopharmaceutical history [7][6] Group 4: Future Outlook - Chinese biopharmaceutical companies are increasingly able to produce globally recognized clinical data, particularly in competitive fields like oncology and immunology [2][6] - The shift from merely selling drug pipelines to achieving global commercialization is essential for the future growth of Chinese pharmaceutical companies [13][15] - There is a need for Chinese firms to enhance their innovation capabilities and international execution to compete effectively on a global scale [14][15]

Group 1: High-Yield Healthcare Stocks - Johnson & Johnson, Medtronic, and Merck are highlighted as high-yield stocks in the healthcare sector, offering yields up to 3.9% [1] - The average yield for healthcare stocks is around 1.8%, making these companies attractive options for dividend investors [1] Group 2: Johnson & Johnson - Johnson & Johnson is recognized as a Dividend King, having increased its dividend for 63 consecutive years, the longest streak in the healthcare sector [2] - The current dividend yield for Johnson & Johnson is 3.1%, which is above the healthcare average and within its historical high range [3] - The company is facing a significant class action lawsuit related to talcum powder, which may impact its stock performance in the short term [4] Group 3: Medtronic - Medtronic has a strong dividend history, having increased its dividend for 48 consecutive years, and currently offers a yield of approximately 3.1% [6] - The company is experiencing slowed growth due to a lack of new product introductions, but management is working to address this by refocusing on key business areas [7] - Medtronic's current dividend yield is historically high, presenting an opportunity for long-term investors [8] Group 4: Merck - Merck is one of the largest pharmaceutical companies globally, with a dividend yield of around 3.9% [9][10] - The company has faced challenges due to the nature of drug patents and the time it takes to develop new products, but it has managed to maintain a growing dividend over time [10][11] - Investing in Merck is seen as a long-term strategy for dividend investors, despite the uncertainty of when the next blockbuster drug will be developed [11] Group 5: Overall Investment Perspective - The three companies—Johnson & Johnson, Medtronic, and Merck—are characterized as well-run businesses in the complex healthcare sector, providing investors with reliable dividend yields and strong financial histories [12][13] - These companies allow investors to benefit from industry expertise without needing to be healthcare specialists themselves [13]

Industry Overview - The second-quarter 2025 reporting cycle for the Medical sector is commencing, with most firms expected to release earnings results in the next two weeks, primarily consisting of pharma/biotech and medical device companies [1] - The earnings season for the drug and biotech sector began in mid-July, highlighted by Johnson & Johnson's strong performance, which exceeded earnings and sales estimates, leading to raised revenue and earnings expectations for the year [1] Company Performance - Novartis surpassed second-quarter earnings and revenue estimates, driven by a year-over-year increase in sales of key drugs, prompting an upward revision of its annual guidance for core operating income [2] - Roche experienced solid growth in the first half of 2025, with high demand for key drugs offsetting declines in legacy drug sales [2] - As of July 23, 15% of companies in the Medical sector, representing 27.2% of the sector's market capitalization, reported quarterly earnings, with 88.9% outperforming earnings estimates and 100% beating revenue estimates [3] - Overall, second-quarter earnings for the Medical sector are projected to increase by 0.9%, while sales are expected to rise by 7.9% compared to the previous year [3] Upcoming Earnings Reports - Merck, AstraZeneca, Bristol Myers, AbbVie, and Moderna are scheduled to release their quarterly results this week [4] - Merck has a strong earnings track record, beating estimates in the last four quarters with an average surprise of 3.82% [5] - AstraZeneca has a mixed earnings history, beating estimates in three of the last four quarters, with an average surprise of 4.24% [8] - Bristol Myers has consistently beaten earnings estimates, with an average surprise of 20.16% over the last four quarters [11] - AbbVie has also maintained a strong track record, beating estimates in the last four quarters with an average surprise of 2.55% [13] - Moderna has an excellent earnings history, with an average surprise of 31.60% in the last four quarters [15] Sales Drivers - Merck's growth in the second quarter is likely attributed to increased sales of its cancer drug Keytruda, driven by additional indications and patient demand [7] - AstraZeneca's sales are expected to be bolstered by strong demand for its cancer and diabetes medications [10] - Bristol Myers' revenue may be impacted by declines in legacy drug sales, but growth products are expected to partially offset this decline [12] - AbbVie's revenue is anticipated to be driven by strong sales of key drugs and contributions from newer products [14] - Moderna's revenues are expected to be influenced by sales of its COVID-19 vaccine, Spikevax, while the focus is shifting to updates on its broader pipeline [16]