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Merck Announces Second-Quarter 2012 Financial Results

Sales recorded by Merck for GARDASIL, a vaccine to help prevent certain diseases caused by four types of human papillomavirus (HPV), increased 17 percent to $324 million for the quarter driven by vaccinations of males in the United States and the launch in Japan.

Sales of ZOSTAVAX (zoster vaccine live), a vaccine for the prevention of herpes zoster, grew 22 percent to $148 million in the quarter. The company continues to increase its promotional efforts for ZOSTAVAX in the United States.

Sales of VICTRELIS, the company's oral hepatitis C virus NS3/4A protease inhibitor, were $126 million in the quarter. VICTRELIS is approved in 43 countries and has launched in 23 of those markets.

Animal Health Revenue Performance

Animal Health sales totaled $865 million for the second quarter of 2012, an 8 percent increase over the second quarter of 2011, including a 6 percent negative impact due to foreign exchange. Animal Health had strong performance in the United States and Asia Pacific, with growth led by increased sales of cattle and swine products. The division's products include pharmaceutical and vaccine products for the prevention, treatment and control of disease in all major farm and companion animal species.

Consumer Care Revenue Performance

Second-quarter global sales of Consumer Care were $552 million, an increase of 2 percent compared to the second quarter of 2011, including a 1 percent negative impact due to foreign exchange. The sales increase was primarily due to MiraLAX, CLARITIN and COPPERTONE.

Other Revenue Performance

Other revenues – primarily comprised of alliance revenue, miscellaneous corporate revenues and third-party manufacturing sales – declined 26 percent to $333 million. The change was driven largely by lower revenue from AstraZeneca LP (AZLP) recorded by Merck, which declined 27 percent to $223 million, as well as by lower third-party manufacturing sales.

Second-Quarter Expense and Other Information

The costs detailed below totaled $9.7 billion on a GAAP basis during the second quarter of 2012 and include $1.7 billion of acquisition-related costs and restructuring costs.

   
$ in millions Included in expenses for the period
Second Quarter 2012  

 

GAAP

 

Acquisition- Related Costs 4

 

Restructuring Costs

 

 

Non-GAAP 1

Materials and production   $4,112   $1,226   $83   $2,803
Marketing and administrative   3,249   64   21   3,164
Research and development   2,165   127   41   1,997
Restructuring costs   144   –-   144  
     
Second Quarter 2011                
Materials and production   $4,284   $1,344   $109   $2,831
Marketing and administrative   3,525   77   23   3,425
Research and development   1,936   19   16   1,901
Restructuring costs   668     668  

The gross margin was 66.6 percent for the second quarter of 2012 and 64.7 percent for the second quarter of 2011, reflecting 10.6 and 12.0 percentage point unfavorable impacts, respectively, from the acquisition-related costs and restructuring costs noted above.

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