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May 5, 2016 5:45 am ET

• First-Quarter 2016 GAAP EPS was $0.40; First-Quarter Non-GAAP EPS Increased by 5 Percent to $0.89
• Company Continues to Expect 2016 Full-Year GAAP EPS to be Between $1.96 and $2.23; Narrows and Raises 2016 Full-Year Non-GAAP EPS to be Between $3.65 and $3.77
• First-Quarter 2016 Worldwide Sales Were $9.3 Billion, a Decrease of 1 Percent, Including a 4 Percent Negative Impact from Foreign Exchange
• Obtained FDA Approval of ZEPATIER in the Treatment of Chronic Hepatitis C Genotypes 1 or 4 Infection
• Advanced KEYTRUDA Development Program
  • sBLA Accepted for Recurrent or Metastatic Head and Neck Cancer
  • Breakthrough Therapy Designation Granted for Classical Hodgkin Lymphoma

Merck (NYSE:MRK), known as MSD outside the United States and Canada,
today announced financial results for the first quarter of 2016.

“Our first quarter’s performance sets us on a good course for the year,”
said Kenneth C. Frazier, chairman and chief executive officer, Merck.
“We remain focused on advancing our pipeline and driving the commercial
success of our key launches and inline medicines and vaccines.”

Financial Summary

Non-GAAP (generally accepted accounting principles) earnings per share
(EPS) of $0.89 for the first quarter exclude acquisition- and
divestiture-related costs and restructuring costs.

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

Additional Executive Commentary

“Business development is a top priority, and we are actively pursuing
the best external science through licensing or bolt-on acquisitions to
bolster our pipeline and grow our company,” said Frazier.

“The Global Human Health business performed well in the first quarter.
The JANUVIA franchise demonstrated strong growth, and we remain pleased
with the ongoing launch of KEYTRUDA in markets around the world,” said
Adam Schechter, president, Global Human Health. “Additionally, we are
already seeing positive signs in the launch of ZEPATIER in the United
States.”

“Merck Research Laboratories advanced several clinical development
programs in the first quarter of 2016. We continued to accelerate the
development of KEYTRUDA with an additional supplemental filing in head
and neck cancer, and by securing a fourth Breakthrough Therapy
Designation in classical Hodgkin lymphoma,” said Dr. Roger M.
Perlmutter, president, Merck Research Laboratories.

“We demonstrated strong performance with a leveraged P&L, growing sales
and EPS, excluding the impact of foreign exchange. We benefited from the
contribution of new product launches, while continuing to sustain growth
in our key franchises and driving operational improvements across the
company,” said Robert Davis, chief financial officer.

Select Business Highlights

Worldwide sales were $9.3 billion for the first quarter of 2016, a
decrease of 1 percent compared with the first quarter of 2015, including
a 4 percent negative impact from foreign exchange.

The following table reflects sales of the company’s top pharmaceutical
products, as well as total sales of Animal Health products.

*First quarter of 2015 reflects approximately two months of sales
following the acquisition of Cubist Pharmaceuticals, Inc. (Cubist) by
Merck on Jan. 21, 2015. Percentages reflect comparison to full quarter
of sales in 2016.
**≥ 100%

Commercial and Pipeline Highlights

During the first quarter of 2016, the company continued to focus on
advancing its pipeline, and achieved regulatory and clinical milestones
for multiple products in its portfolio.

• Merck advanced its development program for KEYTRUDA (pembrolizumab),
  an anti-PD-1 therapy for the treatment of metastatic non-small cell
  lung cancer (NSCLC) in previously treated patients whose tumors
  express PD-L1, as well as advanced melanoma.
  • The U.S. Food and Drug Administration (FDA) accepted
    for review a supplemental Biologics License Application (sBLA) for
    KEYTRUDA for the treatment of patients with recurrent or
    metastatic head and neck squamous cell carcinoma with disease
    progression on or after platinum-containing chemotherapy. The FDA
    granted Priority Review with a PDUFA action date of Aug. 9, 2016;
    the sBLA will be reviewed under the FDA’s Accelerated Approval
    program.
  • KEYTRUDA received
    Breakthrough Therapy Designation from the FDA for the treatment of
    patients with relapsed or refractory classical Hodgkin lymphoma.
    It is the fourth Breakthrough Therapy Designation granted for
    KEYTRUDA.
  • The FDA also accepted
    for review a sBLA for KEYTRUDA to include data from the pivotal
    KEYNOTE-010 study in which KEYTRUDA showed superior overall
    survival compared to chemotherapy in patients with previously
    treated advanced NSCLC whose tumors express PD-L1. In accordance
    with the accelerated approval process, the data from KEYNOTE-010
    was intended to serve as the confirmatory trial for receiving full
    approval, establishing the clinical benefit by demonstrating
    improved survival over standard chemotherapy.
  • The KEYTRUDA clinical development program includes patients with
    more than 30 tumor types in more than 250 clinical trials,
    including more than 100 trials that combine KEYTRUDA with other
    cancer treatments. Registration-enabling trials of KEYTRUDA are
    currently enrolling patients with melanoma, NSCLC, head and neck
    cancer, bladder cancer, gastric cancer, colorectal cancer,
    esophageal cancer, breast cancer, ovarian cancer, Hodgkin
    lymphoma, non-Hodgkin lymphoma, multiple myeloma, nasopharyngeal
    cancer, and other tumors, with further trials in planning for
    other cancers.
• The FDA approved
  ZEPATIER (elbasvir and grazoprevir), a once-daily, fixed-dose
  combination tablet for the treatment of adult patients with chronic
  hepatitis C virus genotype (GT) 1 or GT4 infection, with or without
  ribavirin.
• The FDA accepted
  for review the Biologics License Application (BLA) for MK-8237, the
  company’s investigational house dust mite sublingual allergy
  immunotherapy tablet.
• The Antimicrobial Drugs Advisory Committee of the FDA has scheduled a
  meeting on June 9, 2016 to discuss the BLA for ZINPLAVA
  (bezlotoxumab), an investigational antitoxin for the prevention of Clostridium
  difficile (C. difficile) infection recurrence, which was accepted
  by the FDA for Priority Review with a PDUFA action date of July 23,
  2016.

Pharmaceutical Revenue Performance

First-quarter pharmaceutical sales declined 2 percent to $8.1 billion,
including a 4 percent negative impact from foreign exchange. Excluding
the impact of exchange, growth reflects higher sales in oncology,
hospital acute care and diabetes. Growth in oncology was driven by
higher sales of KEYTRUDA as the company continues to launch the product
with new indications and in new markets. Growth in hospital acute care
was driven by sales of the Cubist portfolio and sales growth of certain
inline brands. Pharmaceutical sales also reflect an increase in the
diabetes franchise of JANUVIA (sitagliptin) and JANUMET (sitagliptin and
metformin HCl), medicines that help lower blood sugar in adults with
type 2 diabetes, driven by strong growth in the United States and
Europe, partially offset by lower sales in emerging markets.

First-quarter pharmaceutical sales reflect a decrease in REMICADE
(infliximab), a treatment for inflammatory diseases, due to the
accelerating impact of biosimilar competition in the company’s marketing
territories in Europe. Pharmaceutical sales also reflect declines in
NASONEX (mometasone furoate monohydrate), an inhaled nasal
corticosteroid for the treatment of nasal allergy symptoms, and ZOSTAVAX
(zoster vaccine live), a vaccine for the prevention of herpes zoster.
Pharmaceutical sales were unfavorably affected in the first quarter of
2016 by the company’s reduced operations in Venezuela.

A generic version of NASONEX became available in the United States in
March 2016; as a result, the company anticipates significant losses of
future NASONEX sales. Additionally, in June 2016 the company will lose
U.S. patent protection for CUBICIN (daptomycin for injection), an I.V.
antibiotic, and significant losses of CUBICIN sales are expected to
occur thereafter.

Animal Health Revenue Performance

Animal Health sales, which totaled $829 million for the first quarter of
2016, were in line with sales from the first quarter of 2015. Excluding
the impact of foreign exchange, Animal Health sales grew 9 percent,
primarily driven by BRAVECTO (fluralaner), a chewable tablet that kills
fleas and ticks in dogs for up to 12 weeks.

First-Quarter 2016 Expense and Other Information

The tables that follow present selected expense information.

The gross margin was 61.6 percent for the first quarter of 2016 compared
to 62.1 percent for the first quarter of 2015, reflecting 15.4 and 14.4
unfavorable percentage point impacts, respectively, from the
acquisition- and divestiture-related costs and restructuring costs noted
above.

Research and development (R&D) expenses, on a non-GAAP basis, were $1.6
billion in the first quarter of 2016, a 6 percent decrease compared to
the first quarter of 2015, primarily driven by lower licensing expenses.

Financial Outlook

Merck continues to expect its full-year 2016 GAAP EPS to be between
$1.96 and $2.23. The company has narrowed and raised its full-year 2016
non-GAAP EPS to be between $3.65 and $3.77, including an approximately 2
percent negative impact from foreign exchange at mid-April exchange
rates. The non-GAAP range excludes acquisition- and divestiture-related
costs and costs related to restructuring programs. The change in the
non-GAAP EPS range reflects recent favorability in foreign exchange
rates, partially offset by the earlier than expected entry of a generic
version of NASONEX in the United States.

At mid-April exchange rates, Merck now anticipates full-year 2016
revenues to be between $39.0 billion and $40.2 billion, including an
approximately 2 percent negative impact from foreign exchange.

In addition, the company continues to expect full-year 2016 non-GAAP
marketing and administrative expenses to be below 2015 levels and R&D
expenses to be modestly above 2015 levels.

The company continues to anticipate its full-year 2016 non-GAAP tax rate
will be in the range of 21.5 to 22.5 percent, including a 2016 R&D tax
credit.

A reconciliation of anticipated 2016 EPS, as reported in accordance with
GAAP to non-GAAP EPS that excludes certain items, is provided in the
table below.

Total Employees

As of March 31, 2016, Merck had approximately 68,000 employees worldwide.

Earnings Conference Call

Investors, journalists and the general public may access a live audio
webcast of the call today at 8:00 a.m. EDT on Merck’s website at http://investors.merck.com/investors/webcasts-and-presentations.
Institutional investors and analysts can participate in the call by
dialing (706) 758-9927 or (877) 381-5782 and using ID code number
75256428. Members of the media are invited to monitor the call by
dialing (706) 758-9928 or (800) 399-7917 and using ID code number
75256428. 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

For 125 years, Merck has been a global health care 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 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
health care through far-reaching policies, programs and partnerships.
For more information, visit www.merck.com
and connect with us on Twitter,
Facebook,
YouTube
and LinkedIn.
You can also follow our Twitter conversation at $MRK.

Forward-Looking Statement of Merck & Co., Inc., Kenilworth, N.J., USA

This news release of Merck & Co., Inc., Kenilworth, N.J., USA (the
“company”) includes “forward-looking statements” within the meaning of
the safe harbor provisions of the U.S. Private Securities Litigation
Reform Act of 1995. These statements are based upon the current beliefs
and expectations of the company’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; the company’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 the company’s patents
and other protections for innovative products; and the exposure to
litigation, including patent litigation, and/or regulatory actions.

The company 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 the company’s 2015 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 2016 and 2015 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
description of the items, see Table 2a, 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
and purchase accounting adjustments to inventories recognized as a
result of acquisitions, intangible asset impairment charges and expense
or income related to changes in the estimated fair value measurement of
contingent consideration. Also includes integration, transaction and
certain other costs related to business acquisitions and divestitures.

(1) Amounts include the impact of acquisition and divestiture-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.

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 $1.1
billion of expenses for the amortization of intangible assets recognized
as a result of acquisitions, as well as $24 million of amortization of
purchase accounting adjustments to inventories as a result of the prior
year acquisition of Cubist Pharmaceuticals, Inc., and $252 million of
impairment charges on product intangibles. Amounts included in marketing
and administrative expenses reflect integration, transaction and certain
other costs related to business acquisitions, including severance costs
which are not part of the company’s formal restructuring programs, as
well as transaction and certain other costs related to divestitures.
Amounts included in research and development expenses primarily reflect
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 activities under the company’s formal restructuring programs.

(3) Represents the estimated tax impact on the reconciling items.

* 100% or greater

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

⁽¹⁾ Only select products are shown.

⁽²⁾ First quarter of 2015 reflects approximately two months
of sales following the acquisition of Cubist Pharmaceuticals, Inc. by
Merck on Jan. 21, 2015. Percentage reflects comparison to full quarter
of sales in 2016.

⁽³⁾ Includes Pharmaceutical products not individually shown
above. Other Vaccines sales included in Other Pharmaceutical were $103
million in the first quarter of 2016 and $78 million, $76 million, $99
million and $148 million for the first, second, third and fourth
quarters of 2015, respectively.

⁽⁴⁾ Other revenues are comprised primarily of alliance
revenue, third-party manufacturing sales and miscellaneous corporate
revenues, including revenue hedging activities.

Merck
Media:
Lainie Keller, 908-236-5036
or
Investors:
Teri Loxam, 908-740-1986
Justin Holko, 908-740-1879