What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-02-24 compared with 2025-02-25 · 445 added, 415 removed, 603 unchanged (59% of the section changed)

32 unchanged sentences

Executive Summary

Merck’s performance during 2024 was driven by continued demand across its innovative portfolio, including for recently launched products, enabled by the operational and commercial execution of its science-led strategy.

The Company maintained its focus on the pursuit of breakthrough science and innovation, making disciplined investments in compelling science to drive long-term value for patients, customers, and shareholders.

Merck advanced its robust early- and late-phase pipeline which includes growing diversity across new therapeutic areas and modalities and completed several promising business development transactions.

The Company continued to return capital to shareholders, primarily through dividends.

Table of Content s

In 2025, Merck successfully advanced its science-led strategy through new product approvals and launches, strong clinical execution, important data readouts, and the addition of novel innovation through business development efforts.

The Company also continued to return capital to shareholders, primarily through dividends.

Worldwide sales were $65.0 billion in 2025, an increase of 1% compared with 2024, or 2% excluding the unfavorable effect of foreign exchange.

The sales increase was primarily due to growth in oncology, cardiovascular and animal health, partially offset by declines in diabetes, virology (driven largely by lower sales of COVID-19 medication Lagevrio ), immunology (as Merck’s marketing rights to these products ended in 2024) and vaccines.

Merck continues to execute value creating business development opportunities focused on innovation to augment its robust internal pipeline with compelling external science.

The sales increase was primarily due to growth in oncology, cardiometabolic and respiratory, diabetes, and animal health, largely offset by declines in vaccines, immunology (as Merck’s marketing rights to these products ended in 2024), and virology (driven largely by lower sales of COVID-19 medication Lagevrio ).

Merck continues to execute science-led business development transactions to augment its robust internal pipeline and portfolio with compelling external science focused on delivering innovation to patients, long-term growth, and value creation to shareholders.

Highlights of 2025 activity include the following:

• Closed an exclusive global license to develop, manufacture and commercialize MK-2010 (LM-299), a novel investigational programmed death receptor-1 (PD-1)/vascular endothelial growth factor (VEGF) bispecific antibody from LaNova Medicines Ltd (LaNova).

• Closed an exclusive global license to develop, manufacture and commercialize MK-4082 (HS-10535), an investigational preclinical oral small molecule GLP-1 receptor agonist from Hansoh Pharma (Hansoh).

• Acquired global rights to MK-1045 (formerly CN201), a novel investigational clinical-stage bispecific antibody for the treatment of B-cell associated diseases from Curon Pharmaceutical (Curon).

• Acquired Eyebiotech Limited (EyeBio), a privately held ophthalmology-focused biotechnology company developing candidates for the prevention and treatment of vision loss.

• Acquired Harpoon Therapeutics, Inc.

(Harpoon), a clinical-stage immunotherapy company developing a novel class of T-cell engagers designed to harness the power of the body’s immune system to treat patients suffering from cancer and other diseases.

During 2024, Merck continued its efforts to address unmet medical needs by launching new products with significant patient benefit, including the U.S.

launches of Winrevair , for the treatment of certain adults with pulmonary arterial hypertension (PAH), and Capvaxive, for the prevention of invasive pneumococcal disease and pneumococcal pneumonia in adults.

Winrevair was also approved in the EU.

The Company received more than 25 regulatory approvals in major markets in 2024, including the Winrevair and Capvaxive approvals noted above, along with numerous approvals in oncology.

Keytruda received approval for additional indications in the U.S.

and/or internationally as monotherapy in the therapeutic areas of hepatocellular carcinoma (HCC), melanoma and urothelial carcinoma, in combination with chemotherapy in the therapeutic areas of biliary tract cancer, cervical cancer, endometrial carcinoma, gastric or gastroesophageal junction (GEJ) adenocarcinoma, malignant pleural mesothelioma and non-small-cell lung cancer (NSCLC), as well as in combination with Padcev (enfortunab vedotin-ejfv) for advanced urothelial carcinoma.

Also in 2024, Welireg was approved in China for the treatment of adult patients with certain von Hippel-Lindau (VHL) disease-associated tumors not requiring immediate surgery.

Lynparza, which is being developed in collaboration with AstraZeneca PLC (AstraZeneca), received approval in China for the treatment of certain adult patients with germline BRCA -mutated, human epidermal growth factor receptor 2 (HER2)-negative high-risk early breast cancer.

• Entered into an agreement to acquire Cidara Therapeutics, Inc.

(Cidara), a biotechnology company developing drug-Fc conjugate therapeutics, including a long-acting antiviral designed to prevent seasonal and pandemic influenza;

this transaction closed in January 2026.

• Acquired Verona Pharma plc (Verona Pharma), a biopharmaceutical company focused on respiratory diseases, through which Merck obtained Ohtuvayre, a product approved for the maintenance treatment of chronic obstructive pulmonary disease (COPD).

• Closed an exclusive license agreement for MK-7262 (HRS-5346), an investigational oral small molecule Lipoprotein(a) inhibitor from Jiangsu Hengrui Pharmaceuticals Co., Ltd.

(Hengrui Pharma).

• Closed an agreement with Dr.

Falk Pharma GmbH (Falk) to acquire sole global rights to MK-8690, an investigational anti-CD30 ligand monoclonal antibody.

During 2025, Merck continued its efforts to address unmet medical needs by launching Enflonsia in the U.S.

for the prevention of respiratory syncytial virus (RSV) lower respiratory tract disease in neonates (newborns) and infants born during or entering their first RSV season.

Also in 2025, the Company launched Keytruda Qlex , which was approved by the U.S.

Food and Drug Administration (FDA) for subcutaneous administration across all solid tumor indications for Keytruda in the U.S., and the European Commission (EC) approved a new subcutaneous (SC) route of administration and a new pharmaceutical form (solution for injection) of Keytruda (to be marketed as Keytruda SC ) for use across all Keytruda indications for adult patients in Europe.

Additionally, in pulmonary arterial hypertension (PAH), the Company launched an expanded indication for Winrevair in the U.S.

based on the results of the ZENITH trial.

The Company also received numerous other approvals in oncology.

Keytruda received approvals for additional indications in certain markets, including in combination with chemotherapy in the therapeutic areas of gastric or gastroesophageal junction (GEJ) adenocarcinoma and malignant pleural mesothelioma, in combination with Padcev (enfortumab vedotin) for locally advanced or metastatic urothelial carcinoma and for cisplatin-ineligible muscle-invasive bladder cancer (MIBC), as well as in combination with radiotherapy with or without chemotherapy for head and neck squamous cell carcinoma (HNSCC).

Additionally, in 2025, Welireg was approved in the European Union (EU) and Japan for the treatment of adult patients with certain von Hippel-Lindau (VHL) disease-associated tumors and certain adult patients with renal cell carcinoma (RCC), as well as in the U.S.

for certain adult and pediatric patients with pheochromocytoma and paraganglioma.

In addition to the regulatory approvals discussed above, the Company advanced its late-stage pipeline with several regulatory submissions.

• MK-1022, patritumab deruxtecan, is a potential first-in-class HER3 directed DXd antibody drug conjugate (ADC), under review by the U.S.

Food and Drug Administration (FDA) for the treatment of adult patients with locally advanced or metastatic epidermal growth factor receptor (EGFR)-mutated NSCLC previously treated with two or more systemic therapies.

In June 2024, the FDA issued a complete response letter (CRL) for the Biologics License Application (BLA) due to findings pertaining to an inspection of a third-party manufacturing facility.

The CRL did not identify any issues with the efficacy or safety data submitted.

Patritumab deruxtecan (HER3-DXd) was discovered by Daiichi Sankyo and is

Table of Content s

being jointly developed by Daiichi Sankyo and Merck.

Merck is working with Daiichi Sankyo to address FDA feedback.

• MK-6482 , Welireg, is under review in Japan both for the treatment of adults with VHL disease and for the treatment of certain adults with previously treated advanced renal cell carcinoma (RCC).

Welireg is also under priority review in the U.S.

for the treatment of certain patients with advanced, unresectable or metastatic pheochromocytoma and paraganglioma.

• V116, Capvaxive , a 21-valent pneumococcal conjugate vaccine designed to help prevent invasive pneumococcal disease and pneumococcal pneumonia caused by certain serotypes in adults, is under review in the EU and Japan.

• MK-7962, Winrevair , Merck’s novel activin signaling inhibitor, is under review in Japan for the treatment of adult patients with PAH.

• MK-1654, clesrovimab, is an investigational prophylactic long-acting monoclonal antibody designed to protect infants from respiratory syncytial virus (RSV) disease during their first RSV season under review by the FDA.

Clesrovimab is also under review in the EU.

• Additionally, Keytruda is under review in the EU and Japan for a supplemental indication for the treatment of certain patients with malignant pleural mesothelioma.

During 2024, the Company initiated more than 20 Phase 3 studies spanning cardiometabolic, immunology, infectious diseases, oncology, ophthalmology and vaccines.

• MK-8591A, doravirine/islatravir, is an investigational, once-daily, oral two-drug regimen for adults with HIV-1 infection that is virologically suppressed on antiretroviral therapy under review by the FDA.

MK-8591A is also under review in Japan.

• MK-1654, Enflonsia , a prophylactic long-acting monoclonal antibody designed to protect infants from RSV disease during their first RSV season, is under review in the EU and Japan.

• MK-7962, Winrevair , an activin signaling inhibitor for the treatment of adults with PAH (World Health Organization [WHO] Group 1 pulmonary hypertension), is under review by the FDA in connection with a proposed update to the U.S.

product label based on the results of the HYPERION trial.

• MK-3475, Keytruda (pembrolizumab), is an anti-PD-1 (programmed death receptor-1) therapy available for intravenous administration.

MK-3475A, Keytruda Qlex , combines pembrolizumab with berahyaluronidase alfa to enhance dispersion and permeability to enable subcutaneous administration.

Keytruda and Keytruda Qlex each are approved for the treatment of many cancers and continue to be studied in additional Phase 3 trials.

◦ Keytruda is under review in the EU and Japan in combination with chemotherapy with or without bevacizumab for the treatment of certain patients with platinum-resistant recurrent ovarian cancer.

◦ Keytruda is also under review in the EU and Japan in combination with Pfizer, Inc.’s (Pfizer) and Astellas’ Padcev as neoadjuvant treatment, then continued after radical cystectomy as adjuvant treatment, for patients with MIBC who are ineligible for cisplatin-based chemotherapy.

◦ Keytruda and Keytruda Qlex are under review by the FDA in combination with Gilead Sciences Inc.’s (Gilead) sacituzumab govitecan (Trodelvy) for the first-line treatment of certain patients with unresectable locally advanced or metastatic triple-negative breast cancer (TNBC) whose tumors express programmed death-ligand 1 (PD‑L1).

• MK-6482, Welireg, is Merck’s first-in-class oral hypoxia-inducible factor-2 alpha (HIF-2α) inhibitor.

◦ Welireg , in combination with Keytruda or Keytruda Qlex , is under priority review by the FDA for the adjuvant treatment of certain patients with clear cell RCC following nephrectomy.

◦ Welireg , in combination with MK-7902, Lenvima, an orally available multiple receptor tyrosine kinase inhibitor (TKI), is under review by the FDA for the treatment of certain patients with advanced RCC following previous treatment with a PD-1 or PD-L1 inhibitor.

Lenvima is being developed as part of a collaboration with Eisai Co., Ltd.

In 2025, the Company announced positive late-stage results from 18 Phase 3 trials and initiated 21 new Phase 3 trials spanning cardiometabolic and respiratory, immunology, infectious diseases, oncology and ophthalmology.

The Company now has approximately 80 Phase 3 studies underway.

The Company is diversifying its oncology portfolio and executing on its strategy which is broadly based on three strategic pillars:

immuno-oncology, precision molecular targeting and tissue targeting.

Merck’s Phase 3 oncology programs within these pillars are as follows:

Merck has numerous Phase 3 oncology programs within these pillars.

Immuno-oncology

• MK-1308A, the coformulation of quavonlimab, Merck’s novel investigational anti-CTLA-4 antibody, in combination with pembrolizumab for RCC;

• MK-3475, Keytruda , in the therapeutic areas of hepatocellular, ovarian and small-cell lung cancers;

• MK-3475A, the subcutaneous coformulation of pembrolizumab in combination with hyaluronidase, being evaluated for comparability with intravenous pembrolizumab in metastatic NSCLC;

• V940 (mRNA-4157), an investigational individualized neoantigen therapy, in combination with Keytruda , as an adjuvant treatment in patients with certain types of melanoma and NSCLC, being developed as part of a collaboration with Moderna, Inc.

• V940 (mRNA-4157), intismeran autogene, is an investigational individualized neoantigen therapy being evaluated in combination with Keytruda for the adjuvant portion of treatment in patients with certain types of melanoma and non-small cell lung cancer (NSCLC).

Intismeran autogene is being developed as part of a collaboration with Moderna, Inc.

• MK-1308A is the coformulation of quavonlimab, Merck’s novel investigational anti-cytotoxic T-lymphocyte associated protein 4 (CTLA-4) antibody, in combination with pembrolizumab, being evaluated for the treatment of RCC.

Precision molecular targeting

• MK-1026, nemtabrutinib, an oral, reversible, non-covalent Bruton’s tyrosine kinase (BTK) inhibitor, for hematological malignancies, including chronic lymphocytic leukemia and small lymphocytic lymphoma;

• MK-1084, an investigational oral selective KRAS G12C inhibitor, in combination with Keytruda , for metastatic NSCLC;

• MK-3543, bomedemstat, an investigational orally available lysine-specific demethylase 1 inhibitor for myeloproliferative disorders;

• MK-5684, opevesostat, an investigational cytochrome P450 11A1 (CYP11A1) inhibitor for metastatic castration-resistant prostate cancer;

• MK-7339, Lynparza, in combination with Keytruda , for non-small-cell lung and small-cell lung cancers;

• MK-7902, Lenvima, being developed as part of a collaboration with Eisai Co., Ltd.

(Eisai), in combination with Keytruda , for esophageal cancer.

• MK-1026, nemtabrutinib, is an investigational oral, reversible, non-covalent Bruton’s tyrosine kinase (BTK) inhibitor, being evaluated for the treatment of hematological malignancies, including chronic lymphocytic leukemia and small lymphocytic lymphoma.

• MK-1084, calderasib, is an investigational oral selective KRAS G12C inhibitor being evaluated with or without Keytruda or Keytruda Qlex for the treatment of certain patients with colorectal and non-small cell lung cancers.

Calderasib is being developed as part of a collaboration with Taiho Pharmaceutical Co.

and Astex Pharmaceuticals (UK), a wholly owned subsidiary of Otsuka Pharmaceutical Co., Ltd.

• MK-3543, bomedemstat, is an investigational orally available lysine-specific demethylase 1 inhibitor being evaluated for the treatment of certain patients with essential thrombocythemia.

• MK-5684, opevesostat, is an investigational cytochrome P450 11A1 (CYP11A1) inhibitor being evaluated for the treatment of certain patients with metastatic castration-resistant prostate cancer.

• MK-6482, Welireg , is being developed for expanded indications in RCC in combination with Keytruda and Lenvima, and in other combinations.

• MK-7339, Lynparza, is an oral poly (ADP-ribose) polymerase (PARP) inhibitor being evaluated in combination with Keytruda for expanded indications in the therapeutic areas of non-small cell lung and small cell lung cancers.

Lynparza is being developed as part of a collaboration with AstraZeneca PLC (AstraZeneca).

Tissue targeting

• MK-1022, patritumab deruxtecan, being developed in collaboration wtih Daiichi Sankyo, for NSCLC as noted above;

• MK-2140, zilovertamab vedotin, an ADC targeting receptor tyrosine kinase-like orphan receptor 1 (ROR1) for hematological malignancies, including diffuse large B cell lymphoma;

• MK-2400, ifinatamab deruxtecan, an ADC being evaluated in patients with relapsed SCLC versus chemotherapy, being developed as part of a collaboration with Daiichi Sankyo;

Table of Content s

• MK-2870, sacituzumab tirumotecan, an investigational trophoblast cell-surface antigen 2 (TROP2)-directed ADC, being developed as part of a collaboration with Kelun-Biotech for breast, cervical, endometrial, gastric and non-small-cell lung cancers.

• MK-1022, patritumab deruxtecan, is an investigational human epidermal growth factor receptor 3 (HER3) directed antibody drug conjugate (ADC) being evaluated in certain patients with breast cancer.

Patritumab deruxtecan is being developed as part of a collaboration with Daiichi Sankyo.

• MK-2140, zilovertamab vedotin, is an investigational ADC targeting receptor tyrosine kinase-like orphan receptor 1 (ROR1) being evaluated for the treatment of hematological malignancies, including diffuse large B cell lymphoma.

• MK-2400, ifinatamab deruxtecan, is an investigational B7-H3 directed ADC being evaluated in certain patients with esophageal, prostate, and small cell lung cancers.

Ifinatamab deruxtecan is being developed as part of a collaboration with Daiichi Sankyo.

• MK-2870, sacituzumab tirumotecan, is an investigational trophoblast cell-surface antigen 2 (TROP2)-directed ADC being evaluated for certain patients with breast, cervical, endometrial, gastric, non-small cell lung, and ovarian cancers.

Sacituzumab tirumotecan is being developed as part of a collaboration with Kelun-Biotech.

• MK-5909, raludotatug deruxtecan, is an investigational CDH6 targeting ADC being evaluated in patients with platinum resistant ovarian cancer.

Raludotatug deruxtecan is being developed as part of a collaboration with Daiichi Sankyo.

Additionally, the Company currently has candidates in Phase 3 clinical development in several other therapeutic areas.

• MK-3000, an investigational, potentially first-in-class tetravalent, tri-specific antibody that acts as an agonist of the Wingless-related integration site signaling pathway, for the treatment of diabetic macular edema and neovascular age-related macular degeneration;

• MK-8591A, a once-daily oral combination of doravirine and islatravir, an investigational nucleoside reverse transcriptase translocation inhibitor, for the treatment of HIV-1 infection (which is on partial clinical hold for higher doses of islatravir than those used in current clinical trials);

• MK-8591D, islatravir in combination with lenacapavir for the treatment of HIV-1 infection (which is on partial clinical hold for higher doses of islatravir than those used in current clinical trials), being developed in collaboration with Gilead Sciences Inc.;

• MK-0616, enlicitide decanoate, an investigational, oral proprotein convertase subtilisin/kexin type 9 (PCSK9) inhibitor for hypercholesterolemia, including in studies evaluating low-density lipoprotein cholesterol reduction and a cardiovascular outcomes study;

• MK-7240, tulisokibart, a humanized monoclonal antibody directed to tumor necrosis factor-like ligand 1A, a target associated with both intestinal inflammation and fibrosis, for Crohn’s disease and ulcerative colitis;

• MK-4482, Lagevrio , which is reflected in Phase 3 development in the U.S.

as it remains investigational following Emergency Use Authorization (EUA) in 2021.

Merck’s capital allocation strategy continues to prioritize investments in its business to drive near- and long-term growth, including investing in the Company’s key growth drivers and expansive pipeline of novel candidates, each of which has potential to address important unmet medical needs.

Research and development expenses in 2024 reflect increased development spending particularly in the therapeutic areas of oncology, immunology and cardiometabolic.

In addition, Merck remains committed to its dividend and will continue to pursue the most compelling external science and technologies through value-enhancing business development transactions.

• MK-0616, enlicitide decanoate, is an investigational oral proprotein convertase subtilisin/kexin type 9 (PCSK9) inhibitor being evaluated for the treatment of hypercholesterolemia, including in studies evaluating low-density lipoprotein cholesterol reduction and a cardiovascular outcomes study.

• V181 is an investigational quadrivalent vaccine for the prevention of dengue disease caused by any of the four dengue virus serotypes (DENV-1, DENV-2, DENV-3, and DENV-4), regardless of prior dengue exposure.

• MK-3000 is an investigational, potentially first-in-class tetravalent, tri-specific antibody that acts as an agonist of the Wingless-related integration site signaling pathway, which is in clinical development for the treatment of diabetic macular edema.

• MK-8591D is an investigational once-weekly, oral combination of Merck’s islatravir, a nucleoside analog leveraging translocation inhibition, and Gilead’s lenacapavir being evaluated for the treatment of HIV-1 infection in virologically suppressed adults (which remains under a partial clinical hold for any studies that would use islatravir doses higher than the doses considered for the revised clinical programs).

• MK-8527 is an investigational once-monthly, oral nucleoside analog leveraging translocation inhibition, for HIV-1 pre-exposure prophylaxis (PrEP).

• MK-1406 (formerly CD388) is an investigational small molecule neuraminidase inhibitor stably conjugated to a proprietary Fc fragment of a human antibody designed to prevent seasonal and pandemic influenza.

MK-1406 was obtained in connection with the January 2026 acquisition of Cidara.

• MK-7240, tulisokibart, is an investigational humanized monoclonal antibody directed to tumor necrosis factor-like ligand 1A, a central amplifier of inflammatory pathways and fibrotic mechanisms in inflammatory bowel disease, being evaluated for the treatment of Crohn’s disease and ulcerative colitis.

• MK-4482, Lagevrio , is an investigational oral antiviral medicine for the treatment of mild to moderate COVID-19 in adults who are at risk for progressing to severe disease, which is reflected in Phase 3 development in the U.S.

as it remains investigational following FDA Emergency Use Authorization (EUA) in 2021.

Merck is developing Lagevrio as part of a collaboration with Ridgeback Biotherapeutics LP (Ridgeback).

Merck’s capital allocation strategy continues to prioritize investments in its business to drive near- and long-term growth, including investing in the Company’s key growth drivers and its broad and diverse pipeline of novel candidates, enabled in part by the benefits of the Company’s multiyear optimization initiative.

Research and development expenses in 2025 reflect increased development spending particularly in the therapeutic areas of ophthalmology, oncology and immunology.

In addition, Merck remains committed to its dividend and will continue to

pursue the most compelling external science and technologies through value-enhancing business development transactions.

In November 2025, Merck’s Board of Directors approved an increase to the Company’s quarterly dividend, raising it to $0.85 per share from $0.81 per share on the Company’s outstanding common stock.

During 2025, the Company returned $13.3 billion to shareholders through dividends of $8.2 billion and share repurchases of $5.1 billion.

In January 2025, Merck’s Board of Directors authorized a new share repurchase program of up to an additional $10 billion of Merck’s common stock for its treasury.

Table of Content s

GAAP and non-GAAP EPS were negatively affected in 2024, 2023 and 2022 by $1.28, $6.21, and $0.22, respectively, of charges for certain upfront and pre-approval milestone payments related to collaborations and licensing agreements, as well as charges related to pre-approval assets obtained in transactions accounted for as asset acquisitions.

In January 2025, Merck’s Board of Directors authorized a new share repurchase program of up to $10 billion of Merck’s common stock for its treasury.

GAAP and non-GAAP EPS were negatively affected in 2025, 2024 and 2023 by $0.20, $1.28, and $6.21, respectively, of per share charges for certain upfront and pre-approval milestone payments related to collaborations and licensing agreements, as well as charges related to pre-approval assets obtained in transactions accounted for as asset acquisitions.

Global efforts toward health care cost containment continue to exert pressure on product pricing and market access worldwide.

5 unchanged sentences

In 2022, the U.S.

Congress passed the Inflation Reduction Act (IRA), which made significant changes to how drugs are covered and paid for under the Medicare program, including the creation of financial penalties for drugs whose prices rise faster than the rate of inflation, redesign of the Medicare Part D program to require manufacturers to bear more of the liability for certain drug benefits (which has taken effect in 2025), and government price setting for certain Medicare Part D drugs (starting in 2026) and Medicare Part B drugs (starting in 2028).

Congress passed the Inflation Reduction Act (IRA), which made significant changes to how drugs are covered and paid for under the Medicare program, including the creation of financial penalties for drugs whose prices rise faster than the rate of inflation, redesign of the Medicare Part D program to require manufacturers to bear more of the liability for certain drug benefits (which went into effect in 2025), and government price setting for certain Medicare Part D drugs (starting in 2026) and Medicare Part B drugs (starting in 2028).

Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), selected Januvia in 2023 for the first year of the IRA’s “Drug Price Negotiation Program” (Program), and selected Janumet and Janumet XR in 2025 for the second year of the IRA’s Program.

Pursuant to the IRA’s Program, the government set a price for Januvia , which became effective on January 1, 2026, and set a price for Janumet and Janumet XR , which will become effective on January 1, 2027.

In addition, in January 2026, HHS announced that Lenvima has been selected for government price setting, the set price for which will become effective on January 1, 2028.

Furthermore, the Company expects that Keytruda will be selected in 2027 for government price setting, which would become effective on January 1, 2029.

Government price setting may also impact pricing in the private market negatively affecting the Company’s performance.

In 2023, the U.S.

Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), selected Januvia for the first year of the IRA’s “Drug Price Negotiation Program” (Program).

Pursuant to the IRA’s Program, a government price was set for Januvia , which will become effective on January 1, 2026.

In January 2025, the U.S.

Department of HHS, through the CMS, announced that Janumet and Janumet XR would be in included in the second year of the IRA’s Program, with government price setting to become effective on January 1, 2027.

The Company has sued the U.S.

5 unchanged sentences

The Company anticipates all of these actions and additional actions in the future will continue to negatively affect sales and profits.

In May 2025, the U.S.

presidential administration issued an executive order intended to encourage or impose the use of “most-favored-nation” pricing to tie U.S.

prescription drug prices to prices in selected comparably developed nations.

In July 2025, the Company and other pharmaceutical companies received letters from the U.S.

presidential administration with a request to agree to the administration’s “most-favored-nation” drug pricing goals by September 29, 2025.

Further to the letter received from the administration, in December 2025, the Company announced that it had entered into a three-year agreement (MFN Agreement) with the U.S government that addressed the four policy goals of the administration’s July letter.

Included within the MFN Agreement is an obligation by the Company to provide key products through a direct-to-patient program at affordable prices for eligible patients in the U.S.

This will initially include Januvia , Janumet and Janumet XR , and will be expanded in the future to include enlicitide decanoate pending FDA approval.

The Company also agreed to offer its existing medicines at discounted prices to Medicaid, excluding certain products.

The Company has also agreed that products launched during the term of the MFN Agreement (with certain exceptions) will be subject to “most-favored-nation” pricing in reference to prices for such products in a specified group of countries (MFN Countries).

Finally, the Company agreed to repatriate and share with the Federal government a portion of foreign revenue received by the Company as a result of the government’s successful trade policy efforts.

Additionally, the Company reached an agreement with the U.S.

Department of Commerce to delay Section 232 tariffs for three years, enabling the Company to make investments in the U.S.

to reshore manufacturing for American patients.

Operating Results

8 unchanged sentences

Worldwide sales were $65.0 billion in 2025, representing growth of 1% compared with 2024, or 2% excluding the unfavorable effect of foreign exchange.

The devaluation of the Argentine peso contributed approximately 2 percentage points of the negative impact of foreign exchange, which was largely offset by inflation-related price increases consistent with practice in that market.

Global sales growth was primarily due to higher sales in the oncology franchise, largely due to strong growth of Keytruda and Welireg , as well as increased alliance revenue from Reblozyl and Lynparza.

Also contributing to revenue growth were higher sales in the cardiovascular

Table of Content s

franchise, largely attributable to the launch of Winrevair , higher sales of certain hospital acute care products, particularly Prevymis , as well as higher sales of animal health products.

Sales growth in 2024 was partially offset by lower sales in the diabetes franchise, due to Januvia and Janumet , and lower sales in the virology franchise largely attributable to Lagevrio .

Lower sales in the immunology franchise due to the return of the marketing rights for Remicade and Simponi in former Merck territories to Johnson & Johnson on October 1, 2024, and lower sales in the vaccines franchise primarily due to Gardasil/Gardasil 9 also offset sales growth in 2024.

Global sales growth was primarily due to higher sales in the oncology franchise, largely due to the performance of Keytruda and Welireg , as well as increased alliance revenue from Koselugo (resulting from an amendment to the collaboration agreement), Reblozyl, and Lynparza.

Also contributing to revenue growth in 2025 were higher sales in the cardiometabolic and respiratory franchise, largely attributable to the ongoing launch of Winrevair , as well as the inclusion of Ohtuvayre sales following the October 2025 acquisition of Verona Pharma.

Growth in the diabetes franchise largely attributable to higher net pricing of Januvia , and higher sales of animal health products largely due to the performance of livestock products also drove sales growth.

Revenue growth in 2025 was largely offset by lower sales in the vaccines franchise primarily due to Gardasil/Gardasil 9, partially offset by the ongoing launch of Capvaxive and the U.S.

launch of Enflonsia .

Revenue growth in 2025 was also offset by lower sales in the immunology franchise due to the return of the marketing rights for Remicade and Simponi in former Merck territories to Johnson & Johnson on October 1, 2024, and by lower sales in the virology franchise largely attributable to Lagevrio .

Sales in the U.S.

grew 13% to $32.3 billion in 2024 primarily driven by higher sales of Keytruda , Winrevair , Gardasil 9, Welireg , Bridion , Lagevrio , and Prevymis , as well as higher alliance revenue from Reblozyl, partially offset by lower sales of Januvia and Vaxneuvance .

International sales grew 1% in 2024, or 6% excluding the unfavorable effect of foreign exchange.

The devaluation of the Argentine peso contributed approximately 3 percentage points of the negative impact of foreign exchange, which was largely offset by inflation-related price increases consistent with practice in that market.

International sales growth was primarily due to higher sales of Keytruda , Vaxneuvance, Prevymis , as well as higher sales of animal health products, partially offset by lower sales of Gardasil/Gardasil 9 , Lagevrio , Bridion , Janumet , Januvia , and Simponi.

grew 13% to $36.5 billion in 2025 primarily driven by higher sales of Keytruda , Winrevair , Capvaxive , Januvia , Bridion , Gardasil 9, Welireg , Janumet , and Prevymis.

The inclusion of Ohtuvayre sales, higher alliance revenue from Reblozyl, and higher sales of animal health products also contributed to U.S.

revenue growth.

sales growth in 2025 was partially offset by lower sales of Dificid and Lagevrio .

International sales declined 11% in 2025, or 10% excluding the unfavorable effect of foreign exchange.

The international sales decline was primarily due to lower sales of Gardasil/Gardasil 9, Simponi, Lagevrio , Januvia , Bridion , Remicade, and Janumet , partially offset by higher sales of Keytruda , Prevymis , Winrevair , increased alliance revenue from Koselugo and Lynparza, as well as higher sales of animal health products .

International sales represented 44% and 50% of total sales in 2025 and 2024, respectively.

7 unchanged sentences

Exchange 2023

Keytruda $ 29,482 18 % 22 % $ 25,011 19 % 21 % $ 20,937

Keytruda/Keytruda Qlex

$ 31,680 7 % 7 % $ 29,482 18 % 22 % $ 25,011

Alliance Revenue - Lynparza (1)

5 unchanged sentences

525 41 % 41 % 371 75 % 75 % 212

Alliance Revenue - Koselugo (3)

436 * * 170 75 % 76 % 97

(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 4 to the consolidated financial statements).

(2) Alliance revenue for Reblozyl represents royalties and, for 2022, also includes a payment received related to the achievement of a regulatory approval milestone (see Note 4 to the consolidated financial statements).

(2) Alliance revenue for Reblozyl represents royalties (see Note 4 to the consolidated financial statements).

(3) Alliance revenue for Koselugo in 2025 primarily includes a $150 million upfront payment received and $175 million of regulatory approval milestones recorded in connection with an amendment to the collaboration agreement with AstraZeneca, which revised the payment structure.

Alliance revenue in 2024 and 2023 represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

See Note 4 to the consolidated financial statements for more information.

Keytruda is an anti-PD-1 therapy that has been approved in over 40 indications in the U.S., including 19 tumor types and 2 tumor-agnostic indications, and has similarly been approved in markets worldwide for many of these indications.

The Keytruda clinical development program includes studies across a broad range of cancer types.

Global sales of Keytruda grew 18% in 2024, or 22% excluding the unfavorable effect of foreign exchange.

The negative impact of foreign exchange was primarily due to the devaluation of the Argentine peso, which was largely offset by inflation-related price increases consistent with practice in that market.

Keytruda sales growth in the U.S.

reflects higher demand across the multiple approved metastatic indications, in particular for the treatment of certain types of bladder, endometrial, microsatellite instability-high (MSI-H) and renal cell cancers, as well as increased uptake across earlier-stage indications, including in certain types of high-risk early-stage triple-negative breast cancer (TNBC), NSCLC and RCC, and higher pricing.

Keytruda sales growth in international markets reflects higher demand predominately for the TNBC, melanoma and RCC earlier-stage indications, as well as uptake in cervical, gastric and renal cell cancer metastatic indications.

The Company expects that the 2025 launch and reimbursement of new indications for Keytruda in the EU will have a negative impact on pricing in those markets.

Keytruda Qlex is a subcutaneously-administered fixed combination of pembrolizumab and berahyaluronidase alfa, which enhances dispersion and permeability to enable subcutaneous administration of pembrolizumab.

Keytruda Qlex , which was initially approved by the FDA in September 2025, is approved in the U.S.

in solid tumor indications approved for Keytruda .

In November 2025, the EC approved a new subcutaneous (SC) route of administration and a new pharmaceutical form (solution for injection) of Keytruda (to be marketed as Keytruda SC ) for use across Keytruda indications for adults in Europe.

Timing for commercial availability of Keytruda SC in individual EU countries will depend on multiple factors, including the completion of national reimbursement procedures and the outcome of litigation with Halozyme, Inc.

as discussed in Note 10 to the consolidated financial statements.

Combined global sales of Keytruda/Keytruda Qlex grew 7% in 2025.

Sales growth in the U.S.

reflects higher demand and net pricing, partially offset by a negative impact due to the timing of purchases.

Increased demand in the U.S.

was driven by higher utilization across earlier-stage indications, including in certain types of cervical cancer, TNBC, NSCLC, RCC, and HNSCC, as well as higher demand across multiple approved metastatic indications, in particular for the treatment of certain types of urothelial and endometrial cancers.

Sales growth in international markets reflects increased uptake predominately for the TNBC, NSCLC, and RCC earlier-stage indications, as well as higher demand in urothelial, gastric, cervical, and endometrial cancer metastatic indications.

The 2025 launch and reimbursement of new indications for Keytruda in the EU had a negative impact on pricing in those markets.

In addition, a biosimilar of Keytruda has launched in Argentina.

Summarized below are the Keytruda regulatory approvals received in 2025 and, to date, in 2026.

Date Approval

January 2024 FDA approval in combination with chemoradiotherapy for the treatment of patients with FIGO (International Federation of Gynecology and Obstetrics) 2014 Stage III-IVA cervical cancer, based on the KEYNOTE-A18 trial.

Table of Content s

January 2024 FDA full approval for the treatment of patients with HCC secondary to hepatitis B who have received prior systemic therapy other than a PD-1/programmed death-ligand 1 (PD-L1) containing regimen.

The conversion from an accelerated to full (regular) approval is based on the KEYNOTE-394 trial.

February 2024 China’s National Medical Products Administration (NMPA) approval in combination with gemcitabine and cisplatin for the first-line treatment of patients with locally advanced or metastatic biliary tract carcinoma, based on the KEYNOTE-966 trial.

European Commission (EC) approval in combination with platinum-containing chemotherapy as neoadjuvant treatment, and then continued as monotherapy as adjuvant treatment, for resectable NSCLC at high risk of recurrence in adults, based on the KEYNOTE-671 trial.

Japan’s Ministry of Health, Labor and Welfare (MHLW) approval in combination with fluoropyrimidine- and platinum-containing chemotherapy for the first-line treatment of patients with locally advanced unresectable or metastatic gastric or GEJ adenocarcinoma, based on the KEYNOTE-859 trial.

Japan’s MHLW approval in combination with standard of care chemotherapy (gemcitabine and cisplatin) for the treatment of patients with locally advanced unresectable or metastatic biliary tract cancer, based on the KEYNOTE-966 trial.

FDA approval in combination with carboplatin and paclitaxel, followed by Keytruda as a single agent, for the treatment of adult patients with primary advanced or recurrent endometrial carcinoma, based on the KEYNOTE-868 trial.

China’s NMPA approval in combination with trastuzumab, fluoropyrimidine- and platinum-containing chemotherapy for the first-line treatment of patients with locally advanced unresectable or metastatic HER2 positive gastric or GEJ adenocarcinoma whose tumors express PD-L1 as determined by a fully validated test, based on the KEYNOTE-811 trial.

September2024

EC approval in combination with Padcev, an ADC, for the first-line treatment of unresectable or metastatic urothelial carcinoma in adults, based on the KEYNOTE-A39 trial that was conducted in collaboration with Seagen (now Pfizer Inc.) and Astellas.

September 2024

FDA approval in combination with pemetrexed and platinum chemotherapy for the first-line treatment of adult patients with unresectable advanced or metastatic malignant pleural mesothelioma, based on the IND.227/KEYNOTE-483 trial.

September 2024

Japan’s MHLW approval in combination with chemotherapy as a neoadjuvant treatment, then continued as monotherapy as an adjuvant treatment, for patients with NSCLC, based on the KEYNOTE-671 trial.

September 2024

Japan’s MHLW approval in combination with Padcev for the first-line treatment of patients with radically unresectable urothelial carcinoma, based on the KEYNOTE-A39 trial.

September 2024

Japan’s MHLW approval as monotherapy in patients with radically unresectable urothelial carcinoma who are not eligible for any platinum-containing chemotherapy, based on the KEYNOTE-052 trial.

China’s National Medical Products Administration (NMPA) approval in combination with enfortumab vedotin, an antibody-drug conjugate, for the treatment of adults with locally advanced or metastatic urothelial carcinoma, based on the KEYNOTE-A39 trial that was conducted in collaboration with Seagen (now Pfizer) and Astellas.

EC approval in combination with pemetrexed and platinum chemotherapy for the first-line treatment of adult patients with unresectable non epithelioid malignant pleural mesothelioma, based on the IND.227/KEYNOTE-483 trial.

Japan’s Ministry of Health, Labor and Welfare (MHLW) approval in combination with trastuzumab and chemotherapy for the first-line treatment of patients with unresectable, advanced or recurrent human epidermal growth factor receptor 2 (HER2) positive gastric or GEJ adenocarcinoma, based on the KEYNOTE-811 trial.

Japan’s MHLW approval in combination with pemetrexed and platinum chemotherapy for unresectable, advanced or recurrent metastatic malignant pleural mesothelioma, based on the IND.227/KEYNOTE-483 trial.

FDA approval for the treatment of adult patients with resectable locally advanced HNSCC whose tumors express PD-L1 Combined Positive Score (CPS) ≥ 1 as determined by an FDA-approved test, as a single agent as neoadjuvant treatment, continued as adjuvant treatment in combination with radiotherapy with or without cisplatin and then as a single agent, based on the KEYNOTE-689 trial.

China’s NMPA approval of Keytruda plus Lenvima in combination with transarterial chemoembolization for the treatment of patients with unresectable, non-metastatic hepatocellular carcinoma (HCC), based on the LEAP-012 trial.

EC approval as monotherapy for the treatment of resectable locally advanced HNSCC as neoadjuvant treatment, continued as adjuvant treatment in combination with radiation therapy with or without concomitant cisplatin and then as monotherapy in adults whose tumors express PD-L1 with a CPS ≥ 1, based on the KEYNOTE-689 trial.

November 2025

FDA approval in combination with Padcev as neoadjuvant treatment and then continued after cystectomy as adjuvant treatment, for the treatment of adult patients with MIBC who are ineligible for cisplatin-based chemotherapy, based on the KEYNOTE-905 trial conducted in collaboration with Pfizer and Astellas.

February 2026

China’s NMPA approval for the first-line treatment of certain patients with primary advanced or recurrent endometrial cancer, based on the KEYNOTE-868 (NRG-GY018) trial.

February 2026

FDA approval in combination with paclitaxel, with or without bevacizumab, for the treatment of adult patients with platinum-resistant epithelial ovarian, fallopian tube or primary peritoneal carcinoma whose tumors express PD-L1 (CPS ≥ 1) as determined by an FDA-authorized test, and who have received one or two prior systemic treatment regimens, based on the KEYNOTE-B96 trial.

February 2026

Japan’s MHLW approval for neoadjuvant and adjuvant treatment of locally advanced HNSCC, based on the KEYNOTE-689 trial.

Summarized below are the Keytruda Qlex regulatory approvals received in 2025 and, to date, in 2026.

Date Approval

September 2025

China’s NMPA approval for the first-line treatment of adult patients with unresectable or metastatic melanoma, and conversion from conditional to full approval for the second-line treatment of adult patients with unresectable or metastatic melanoma following failure of one prior line of therapy, based on the LEAP-003 trial.

EC approval in combination with chemoradiotherapy for the treatment of FIGO 2014 Stage III-IVA locally advanced cervical cancer in adults who have not received prior definitive therapy, based on the KEYNOTE-A18 trial.

EC approval in combination with carboplatin and paclitaxel followed by Keytruda as a single agent for the first-line treatment of primary advanced or recurrent endometrial carcinoma in adults who are candidates for systemic therapy, based on the KEYNOTE-868 trial.

FDA approval across most adult solid tumor indications for Keytruda.

FDA approval for the treatment of adult patients with resectable locally advanced HNSCC whose tumors express PD-L1 CPS ≥ 1 as determined by an FDA-approved test, as a single agent as neoadjuvant treatment, continued as adjuvant treatment in combination with radiotherapy with or without cisplatin and then as a single agent, based on the KEYNOTE-689 trial.

November 2025

Japan’s MHLW approval in combination with chemoradiotherapy as treatment for patients with locally advanced cervical cancer, based on the KEYNOTE-A18 trial.

December 2024

China’s NMPA approval in combination with platinum-containing chemotherapy as neoadjuvant treatment and then continued as monotherapy as adjuvant treatment after surgery for patients with resectable stage II, IIIA, or IIIB NSCLC, based on the KEYNOTE-671 trial.

December 2024

Japan’s MHLW approval in combination with carboplatin and paclitaxel as a treatment for adult patients with advanced or recurrent endometrial carcinoma, based on the KEYNOTE-868 trial.

Table of Content s

December 2024

China’s NMPA approval in combination with chemoradiotherapy for the treatment of patients with FIGO 2014 Stage III-IVA cervical cancer, based on the KEYNOTE-A18 trial.

China’s NMPA approval in combination with Padcev for adult patients with locally advanced or metastatic urothelial cancer, based on the KEYNOTE-A39 trial.

The Company is a party to license agreements pursuant to which the Company pays royalties on sales of Keytruda .

Under the terms of the more significant of these agreements, Merck paid a royalty of 6.5% on worldwide sales of Keytruda through December 2023 to one third party;

this royalty declined to 2.5% in 2024 and will continue through 2026 terminating thereafter.

The Company pays an additional 2% royalty on worldwide sales of Keytruda to another third party, the termination date of which varies by country;

EC approval of new subcutaneous route of administration and a new pharmaceutical form of Keytruda for all adult indications approved in the EU (to be marketed as Keytruda SC ).

November 2025

FDA approval in combination with Padcev, as neoadjuvant treatment and then continued after cystectomy as adjuvant treatment, for the treatment of adult patients with MIBC who are ineligible for cisplatin-based chemotherapy, based on the KEYNOTE-905 trial conducted in collaboration with Pfizer and Astellas.

February 2026

The Company is a party to license agreements pursuant to which the Company pays royalties on net sales of Keytruda .

Under the terms of the more significant of these agreements, Merck paid a royalty of 6.5% on worldwide net sales of Keytruda through December 2023 to one third party, which declined to 2.5% in 2024.

This royalty (which also applies to net sales of Keytruda Qlex ) will continue through 2026, terminating thereafter.

The Company pays an additional 2% royalty on worldwide net sales of Keytruda (and on Keytruda Qlex following regulatory approval) to another third party;

this royalty expired in the U.S.

in September 2024 and will expire on varying dates in major European markets in the second half of 2025.

The royalty expenses are included in Cost of sales .

Lynparza is an oral poly (ADP-ribose) polymerase (PARP) inhibitor being developed and commercialized as part of a collaboration with AstraZeneca (see Note 4 to the consolidated financial statements).

in September 2024, expired in major European markets in the second half of 2025, but will continue to be paid on net sales of Keytruda and Keytruda Qlex in certain other international markets expiring at various dates through 2035.

The royalty expenses are included in

Cost of sales .

The Company may be subject to additional royalties on net sales of Keytruda Qlex in the future under certain circumstances (see Note 3 to the consolidated financial statements).

Lynparza is a PARP inhibitor being developed and commercialized as part of a collaboration with AstraZeneca (see Note 4 to the consolidated financial statements).

Lynparza is approved for the treatment of certain types of advanced or recurrent ovarian, early or metastatic breast, metastatic pancreatic and metastatic castration-resistant prostate cancers.

Alliance revenue related to Lynparza grew 9% in 2024 largely due to higher demand in most international markets.

Alliance revenue related to Lynparza grew 11% in 2025 largely due to higher demand globally.

In January 2025, China’s NMPA approved Lynparza as adjuvant treatment for adult patients with germline BRCA -mutated, HER2-negative high-risk early breast cancer, based on the OlympiA trial.

Lenvima is an oral receptor tyrosine kinase inhibitor being developed and commercialized as part of a collaboration with Eisai (see Note 4 to the consolidated financial statements).

Lenvima is an oral receptor TKI being developed and commercialized as part of a collaboration with Eisai (see Note 4 to the consolidated financial statements).

Lenvima is approved for the treatment of certain types of thyroid cancer, RCC, HCC, in combination with everolimus for certain patients with advanced RCC, and in combination with Keytruda for certain patients with advanced endometrial carcinoma or advanced RCC.

Alliance revenue related to Lenvima grew 5% in 2024 primarily reflecting higher demand and pricing in the U.S.

Sales of Welireg , for the treatment of adult patients with certain VHL disease-associated tumors and certain adult patients with previously treated advanced RCC, more than doubled in 2024 primarily due to higher demand in the U.S.

reflecting in part continued uptake of the RCC indication following approval by the FDA in December 2023.

In November 2024, Welireg was approved in China for the treatment of adult patients with certain VHL disease-associated tumors not requiring immediate surgery based on the LITESPARK-004 clinical trial.

In February 2025, the EC conditionally approved Welireg as monotherapy both for the treatment of adult patients with VHL disease who require therapy for associated, localized RCC, central nervous system hemangioblastomas, or pancreatic neuroendocrine tumors, and for whom localized procedures are unsuitable, and for the treatment of adult patients with advanced clear cell RCC that progressed following two or more lines of therapy that included a PD-1 or PD-L1 inhibitor and at least two VEGF targeted therapies.

The EC approval of these two indications is based on results from the LITESPARK-004 and LITESPARK-005 trials.

The conditional approval of Welireg will be valid for one year, subject to yearly renewal, pending certain additional clinical data.

Alliance revenue related to Lenvima grew 4% in 2025 primarily due to higher sales in the U.S.

reflecting increased demand that was partially offset by lower pricing.

Sales of Welireg , for the treatment of adult patients with certain VHL disease-associated tumors, certain adult patients with previously treated advanced RCC, and certain patients with pheochromocytoma and paraganglioma, rose 41% in 2025 primarily due to higher demand in the U.S.

and continued launch uptake in several international markets, partially offset by lower net pricing in the U.S.

(largely due to the Medicare Part D redesign that was part of the IRA).

Welireg received the following regulatory approvals in 2025.

Date Approval

February 2025

EC conditional approval as monotherapy for the treatment of adult patients with VHL disease who require therapy for associated, localized RCC, central nervous system hemangioblastomas, or pancreatic neuroendocrine tumors, and for whom localized procedures are unsuitable, based on the LITESPARK-004 trial.

February 2025

EC conditional approval for the treatment of adult patients with advanced clear cell RCC that progressed following two or more lines of therapy that included a PD-1 or PD-L1 inhibitor and at least two vascular endothelial growth factor targeted therapies, based on the LITESPARK-005 trial.

FDA approval for the treatment of adult and pediatric patients (12 years and older) with locally advanced, unresectable, or metastatic pheochromocytoma and paraganglioma, based on the LITESPARK-015 trial.

Japan’s MHLW approval as monotherapy for the treatment of adult patients with VHL disease-associated tumors, based on the LITESPARK-004 trial.

Japan’s MHLW approval for the treatment of adults with radically unresectable or metastatic RCC that has progressed after chemotherapy, based on the LITESPARK-005 trial.

The EC conditional approvals of Welireg noted above will be valid for one year, subject to yearly renewal, pending certain additional clinical data.

Timing for commercial availability of Welireg in individual EU countries will depend on multiple factors, including the completion of national reimbursement procedures.

2 unchanged sentences

Alliance revenue related to this collaboration (consisting of royalties) increased 41% in 2025 due to strong underlying sales performance.

Koselugo is an oral, selective MEK inhibitor approved for the treatment of patients with neurofibromatosis type 1 who have symptomatic inoperable plexiform neurofibromas.

Koselugo is part of a collaboration with AstraZeneca.

The increase in alliance revenue in 2025 is due to the recognition of a $150 million upfront payment received and $175 million of regulatory approval milestones recorded in connection with an amendment to the collaboration agreement that (subject to an annual election by AstraZeneca) discontinued the revenue and cost sharing provisions of the collaboration, and changed the payment structure.

See Note 4 to the consolidated financial statements for additional information.

($ in millions) 2025 % Change % Change

10 unchanged sentences

759 * * 97 — — —

Table of Content s

Combined worldwide sales of Gardasil and Gardasil 9, vaccines to help prevent certain cancers and other diseases caused by certain types of human papillomavirus (HPV), declined 3% in 2024 primarily driven by lower demand in China.

Outside of China, Gardasil/Gardasil 9 achieved strong growth in most other international markets due to higher demand, particularly in Japan due to a national catch-up immunization program, and in the U.S.

due to public sector buying patterns, higher pricing and demand.

Pneumovax 23 166 (37) % (37) % 263 (36) % (34) % 412

100 — — — — — —

In January 2026, the acting director of the U.S.

Centers for Disease Control and Prevention (CDC) announced changes to the child and adolescent immunization schedule (January announcement), reducing the number of routinely recommended vaccinations and creating three new categories:

immunizations recommended for all children;

immunizations recommended for certain high-risk groups or populations;

and immunizations based on shared clinical decision-making.

Immunizations recommended for all children include vaccines for measles, mumps, rubella, polio, pertussis, tetanus, diphtheria, Haemophilus influenzae type B (Hib), pneumococcal disease, human papillomavirus (HPV), and varicella (chickenpox).

Immunizations recommended for certain high-risk groups or populations include RSV, hepatitis A, hepatitis B, and dengue.

Immunizations recommended based on shared clinical decision-making include rotavirus, hepatitis A, and hepatitis B.

HHS has stated that immunizations for all of the diseases covered by the previous immunization schedule will still be available to anyone who wants them through Affordable Care Act insurance plans and federal insurance programs, including Medicaid, the Children’s Health Insurance Program, and the Vaccines For Children (VFC) program.

Additionally, in September 2025, the trade association representing U.S.

health insurers (AHIP) announced that its member health plans would continue to cover all immunizations that had been recommended by the CDC’s Advisory Committee on Immunization Practices (ACIP) as of September 1, 2025, with no cost-sharing for patients through the end of 2026.

Combined worldwide sales of Gardasil and Gardasil 9, vaccines to help prevent certain cancers and other diseases caused by certain types of HPV, declined 39% in 2025 primarily driven by lower demand in China (discussed below), and in Japan reflecting in part that the last date to initiate the first dose in Japan’s national immunization program catch-up cohort was in March 2025.

The declines were partially offset by higher sales in the U.S.

due to higher net pricing and favorable CDC purchasing patterns.

Higher demand and timing in certain international markets also partially offset the sales decline in 2025.

Beginning in mid-2024, the Company observed a significant decline in shipments from its distributor and commercialization partner in China, Chongqing Zhifei Biological Products Co., Ltd.

(Zhifei), to disease and control prevention institutions and correspondingly into the points of vaccination, resulting in above normal inventory levels at Zhifei.

(Zhifei), to disease and control prevention institutions and correspondingly into the points of vaccination compared with prior quarters of 2024, resulting in above normal inventory levels at Zhifei.

Accordingly, the Company shipped less than its contracted doses to Zhifei in the latter part of 2024.

Lower demand in China persisted and, at the end of 2024, overall channel inventory levels in China remained elevated at above normal levels.

Therefore, the Company made a decision to temporarily pause shipments to China beginning in February 2025 through at least the middle of the year and, as a result, Gardasil/Gardasil 9 sales will decline significantly in 2025 compared with 2024.

Therefore, the Company made a decision to temporarily pause shipments to China beginning in February 2025 and, given continued lower demand and elevated inventory levels in China, in mid-2025, the Company determined it would not make any further shipments to China in 2025.

The Company will not resume shipments to China until inventory levels return to normal and cannot predict when this will occur.

In January 2025, China’s NMPA approved Gardasil for use in males 9-26 years of age to help prevent certain HPV-related cancers and diseases.

The Company is a party to license agreements pursuant to which the Company pays royalties on sales of Gardasil/Gardasil 9.

Under the terms of the more significant of these agreements, Merck pays a 7% royalty on sales of Gardasil/Gardasil 9 in the U.S.

In April 2025, China’s NMPA approved Gardasil 9 for use in males 16-26 years of age to help prevent certain HPV-related cancers and diseases.

In May 2025, a nine-valent HPV vaccine produced by a local manufacturer received regulatory approval in China for use in females 9-45 years of age.

In August 2025, the Company’s nine-valent HPV vaccine was approved for use in males nine years of age and older in Japan where it will be marketed as Silgard 9.

Among the changes in the CDC’s January announcement referenced above was a reduction of the recommended doses for HPV vaccination of adolescents to a single dose.

Gardasil 9 is currently indicated in the U.S.

for a two-dose regimen in adolescents aged 9-14 and a three-dose regimen for those aged 15-45.

Previous CDC recommendations for adolescents followed FDA-approved dosing.

Many countries outside the U.S.

have implemented a reduced dosing schedule for HPV vaccination in certain age groups.

The Company anticipates that any negative effect of these recommendations or reduced dosing schedules on sales of Gardasil/Gardasil 9 will not be material.

The Company is a party to license agreements pursuant to which the Company pays royalties on net sales of Gardasil/Gardasil 9.

Under the terms of the more significant of these agreements, Merck pays a 7% royalty on net sales of Gardasil/Gardasil 9 in the U.S.

to one third party (this royalty expires in December 2028).

Merck paid an additional 7% royalty on worldwide sales of Gardasil/Gardasil 9 to another third party;

Merck paid an additional 7% royalty on worldwide net sales of Gardasil/Gardasil 9 to another third party;

this royalty expired in December 2023.

The royalty expenses are included in Cost of sales .

Global sales of ProQuad , a pediatric combination vaccine to help protect against measles, mumps, rubella and varicella, grew 6% in 2024 primarily due to higher pricing in the U.S.

Worldwide sales of M-M-R II, a vaccine to help protect against measles, mumps and rubella, grew 8% in 2024 primarily due to higher demand in certain international markets, partially offset by lower demand in the U.S.

Global sales of Varivax, a vaccine to help prevent chickenpox (varicella), grew 3% in 2024 primarily attributable to higher pricing in the U.S., partially offset by lower sales in Latin America due to supply constraints.

The Company is experiencing manufacturing delays related to ProQuad and Varivax .

As a result, the Company anticipates that some international markets will experience supply constraints during 2025.

In order to ensure consistent supply in the U.S., in January 2025, the Company borrowed doses of ProQuad from the U.S.

Centers for Disease Control and Prevention (CDC) Pediatric Vaccine Stockpile.

The borrowing will reduce sales of ProQuad in the first quarter of 2025 by approximately $70 million.

These doses will be used to support routine vaccination in the U.S.

Worldwide sales of Vaxneuvance , a vaccine to help protect against invasive pneumococcal disease caused by certain serotypes, rose 22% in 2024 primarily due to continued uptake following launches in the pediatric indication in Europe, Japan, and other countries in the Asia Pacific region, partially offset by lower demand in the U.S.

due to competition.

Global sales of ProQuad , a pediatric combination vaccine to help protect against measles, mumps, rubella and varicella, grew 1% in 2025 primarily due to higher demand in Europe, partially offset by lower sales in the U.S.

reflecting lower demand that was partially offset by higher net pricing.

As a result of manufacturing delays, in January 2025, the Company borrowed doses of ProQuad from the CDC Pediatric Vaccine Stockpile (CDC Stockpile), which were used to support routine vaccination in the U.S.

The Company replenished the borrowing later in 2025.

Worldwide sales of M-M-R II, a vaccine to help protect against measles, mumps and rubella, grew 3% in 2025 primarily due to higher sales in the U.S., largely reflecting higher net pricing and increased demand, partially offset by lower demand in certain international markets.

Global sales of Varivax, a vaccine to help prevent chickenpox (varicella), declined 6% in 2025 primarily attributable to lower sales in the U.S., largely driven by lower demand and unfavorable CDC Stockpile activity, partially offset by higher net pricing.

The unfavorable impact to Varivax sales from CDC Stockpile activity was offset by CDC Stockpile activity for other products as noted below.

The Varivax sales decline was also due in part to lower demand in the Asia Pacific region.

Higher demand in Latin America partially offset the Varivax sales decline in 2025.

In September 2025, the ACIP voted to recommend that children under the age of four years receive protection from chickenpox (varicella) as a standalone immunization rather than in combination with measles, mumps, and rubella (MMR) vaccination, eliminating a previous shared clinical decision-making recommendation that allowed parents to choose combined MMR and varicella vaccine (MMRV) first-dose administration.

The ACIP also voted to align the VFC program with this change.

The acting CDC Director adopted the recommendation in October 2025.

MMR and varicella vaccines remain recommended and funded through the VFC program for both the first and second doses.

The Company is the only manufacturer in the U.S.

of MMRV vaccine ( ProQuad ) and varicella vaccine ( Varivax ).

The Company anticipates that any negative effect of these recommendations on sales of ProQuad will not be material.

Worldwide sales of Vaxneuvance , a vaccine to help protect against invasive pneumococcal disease caused by certain serotypes, rose 2% in 2025 primarily due to higher demand in Europe and certain markets in the Asia Pacific region, partially offset by lower demand in Japan and the Latin America region due to competition.

sales of Vaxneuvance were nearly flat year over year as a benefit from public and private sector purchasing patterns in the U.S.

was offset by lower demand due to competition.

Vaxneuvance sales in 2025 benefited from approximately $70 million of favorable CDC Stockpile activity, of which approximately $60 million was offset by a drawdown of CDC Stockpile inventory for Varivax (noted above) and RotaTeq , which resulted in a net neutral transaction.

Merck is a party to license agreements pursuant to which the Company pays royalties on sales of Vaxneuvance .

2 unchanged sentences

The royalty expenses are included in Cost of sales .

Worldwide sales of Pneumovax 23, a vaccine to help prevent pneumococcal disease, declined 36% in 2024 due to lower global demand, particularly in the U.S.

as the market has shifted toward newer adult pneumococcal conjugate vaccines.

In June 2024, the FDA approved Capvaxive (Pneumococcal 21-valent Conjugate Vaccine) for the prevention of invasive pneumococcal disease and pneumococcal pneumonia caused by certain serotypes in individuals 18 years of age and older.

The approval was supported by results from multiple Phase 3 clinical studies evaluating Capvaxive in both vaccine-naïve and vaccine-experienced adult patient populations, including STRIDE-3, STRIDE-4, STRIDE-5 and STRIDE-6.

Sales of Capvaxive were $97 million in 2024.

Sales of Capvaxive , a vaccine for the prevention of invasive pneumococcal disease and pneumococcal pneumonia caused by certain serotypes in individuals 18 years of age and older, increased to $759 million in 2025 primarily due to continued uptake following launch in the U.S.

Capvaxive sales growth in 2025 also reflects early launch uptake in certain international markets.

Capvaxive was approved in the U.S.

in June 2024, in the EU in March 2025, and in Japan in August 2025.

The timing of availability of Capvaxive in individual EU countries will depend on multiple factors including the completion of national reimbursement procedures.

Merck is a party to license agreements pursuant to which the Company pays royalties on sales of Capvaxive .

Under the most significant of these agreements, Merck pays a royalty of 7.25% on net sales of Capvaxive through 2026;

Under the terms of the most significant of these agreements, Merck pays a royalty of 7.25% on net sales of Capvaxive through 2026;

this royalty will decline to 2.5% on net sales from 2027 through 2035.

The royalty expenses are included in Cost of sales .

Worldwide sales of Pneumovax 23, a vaccine to help prevent pneumococcal disease, declined 37% in 2025 due to lower global demand, particularly in the U.S.

and Europe, as the market has shifted toward newer adult pneumococcal conjugate vaccines.

In June 2025, the FDA approved Enflonsia , a preventive, long-acting monoclonal antibody, for the prevention of RSV lower respiratory tract disease in neonates (newborns) and infants who are born during or entering their first RSV season.

Also in June 2025, the ACIP voted to recommend Enflonsia as an option for the prevention of RSV lower respiratory tract disease in infants younger than eight months of age who are born during or entering their first RSV season.

These provisional recommendations were adopted by the CDC Director and are now official.

ACIP also voted to include Enflonsia in the VFC program.

Sales of Enflonsia in 2025 were due in part to inventory stocking.

Hospital Acute Care

6 unchanged sentences

Prevymis 978 25 % 23 % 785 30 % 33 % 605

Table of Content s

Global sales of Bridion , for the reversal of two types of neuromuscular blocking agents used during surgery, declined 4% in 2024 primarily driven by lower demand in certain international markets due to generic competition, particularly in the EU and the Asia Pacific region, including in Japan.

The Bridion sales decline was partially offset by higher demand and pricing in the U.S.

The patents that provided market exclusivity for Bridion in the EU and Japan expired in July 2023 and January 2024, respectively.

Accordingly, the Company is experiencing sales declines of Bridion in these markets and expects the declines to continue.

Worldwide sales of Prevymis , a medicine for prophylaxis (prevention) of cytomegalovirus (CMV) infection and disease in certain high risk adult and pediatric recipients of an allogenic hematopoietic stem cell transplant and for prophylaxis of CMV disease in certain high risk adult and pediatric recipients of a kidney transplant, grew 30% in 2024 largely due to higher global demand, particularly in the U.S.

Cardiovascular

247 (27) % (27) % 340 13 % 13 % 302

Global sales of Bridion , for the reversal of two types of neuromuscular blocking agents used during surgery, grew 4% in 2025 as higher demand and net pricing in the U.S.

was partially offset by lower demand in most international markets due to generic competition.

Bridion will lose market exclusivity in the U.S.

in July 2026 at which time the Company anticipates a significant and rapid decline in U.S.

sales of Bridion .

The Company expects to discontinue U.S.

sales of Bridion by the end of 2026.

Worldwide sales of Prevymis , a medicine for prophylaxis (prevention) of cytomegalovirus (CMV) infection and disease in certain high risk adult and pediatric recipients of an allogenic hematopoietic stem cell transplant and for prophylaxis of CMV disease in certain high risk adult and pediatric recipients of a kidney transplant, grew 25% in 2025 largely due to higher demand in the U.S.

and in most international markets reflecting in part the launch of new indications, partially offset by lower demand in China due to generic competition.

Worldwide sales of Dificid , a medicine for the treatment of C.

difficile -associated diarrhea, declined 27% in 2025 due to generic competition in the U.S.

Dificid lost market exclusivity in the U.S.

in July 2025;

accordingly, the Company is experiencing a significant decline in U.S.

sales of Dificid and expects the decline to continue.

Cardiometabolic and Respiratory

($ in millions) 2025 % Change % Change

7 unchanged sentences

Adempas 312 9 % 6 % 287 12 % 14 % 255

178 — — — — — —

(1) Alliance revenue for Adempas and 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 4 to the consolidated financial statements).

In March 2024, the FDA approved Winrevair for the treatment of adults with pulmonary arterial hypertension (PAH) (World Health Organization [WHO] Group 1) to increase exercise capacity, improve WHO functional class (FC), and reduce the risk of clinical worsening events.

In August 2024, the EC approved Winrevair , in combination with other PAH therapies, for the treatment of PAH in adult patients with WHO FC II to III, to improve exercise capacity.

The FDA and EC approvals were based on the STELLAR trial.

Winrevair has since launched in Germany.

Timing for commercial availability of Winrevair in the remaining EU countries will depend on multiple factors, including the completion of national reimbursement procedures, which is expected to occur in most other major EU markets in the second half of 2025.

Winrevair is the subject of a licensing agreement pursuant to which Merck pays a 22% royalty on sales of Winrevair to BMS.

Winrevair is an activin signaling inhibitor indicated for the treatment of adults with PAH (WHO Group 1 pulmonary hypertension) to improve exercise capacity and WHO functional class (FC), and reduce the risk of clinical worsening events including hospitalization for PAH, lung transplantation and death.

Sales of Winrevair rose to $1.4 billion in 2025 primarily reflecting higher sales in the U.S.

due to continued uptake since launch, partially offset by lower net pricing in the U.S.

(largely due to the Medicare Part D redesign that was part of the IRA).

Sales growth also reflects early launch uptake in certain international markets, particularly in the EU and Japan.

Winrevair was originally approved in the U.S.

in March 2024, in the EU in August 2024, and in Japan in June 2025 (where it is being marketed as Airwin ).

Winrevair is the subject of a licensing agreement pursuant to which Merck pays a 22% royalty on net sales of Winrevair to BMS.

The royalty expenses are included in Cost of sales .

Summarized below are the Winrevair regulatory approvals received in 2025 and, to date, in 2026.

Date Approval

Japan’s MHLW approval for the treatment of adults with PAH, based on the STELLAR trial (marketed as Airwin ).

FDA approval of expanded indication in adults with PAH (WHO Group 1 pulmonary hypertension) to improve exercise capacity and WHO FC, and reduce the risk of clinical worsening events, including hospitalization for PAH, lung transplantation and death, based on the ZENITH trial.

EC approval of expanded indication in combination with other PAH therapies for the treatment of PAH in adult patients with WHO FC II, III and IV, based on the ZENITH trial.

Adempas and Verquvo are part of a worldwide collaboration with Bayer AG (Bayer) to market and develop soluble guanylate cyclase (sGC) modulators (see Note 4 to the consolidated financial statements).

Adempas is approved for the treatment of certain types of PAH and chronic pulmonary hypertension (PH).

Adempas is approved for the treatment of certain types of PAH and chronic pulmonary hypertension.

Verquvo is approved to reduce the risk of cardiovascular death and heart failure hospitalization following a hospitalization for heart failure or need for outpatient intravenous diuretics in adults with symptomatic chronic heart failure and reduced ejection fraction.

Alliance revenue from the collaboration grew 13% in 2025 reflecting higher demand in Bayer’s marketing territories.

The Company expects alliance revenue will decline in 2026 reflecting the loss of market exclusivity for Adempas in the U.S.

Revenue also includes sales of Adempas and Verquvo in Merck’s marketing territories.

Sales of Adempas in Merck’s marketing territories grew 9% in 2025 primarily due to higher demand.

Ohtuvayre is an inhaled phosphodiesterases 3 and 4 (PDE3 and PDE4) inhibitor, which was approved in the U.S.

in June 2024 for the maintenance treatment of COPD in adults.

Ohtuvayre was obtained in conjunction with Merck’s October 2025 acquisition of Verona Pharma.

Sales of Ohtuvayre recorded by Merck following the closing of the transaction were $178 million in 2025.

($ in millions) 2025 % Change % Change

4 unchanged sentences

Lagevrio $ 380 (61) % (61) % $ 964 (33) % (28) % $ 1,428

Lagevrio is an investigational oral antiviral COVID-19 medicine being developed in a collaboration with Ridgeback Biotherapeutics LP (Ridgeback) (see Note 4 to the consolidated financial statements).

Sales of Lagevrio declined 33% in 2024 primarily due to lower demand and pricing in several markets in the Asia Pacific region, particularly in Japan, partially offset by uptake from commercial distribution in the U.S.

under Emergency Use Authorization.

Table of Content s

Lagevrio is an investigational oral antiviral COVID-19 medicine being developed in a collaboration with Ridgeback (see Note 4 to the consolidated financial statements).

Sales of Lagevrio declined 61% in 2025 largely due to lower demand in several markets in the Asia Pacific region, particularly in Japan, and in the U.S.

driven primarily by declining COVID-19 cases.

The Company expects the Lagevrio sales decline to continue in 2026.

($ in millions) 2025 % Change % Change

3 unchanged sentences

Exchange 2023

$ 543 (24) % (23) % $ 710 1 % — % $ 706

114 (39) % (36) % 187 (9) % (8) % 207

Simponi $ — (100) % (100) % $ 543 (24) % (23) % $ 710

Remicade — (100) % (100) % 114 (39) % (36) % 187

Simponi and Remicade are treatments for certain inflammatory diseases that the Company marketed in Europe, Russia and Türkiye.

The Company’s marketing rights with respect to these products reverted to Johnson & Johnson on October 1, 2024 resulting in sales declines for these products versus prior year.

The Company’s marketing rights with respect to these products reverted to Johnson & Johnson on October 1, 2024, subsequent to which the Company stopped recognizing sales of these products.

($ in millions) 2025 % Change % Change

4 unchanged sentences

Januvia/Janumet $ 2,544 12 % 13 % $ 2,268 (33) % (29) % $ 3,366

Worldwide combined sales of Januvia and Janumet , medicines that help lower blood sugar levels in adults with type 2 diabetes, declined 33% in 2024 primarily due to lower sales in the U.S., largely reflecting lower pricing and lower demand due to competitive pressures, as well as the ongoing impact of the loss of exclusivity in most markets in Europe, the Asia Pacific region, and in Canada.

Worldwide combined sales of Januvia and Janumet , medicines that help lower blood sugar levels in adults with type 2 diabetes, grew 12% in 2025 primarily due to higher net pricing in the U.S., including a favorable true-up to customer discounts, partially offset by lower demand in China, ongoing generic competition in most other international markets, and continuing volume declines in the U.S.

due to competitive pressure.

The American Rescue Plan Act enacted in the U.S.

2 unchanged sentences

In early 2025, Merck lowered the list price of the Januvia family of products to more closely align them with net prices.

The lower list price will reduce the rebate amount Merck pays to Medicaid, resulting in higher realized net pricing, which will be partially offset by continuing volume declines.

The Company expects higher U.S.

net sales of these products in 2025 compared with 2024.

The lower list price has reduced the rebate amount Merck pays to Medicaid, resulting in higher realized net pricing.

While the key U.S.

patent for Januvia , Janumet and Janumet XR claiming the sitagliptin compound expired in January 2023, as a result of favorable court rulings and settlement agreements related to a later expiring patent directed to the specific sitagliptin salt form of the products (see Note 10 to the consolidated financial statements), the Company expects that Januvia and Janumet will not lose market exclusivity in the U.S.

patent for Januvia , Janumet and Janumet XR claiming the sitagliptin compound expired in January 2023, as a result of favorable court rulings and settlement agreements related to a later expiring patent directed to the specific sitagliptin salt form of the products, the Company expects that Januvia and Janumet will not lose market exclusivity in the U.S.

until May 2026 and Janumet XR will not lose market exclusivity in the U.S.

until July 2026, although a non-automatically substitutable form of sitagliptin that differs from the form in the Company’s sitagliptin products has been approved by the FDA.

Additionally, i n 2023, the U.S.

Department of HHS, through the CMS, announced that Januvia would be included in the first year of the IRA’s Program.

Pursuant to the IRA’s Program, a government price was set for Januvia , which will become effective on January 1, 20 26.

Also, in January 2025, the U.S.

Additionally, HHS, through the CMS, selected Januvia

in 2023 for the first year of the IRA’s Program, and selected Janumet and Janumet XR in 2025 for the second year of the IRA’s Program.

Pursuant to the IRA’s Program, the government set a price for Januvia , which became effective on January 1, 20 26, and set a price for Janumet and Janumet XR, which will become effective on January 1, 2027.

The Company ha s sued the U.S.

government regarding the IRA’s Program (see Note 10 to the consolidated financial statements).

As a result of the anticipated patent expiries in 2026, the government price setting in 2026 and 2027 noted above, as well as ongoing competitive pressures, the Company anticipates significant sales declines for Januvia, Janumet and Janumet XR in the U.S.

in 2026 and thereafter.

The Company lost market exclusivity for Januvia in all of the EU and for Janumet in some European countries in September 2022.

Exclusivity for Janumet was lost in other European countries in April 2023.

Accordingly, the Company is experiencing sales declines in these markets and expects the declines to continue.

Generic equivalents of Januvi a and Janumet have also launched in China.

Table of Content s

government regarding the IRA’s Program.

See Note 10 to the consolidated financial statements for additional information related to the above-referenced patent and IRA litigation.

The Company expects a significant decline in sales of Januvia in the first half of 2026 reflecting the impact of government price setting noted above and subsequently, following loss of market exclusivity in May 2026, the Company anticipates it will lose nearly all U.S.

sales of Januvia and Janumet .

Animal Health Segment

7 unchanged sentences

$ 6,354 8 % 9 % $ 5,877 4 % 8 % $ 5,625

Animal Health sales grew 4% in 2024, or 8% excluding the unfavorable effect of foreign exchange.

Sales of livestock products grew 4% in 2024 primarily due to higher pricing, increased demand for poultry and swine products, as well as the inclusion of sales from the July 2024 acquisition of the aqua business of Elanco Animal Health Incorporated (Elanco aqua business).

Sales of livestock products grew 13% in 2025 primarily due to increased demand across all species, the inclusion of sales from the July 2024 acquisition of the aqua business of Elanco Animal Health Incorporated (Elanco aqua business), improved supply, new product launches, and higher pricing.

See Note 3 to the consolidated financial statements for additional information related to the acquisition of the Elanco aqua business.

Sales of companion animal products grew 6% in 2024 reflecting higher pricing.

Sales of the Bravecto line of products were $1.1 billion in 2024, an increase of 6% compared with 2023, or 8% excluding the impact of foreign exchange.

Sales of companion animal products grew 2% in 2025 reflecting higher pricing, new product launches, and improved supply, partially offset by lower demand for other products in the portfolio.

Sales of the Bravecto line of products were $1.1 billion in 2025, an increase of 1% compared with 2024.

In July 2025, the FDA approved Bravecto Quantum , a once-yearly injectable product to treat and protect dogs from fleas and ticks.

Also in July 2025, the EC approved Numelvi tablets for dogs, a once-daily, second-generation Janus kinase (JAK) inhibitor indicated for the treatment of pruritus associated with allergic dermatitis including atopic dermatitis and treatment of clinical manifestations of atopic dermatitis.

Costs, Expenses and Other

9 unchanged sentences

Cost of sales includes the amortization of intangible assets recorded in connection with acquisitions, collaborations, and licensing arrangements, which totaled $2.8 billion in 2025 and $2.4 billion in 2024.

Amortization expense in 2024 and 2023 includes $48 million and $154 million, respectively, of cumulative catch-up amortization related to Merck’s collaborations with AstraZeneca and Eisai, respectively.

(See Note 4 to the consolidated financial statements for more information on Merck’s collaborative arrangements).

Also included in cost of sales are expenses associated with restructuring activities, which amounted to $495 million in 2024 and $211 million in 2023, primarily reflecting accelerated depreciation and asset impairment charges related to the planned sale or closure of manufacturing facilities.

Additionally, cost of sales in 2025 includes an $83 million impact for the recognition of fair value step-up of inventories related to the Verona Pharma acquisition.

Also included in cost of sales are expenses associated with restructuring activities, which amounted to $1.5 billion in 2025 and $495 million in 2024, primarily reflecting accelerated depreciation and asset impairment charges related to manufacturing facilities to be fully or partially closed or divested, as well as contractual termination costs.

Separation costs associated with manufacturing-related headcount reductions have been incurred and are reflected in Restructuring costs as discussed below.

Gross margin was 74.8% in 2025 compared with 76.3% in 2024.

The gross margin improvement was primarily due to the favorable effects of product mix (including lower royalty rates related to Keytruda and Gardasil/Gardasil 9 sales) and foreign exchange, partially offset by increased amortization of intangible assets, higher restructuring costs (primarily reflecting asset impairment charges), and increased manufacturing-related costs (including inventory write-offs).

The gross margin decline was primarily due to the negative impacts of higher restructuring costs (primarily related to the accelerated depreciation of manufacturing lines at two sites under the 2025 Restructuring Program), higher inventory write-downs (primarily vaccines), increased amortization of intangibles, and the recognition of fair value step-up of inventories related to the Verona Pharma acquisition, partially offset by the favorable impact of product mix.

Selling, General and Administrative

Selling, general and administrative (SG&A) expenses were $10.8 billion in 2024, an increase of 3% compared with 2023.

The increase was primarily due to higher administrative costs (including compensation and benefits), and increased promotional costs (reflecting prioritization in support of key growth drivers including new product launches), as well as higher selling and acquisition-related costs, partially offset by the favorable effect of foreign exchange and lower restructuring costs.

Table of Content s

Selling, general and administrative (SG&A) expenses were $10.7 billion in 2025, a decline of 1% compared with 2024.

The decrease was primarily driven by lower restructuring and promotional costs, partially offset by increased administrative costs.

Research and Development

Research and development (R&D) expenses were $15.8 billion in 2025, a decline of 12% compared with 2024.

The decline was primarily due to lower charges for business development activity and the favorable effect of foreign exchange.

The decline was primarily due to lower charges for business development activity.

Significant business development transactions in 2025 include charges of:

• $1.35 billion for the acquisition of EyeBio and $100 million for a related developmental milestone

• $750 million for the acquisition of MK-1045 (formerly CN201) from Curon

• $656 million for the acquisition of Harpoon

• $588 million for a global license agreement with LaNova

• $112 million for a global license agreement with Hansoh

• $300 million for completion of the technology transfer for MK-2010 (LM-299) from LaNova Medicines Ltd (LaNova, acquired by Sino Biopharmaceutical Limited)

• $200 million for a license agreement with Hengrui Pharma

• $150 million related to an agreement with Falk to acquire sole global rights to MK-8690

• $100 million for the achievement of a developmental milestone related to the 2024 Eyebiotech Limited (EyeBio) acquisition

Significant business development transactions in 2024 include charges of:

• $10.2 billion for the acquisition of Prometheus

• $5.5 billion related to the formation of a collaboration with Daiichi Sankyo

• $1.2 billion for the acquisition of Imago

• $175 million for a license and collaboration agreement with Kelun-Biotech

The decline in R&D expenses was partially offset by higher compensation and benefit costs (reflecting in part increased headcount) and increased clinical development spending, including for recently acquired programs.

R&D expenses are comprised of the costs directly incurred by Merck Research Laboratories (MRL), the Company’s research and development division that focuses on human health-related activities, which were $10.1 billion in 2024 and $9.0 billion in 2023.

Also included in R&D expenses are Animal Health research costs, upfront payments for collaboration and licensing agreements (including charges for the transactions with LaNova, Hansoh, Daiichi Sankyo and Kelun-Biotech noted above), charges for transactions accounted for as asset acquisitions (including charges for the acquisitions of EyeBio, MK-1045, Harpoon, Prometheus and Imago noted above) and costs incurred by other divisions in support of R&D activities, including depreciation, production and general and administrative, which in the aggregate were $7.7 billion in 2024 and $20.7 billion in 2023.

R&D expenses also include an impairment charge of $779 million in 2023 (related to gefapixant).

See Note 8 to the consolidated financial statements for additional information related to this impairment charge.

The Company may recognize additional impairment charges in the future related to the cancellation or delay of other pipeline programs that were measured at fair value and capitalized in connection with business combinations and such charges could be material.

• $1.35 billion for the acquisition of EyeBio and $100 million for the achievement of a related developmental milestone

• $750 million for the acquisition of MK-1045 (formerly CN201) from Curon Biopharmaceutical

• $656 million for the acquisition of Harpoon Therapeutics, Inc.

• $588 million for a global license agreement with LaNova

• $112 million for a global license agreement with Hansoh Pharma (Hansoh)

The decline in R&D expenses was partially offset by higher clinical development spending, higher restructuring costs, and increased investment in discovery research and early drug development.

R&D expenses consist of the costs directly incurred by Merck Research Laboratories (MRL), the Company’s research and development division that focuses on human health-related activities, which were $10.8 billion in 2025 and $10.1 billion in 2024.

Also included in R&D expenses are Animal Health research costs, upfront and milestone payments for collaboration and licensing agreements (including charges related to the transactions with LaNova, Hengrui Pharma, Falk, and Hansoh noted above), charges for transactions accounted for as asset acquisitions (including charges for the acquisitions of EyeBio, MK-1045, and Harpoon noted above), and costs incurred by other divisions in support of R&D activities, including depreciation, production, and general and administrative, which in the aggregate were $4.8 billion in 2025 and $7.7 billion in 2024.

R&D expenses also include restructuring costs of $175 million in 2025 associated with contractual termination costs.

Restructuring Costs

In January 2024, the Company approved a new restructuring program (2024 Restructuring Program) intended to continue the optimization of the Company’s Human Health global manufacturing network as the future pipeline shifts to new modalities and also optimize the Animal Health global manufacturing network to improve supply reliability and increase efficiency.

In July 2025, the Company approved a new restructuring program (2025 Restructuring Program) designed to position the Company for its next chapter of growth and to successfully advance its pipeline and launch new products across multiple therapeutic areas.

As part of this program, the Company expects to eliminate certain positions in sales and administrative organizations, as well as research and development.

The Company will, however, continue to hire employees into new roles across all strategic growth areas of the business.

In addition, the Company will reduce its global real estate footprint and continue to optimize its manufacturing network, aligning the geography of its global manufacturing footprint to its customers and reflecting changes in the Company’s business.

Most actions contemplated under the 2025 Restructuring Program are expected to be largely completed by the end of 2027, with the exception of certain manufacturing actions, which are expected to be substantially completed by the end of 2029.

The cumulative pretax costs to be incurred by the Company to implement the program are estimated to be approximately $3.0 billion, of which approximately 60% will be cash, relating primarily to employee separation expense and contractual termination costs.

The remainder of the costs will be non-cash, relating primarily to the accelerated depreciation of facilities.

The Company expects the actions under the 2025 Restructuring Program to result in annual cost savings of approximately $1.7 billion, which will be substantially realized by the end of 2027.

The 2025 Restructuring Program is part of the Company’s multiyear optimization initiative anticipated to achieve $3.0 billion in annual cost savings by the end of 2027, which will be fully reinvested into strategic growth areas of the business.

In January 2024, the Company approved a restructuring program (2024 Restructuring Program) intended to continue the optimization of the Company’s Human Health global manufacturing network as the future pipeline shifts to new modalities and also optimize the Animal Health global manufacturing network to improve supply reliability and increase efficiency.

The actions contemplated under the 2024 Restructuring Program are expected to be substantially completed by the end of 2031, with the cumulative pretax costs to be incurred by the Company to implement the program estimated to be approximately $4.0 billion.

1 unchanged sentence

The remainder of the costs will result in cash outlays, relating primarily to facility shut-down costs.

The Company expects to record charges of approximately $550 million in 2025 related to the 2024 Restructuring Program.

The Company anticipates the actions under the 2024 Restructuring Program will result in cumulative annual net cost savings of approximately $750 million by the end of 2031.

In 2019, Merck approved a global restructuring program (2019 Restructuring Program) as part of a worldwide initiative focused on optimizing the Company’s manufacturing and supply network, as well as reducing its global real estate footprint.

The actions under the 2019 Restructuring Program were substantially complete at the end of 2023 and, as of January 1, 2024, any remaining activities are being accounted for as part of the 2024 Restructuring Program.

Restructuring costs of $309 million in 2024 and $599 million in 2023 include separation and other costs associated with these restructuring activities.

Restructuring costs of $889 million in 2025 and $309 million in 2024 primarily include separation and other costs associated with these restructuring activities.

Separation costs incurred were associated with actual headcount reductions, as well as estimated expenses under existing severance programs for involuntary headcount reductions that were probable and could be reasonably estimated.

Other expenses in Restructuring costs include facility shut-down and other related costs, as well as employee-related costs such as curtailment, settlement and termination

Table of Content s

charges associated with pension and other postretirement benefit plans and share-based compensation plan costs.

Other expenses in Restructuring costs include facility shut-down and other related costs, as well as employee-related costs such as curtailment, settlement, and termination charges associated with pension and other postretirement benefit plans, and share-based compensation plan costs.

For segment reporting, restructuring costs are unallocated expenses.

Additional costs associated with the Company’s restructuring activities are included in Cost of sales , Selling, general and administrative expenses and Research and development costs.

The Company recorded aggregate pretax costs related to restructuring program activities of $888 million in 2024 and $933 million in 2023 (of which $190 million related to the 2024 Restructuring Program).

The Company recorded aggregate pretax costs related to restructuring program activities of $2.6 billion in 2025 and $888 million in 2024.

See Note 5 to the consolidated financial statements for additional details.

Other (Income) Expense, Net

Other (income) expense, net, was $24 million of income in 2024 compared with $466 million of expense in 2023 primarily reflecting a $572.5 million charge in 2023 related to settlements with certain plaintiffs in the Zetia antitrust litigation.

The favorability was also due to $170 million of income in 2024 related to the expansion of an existing development and commercialization agreement with Daiichi Sankyo, as well as lower foreign exchange losses in 2024.

Other (income) expense, net, was unfavorably affected in 2024 by lower income from investments in equity securities and higher net interest expense compared with 2023.

Other (income) expense, net, was $151 million of expense in 2025 compared with $24 million of income in 2024.

The unfavorable year-over-year change primarily reflects $170 million of income in 2024 related to the expansion of an existing development and commercialization agreement with Daiichi Sankyo, as well as higher net interest expense and higher foreign exchange losses in 2025, partially offset by higher net income from investments in equity securities in 2025.

For details on the components of Other (income) expense, net, see Note 14 to the consolidated financial statements.

7 unchanged sentences

$ 21,067 $ 19,936 $ 1,889

Pharmaceutical segment profits are comprised of segment sales less standard costs, as well as SG&A expenses directly incurred by the segment.

Animal Health segment profits are comprised of segment sales, less all cost of sales, as well as SG&A and R&D expenses directly incurred by the segment.

Pharmaceutical segment profits consist of segment sales less standard costs, as well as SG&A expenses directly incurred by the segment.

Animal Health segment profits consist of segment sales, less all cost of sales, as well as SG&A and R&D expenses 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, R&D expenses incurred by MRL, 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.

Also excluded from the determination of segment profits are costs related to restructuring activities and acquisition- and divestiture-related costs, including the amortization of intangible assets and amortization of purchase accounting adjustments, intangible asset impairment charges, and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration.

Also excluded from the determination of segment profits are costs related to restructuring activities and acquisition- and divestiture-related costs, including the amortization of intangible assets and the recognition of fair value step-up of inventories, intangible asset impairment charges, and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration.

Additionally, segment profits do not reflect other expenses from corporate and manufacturing cost centers and other miscellaneous income or expense.

1 unchanged sentence

Also included in “Non-segment activity” are miscellaneous corporate profits (losses), as well as operating profits (losses) related to third-party manufacturing arrangements.

Pharmaceutical segment profits grew 15% in 2024 primarily due to higher sales, partially offset by higher administrative and promotional costs, as well as the unfavorable effect of foreign exchange.

Animal Health segment profits increased 12% in 2024 primarily due to higher sales and lower manufacturing-related costs, partially offset by increased administrative costs, as well as the unfavorable effect of foreign exchange.

Taxes on Income

The effective income tax rate of 14.1% in 2024 reflects a favorable mix of income and expense, as well as a 2.6 percentage point favorable impact due to a $519 million reduction in reserves for unrecognized income tax benefits resulting from the expiration in 2024 of the statute of limitations for assessments related to the 2019 and 2020 federal tax return years.

The effective income tax rate of 13.3% in 2025 reflects the favorable impacts of jurisdictional mix of income and expense, as well as certain discrete items.

The effective income tax rate of 14.1% in 2024 reflects a favorable jurisdictional mix of income and expense, as well as a 2.6 percentage point favorable impact due to a $519 million reduction in reserves for unrecognized income tax benefits resulting from the expiration in 2024 of the statute of limitations for assessments related to the 2019 and 2020 federal tax return years.

The effective income tax rate in 2024 also reflects a 1.5 percentage point combined unfavorable impact of charges for the acquisition of Harpoon, for which no tax benefit was recognized, and the acquisitions of EyeBio and MK-1045 for which minimal tax benefits were realized.

While many jurisdictions in which Merck operates have adopted the global minimum tax provision of the Organization for Economic Cooperation and Development (OECD) Pillar 2, effective for tax years beginning in January 2024, it resulted in a minimal impact to the Company’s 2024 effective income tax rate due to the accounting

Table of Content s

for the tax effects of intercompany transactions.

The Company expects the impact of the global minimum tax will increase its effective income tax rate by approximately 2% in 2025.

In addition, beginning in 2026, the tax rates on foreign earnings and export income are scheduled to increase under existing provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) and may result in an increase to the Company’s effective income tax rate.

Also, in the event that the provision of the TCJA requiring capitalization and amortization of R&D expenses for tax purposes is repealed along the lines proposed in the Tax Relief for American Families and Workers Act of 2024, the Company will again be able to realize the benefit of U.S.

R&D expenses as incurred, but expects no material impact to its effective income tax rate.

The effective income tax rate of 80.0% in 2023 includes a 65.6 percentage point combined unfavorable impact of charges for the acquisitions of Prometheus and Imago (for which no tax benefits were recognized) and the Daiichi Sankyo collaboration.

These charges reduced domestic pretax income by approximately $16.9 billion in 2023.

In addition, the effective income tax rate in 2023 reflects higher foreign taxes and the impact of the R&D capitalization provision of the TCJA on the Company’s U.S.

global intangible low-taxed income inclusion, partially offset by a favorable mix of income and expense, as well as higher foreign tax credits.

The Internal Revenue Service (IRS) is currently conducting examinations of the Company’s tax returns for the years 2017 and 2018, including the one-time transition tax enacted under the TCJA.

If the IRS disagrees with the Company’s transition tax position, it may result in a significant tax liability.

The effective income tax rates for 2025 and 2024 include the global minimum tax provision of the Organization for Economic Cooperation and Development (OECD) Pillar 2, which for 2024 resulted in a minimal impact to the Company’s effective income tax rate due to the accounting for the tax effects of intercompany transactions.

In July 2025, the OBBBA was enacted into law, which had an immaterial impact to the effective income tax rate in 2025.

The Internal Revenue Service (IRS) is currently conducting examinations of the Company’s tax returns for the years 2017 and 2018, including the one-time transition tax enacted under the Tax Cuts and Jobs Act of 2017 (TCJA).

In April 2025, Merck received Notices of Proposed Adjustment (NOPAs) that would increase the amount of the one-time transition tax on certain undistributed earnings of foreign subsidiaries by approximately $1.3 billion.

In addition, the NOPAs included penalties of approximately $260 million.

These amounts are exclusive of any interest that may be due.

The Company disagrees with the proposed adjustments and will vigorously contest the NOPAs through all available administrative and, if necessary, judicial proceedings.

It may take a number of years to reach resolution of this matter.

If the Company is ultimately unsuccessful in defending its position, the impact could be material to its financial statements.

The statute of limitations for assessments with respect to the 2019 and 2020 federal tax return years expired in June 2024 and October 2024, respectively.

The IRS is also currently conducting examinations of the Company’s tax returns for the years 2021 and 2022.

11 unchanged sentences

The information on non-GAAP income and non-GAAP EPS should be considered in addition to, but not as a substitute for or superior to, net income and EPS prepared in accordance with GAAP.

Table of Content s

A reconciliation between GAAP financial measures and non-GAAP financial measures is as follows:

6 unchanged sentences

Restructuring costs 2,551 888 933

Loss (income) from investments in equity securities, net 45 (279) 1,348

(Income) loss from investments in equity securities, net

(306) 45 (279)

Charge for Zetia antitrust litigation settlements — — 573

4 unchanged sentences

Estimated tax benefit on excluded items (2)

606 631 1,232

Net tax benefit, which reflects a net benefit related to favorable audit reserve adjustments

Tax benefit resulting from the expiration of the statute of limitations for assessments related to the 2019 and 2020 federal tax return years — 519 —

11 unchanged sentences

$ 8.98 $ 7.65 $ 1.51

(1) Amounts in 2024, 2023 and 2022 include $39 million, $792 million and $1.7 billion, respectively, of intangible asset impairment charges.

(1) Amounts in 2025, 2024 and 2023 include $55 million, $39 million and $792 million, respectively, of intangible asset impairment charges.

(2) The estimated tax impact on the excluded items is determined by applying the statutory rate of the originating territory of the non-GAAP adjustments.

(3) GAAP and non-GAAP EPS were negatively affected in 2024, 2023 and 2022 by $1.28, $6.21, and $0.22, respectively, of charges for certain upfront and pre-approval milestone payments related to collaborations and licensing agreements, as well as charges related to pre-approval assets obtained in transactions accounted for as asset acquisitions.

(3) GAAP and non-GAAP EPS were negatively affected in 2025, 2024 and 2023 by $0.20, $1.28, and $6.21, respectively, of per share charges for certain upfront and pre-approval milestone payments related to collaborations and licensing agreements, as well as charges related to pre-approval assets obtained in transactions accounted for as asset acquisitions.

Acquisition- and Divestiture-Related Costs

Non-GAAP income and non-GAAP EPS exclude the impact of certain amounts recorded in connection with acquisitions and divestitures of businesses.

These amounts include the amortization of intangible assets and amortization of purchase accounting adjustments to inventories, as well as intangible asset impairment charges, and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration.

These amounts include the amortization of intangible assets and the recognition of fair value step-up of inventories, as well as intangible asset impairment charges, and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration.

Also excluded are integration, transaction, and certain other costs associated with acquisitions and divestitures.

Non-GAAP income and non-GAAP EPS also exclude amortization of intangible assets related to collaborations and licensing arrangements.

Non-GAAP income and non-GAAP EPS also exclude amortization of intangible assets related to collaborations, asset acquisitions, and licensing arrangements, as well as the recognition of fair value step-up of inventories related to asset acquisitions.

Restructuring Costs

Non-GAAP income and non-GAAP EPS exclude costs related to restructuring actions (see Note 5 to the consolidated financial statements).

These amounts include employee separation costs and accelerated depreciation associated with facilities to be closed or divested.

These amounts include employee separation costs and accelerated depreciation associated with facilities to be fully or partially closed or divested.

Accelerated depreciation costs represent the difference between the depreciation expense to be recognized over the revised useful life of the asset, based upon the anticipated date the site will be closed or divested or the equipment disposed of, and depreciation expense as determined utilizing the useful life prior to the restructuring actions.

Restructuring costs also include other exits costs, such as asset impairment, facility shut-down and other related costs, as well as employee-related costs such as curtailment, settlement and termination charges associated with pension and other postretirement benefit plans and share-based compensation costs.

Restructuring costs also include asset impairment, facility shut-down, contractual termination, and other related costs, as well as employee-related costs such as curtailment, settlement and termination charges associated with pension and other postretirement benefit plans, and share-based compensation costs.

Income and Losses from Investments in Equity Securities

3 unchanged sentences

These items are adjusted for after evaluating them on an individual basis, considering their quantitative and qualitative aspects.

Typically, these items

Table of Content s

are unusual in nature, significant to the results of a particular period or not indicative of future operating results.

Typically, these items are unusual in nature, significant to the results of a particular period or not indicative of future operating results.

Excluded from non-GAAP income and non-GAAP EPS in 2025 is a net tax benefit, which reflects a net benefit from favorable audit reserve adjustments.

Excluded from non-GAAP income and non-GAAP EPS in 2024 is a benefit due to reductions in reserves for unrecognized income tax benefits resulting from the expiration of the statute of limitations for assessments related to the 2019 and 2020 federal tax return years (see Note 15 to the consolidated financial statements).

11 unchanged sentences

Merck actively monitors the landscape for growth opportunities that meet the Company’s strategic criteria.

In December 2024, Merck closed an exclusive global license to develop, manufacture and commercialize MK-2010 (LM-299), a novel investigational PD-1/VEGF bispecific antibody from LaNova.

Merck recorded a charge of $588 million to Research and development expenses in 2024, or $0.18 per share, for the upfront payment, which was made in January 2025.

LaNova is also eligible to receive milestone payments associated with the technology transfer, development, regulatory approval and commercialization of MK-2010 (LM-299) across multiple indications.

Also in December 2024, Merck closed an exclusive global license to develop, manufacture and commercialize MK-4082 (HS-10535), an investigational preclinical oral small molecule GLP-1 receptor agonist from Hansoh.

Merck recorded a charge of $112 million to Research and development expenses in 2024, or $0.04 per share, for the upfront payment, which was made in February 2025.

Hansoh is also eligible to receive future contingent milestone payments associated with the development, regulatory approval and commercialization of MK-4082 (HS-10535) as well as tiered royalties on future net sales of MK-4082 (HS-10535), if approved.

Under the agreement, Hansoh may co-promote or solely commercialize MK-4082 (HS-10535) in Chinese mainland, Hong Kong and Macau, subject to certain conditions.

In September 2024, Merck acquired MK-1045 (formally CN201), a novel investigational clinical-stage bispecific antibody for the treatment of B-cell associated diseases, from Curon Biopharmaceutical (Curon) for an upfront payment of $700 million.

In addition, Curon is eligible to receive future contingent developmental and regulatory milestone payments.

The transaction was accounted for as an asset acquisition.

Merck recorded a charge of $750 million (reflecting the upfront payment and other related costs) to Research and development expenses, or $0.29 per share, in 2024 related to the execution of the transaction.

In connection with the agreement, Merck is also obligated to pay a third party future contingent developmental, regulatory and sales-based milestone payments, as well as tiered royalties ranging from a mid-single-digit rate to a low-double-digit rate on future net sales of MK-1045, if approved.

In July 2024, Merck acquired EyeBio, a privately held ophthalmology-focused biotechnology company, for $1.2 billion (including payments to settle share-based equity awards) and also incurred $207 million of transaction costs.

The acquisition agreement also provides for former EyeBio shareholders to receive future contingent developmental, regulatory and sales-based milestone payments.

EyeBio’s lead candidate, MK-3000 (formerly EYE103), is an investigational, potentially first-in-class tetravalent, tri-specific antibody that acts as an agonist of the Wingless-related integration site signaling pathway, which is in clinical development for the treatment of diabetic macular edema and neovascular age-related macular degeneration.

The transaction was accounted for as an asset acquisition.

Merck recorded net assets of $21 million, as well as a charge of $1.35 billion to Research and development expenses, or $0.52 per share, in 2024 related to the acquisition.

Additionally, a $100 million developmental milestone was triggered and paid in 2024 upon initiation of a Phase 2/3 clinical trial evaluating MK-3000 for the treatment of diabetic macular edema, which was also recorded as a charge to Research and development expenses ($0.04 per share).

In March 2024, Merck acquired Harpoon, a clinical-stage immunotherapy company developing a novel class of T-cell engagers designed to harness the power of the body’s immune system to treat patients suffering from cancer and other diseases for $765 million and also incurred $56 million of transaction costs.

Harpoon’s lead candidate, MK-6070 (formerly HPN328), is a T-cell engager targeting delta-like ligand 3 (DLL3), an inhibitory

Table of Content s

canonical Notch ligand that is expressed at high levels in small-cell lung cancer and neuroendocrine tumors.

The transaction was accounted for as an asset acquisition.

The Company recorded net assets of $165 million, as well as a charge of $656 million to Research and development expenses, or $0.26 per share, in 2024 related to the transaction.

In January 2026, Merck acquired Cidara, a biotechnology company developing drug-Fc conjugate (DFC) therapeutics, for approximately $9.2 billion (including payments to settle share-based equity awards).

Cidara’s lead DFC candidate, MK-1406 (formerly CD388), is a long-acting antiviral designed to prevent seasonal and pandemic influenza.

MK-1406 is currently being evaluated among adult and adolescent participants who are at higher risk of developing complications from influenza.

Merck anticipates the transaction will be accounted for as an asset acquisition since MK-1406 is expected to account for substantially all of the fair value of the gross assets to be acquired (excluding cash and deferred income taxes).

Merck expects to record a charge of approximately $9.0 billion to Research and development expenses, or approximately $3.65 per share, in the first quarter of 2026 for acquired IPR&D with no alternative future use.

There are no future contingent payments associated with the acquisition.

In August 2024, Merck and Daiichi Sankyo expanded their existing global co-development and co-commercialization agreement to include MK-6070.

Merck recognized income (recorded within Other (income) expense, net ) of $170 million, or $0.05 per share, due to the receipt of an upfront cash payment from Daiichi Sankyo and has also satisfied a contingent quid obligation from the original collaboration agreement.

In November 2025, Merck reached an agreement with Falk to discontinue an existing contract concerning co-development and co-commercialization rights in certain territories for MK-8690 (formerly PRA-052), and for Merck to assume full responsibility for the development program going forward.

MK-8690 is an investigational anti-CD30 ligand monoclonal antibody being evaluated by the Company in an early-stage clinical trial.

Under the terms of the agreement, Merck and Falk have discontinued their collaboration based on their existing co-development contract resulting in Merck having secured global rights to MK-8690.

In exchange, Merck made a $150 million upfront payment, which the Company recorded as a charge to Research and development expenses in 2025, or approximately $0.05 per share.

Falk is also eligible to receive a developmental milestone payment, as well as tiered royalties on sales in certain territories.

In October 2025, Merck and Blackstone Life Sciences (Blackstone) entered into a funding arrangement under which Blackstone will pay Merck up to $700 million in the fourth quarter of 2026 (which is non-refundable, subject to the termination provisions of the agreement) to fund a portion of the Company’s development costs for MK-2870, sacituzumab tirumotecan (sac-TMT), expected to be incurred throughout 2026.

In July 2025, the technology transfer for MK-2010 (LM-299), a novel investigational PD-1/vascular endothelial growth factor (VEGF) bispecific antibody that was licensed from LaNova in 2024, was completed.

Accordingly, Merck made a $300 million payment to LaNova that was recorded as a charge to Research and development expenses in 2025, or approximately $0.09 per share.

In May 2025, Merck and Hengrui Pharma closed an exclusive license agreement for MK-7262 (HRS-5346), an investigational oral small molecule Lipoprotein(a) inhibitor.

Under the agreement, Hengrui Pharma granted Merck exclusive rights to develop, manufacture and commercialize MK-7262 (HRS-5346) worldwide, excluding the Greater China region.

Merck recorded a charge of $200 million to Research and development expenses in 2025, or approximately $0.06 per share, for the upfront payment.

Hengrui Pharma is also eligible to receive future contingent payments associated with certain developmental, regulatory and sales-based milestones, as well as tiered royalties on future net sales of MK-7262 (HRS-5346), if approved.

Acquired In-Process Research and Development

4 unchanged sentences

Significant delays in the approval process, or the Company’s failure to obtain approval at all, would delay or prevent the Company from realizing revenues from these products.

Additionally, if the IPR&D programs require additional clinical trial data than previously anticipated, or if the programs fail or are abandoned during development, then the Company will not recover the fair value of the IPR&D recorded as an asset as of the acquisition date.

Additionally, if the IPR&D programs require additional clinical trial data than was previously anticipated, or if the programs fail or are abandoned during development, then the Company will not recover the fair value of the IPR&D recorded as an asset as of the acquisition date.

If such circumstances were to occur, the Company’s future operating results could be adversely affected and the Company may recognize impairment charges, which could be material.

In 2023 and 2022, the Company recorded IPR&D impairment charges within Research and development expenses of $779 million and $1.6 billion, respectively (see Note 8 to the consolidated financial statements).

In 2023, the Company recorded IPR&D impairment charges within Research and development expenses of $779 million (see Note 8 to the consolidated financial statements).

Additional research and development will be required before any of the remaining programs reach technological feasibility.

4 unchanged sentences

were $2.5 billion in 2025, $2.4 billion in 2024 and $2.5 billion in 2023.

The Company plans to invest approximately $20 billion in capital projects from 2024-2028, more than $11 billion of which relates to investments in the U.S., including expanding manufacturing capacity for oncology, vaccine and animal health products.

The Company plans to invest approximately $20 billion in capital projects from 2025-2029, more than $12 billion of which relates to investments in the U.S.

Depreciation expense was $3.0 billion in 2025, $2.1 billion in 2024 and $1.8 billion in 2023, of which $2.2 billion in 2025, $1.4 billion in 2024 and $1.2 billion in 2023, related to locations in the U.S.

Total depreciation expense in 2024, 2023 and 2022 included accelerated depreciation of $254 million, $140 million and $120 million, respectively, associated with restructuring activities (see Note 5 to the consolidated financial statements).

Total depreciation expense in 2025, 2024 and 2023 included accelerated depreciation of $1.2 billion, $254 million and $140 million, respectively, associated with restructuring activities (see Note 5 to the consolidated financial statements).

Analysis of Liquidity and Capital Resources

5 unchanged sentences

Cash provided by operating activities to total debt

Cash provided by operating activities was $21.5 billion in 2024 compared with $13.0 billion in 2023 reflecting stronger operating performance.

Cash provided by operating activities was reduced by upfront, milestone, option and continuation payments related to certain collaborations of $1.1 billion in 2024 compared with $4.2 billion in 2023 (including payments related to the formation of a collaboration with Daiichi Sankyo).

Cash provided by operating activities in 2023 was also reduced by a payment of $572.5 million for the previously disclosed Zetia antitrust settlement.

Cash provided by operating activities continues to be the Company’s primary source of funds to finance

Table of Content s

operating needs, with excess cash serving as the primary source of funds to finance business development transactions, capital expenditures, dividends paid to shareholders and treasury stock purchases.

Cash provided by operating activities was $16.5 billion in 2025 compared with $21.5 billion in 2024.

The decline in cash provided by operating activities reflects higher income tax payments, which were $6.1 billion in 2025 compared with $3.9 billion in 2024, as well as increased upfront, milestone, option and continuation payments related to certain collaborations, licensing agreements, and acquisitions, which were $3.0 billion in 2025 compared with $1.1 billion in 2024.

Cash provided by operating activities continues to be the Company’s primary source of funds to finance operating needs, with excess cash serving as the primary source of funds to finance business development transactions, capital expenditures, dividends paid to shareholders and treasury stock purchases.

Cash used in investing activities was $13.7 billion in 2025 compared with $7.7 billion in 2024.

The lower use of cash in investing activities was primarily due to lower cash used for acquisitions, lower capital expenditures, as well as lower purchases of securities and other investments, partially offset by lower proceeds from sales of securities and other investments.

The higher use of cash in investing activities was primarily due to higher cash used for acquisitions (including the acquisition of Verona Pharma), higher capital expenditures (including the acquisition of a facility from WuXi Vaccines), and higher purchases of securities and other investments, partially offset higher proceeds from sales of securities and other investments.

Cash used in financing activities was $1.9 billion in 2025 compared with $7.0 billion in 2024.

The higher use of cash in financing activities was primarily due to lower proceeds from the issuance debt (see below) and higher dividends paid to shareholders, partially offset by lower payments on long-term debt (see below), higher proceeds from the exercise of stock options and lower purchases of treasury stock.

The lower use of cash in financing activities was primarily due to higher proceeds from the issuance of debt (see below), partially offset by higher purchases of treasury stock, higher payments on long-term debt (see below), higher dividends paid to shareholders, and lower proceeds from the exercise of stock options.

In December 2025, the Company issued $8.0 billion aggregate principal amount of senior unsecured notes.

The Company used the net proceeds from the offering for general corporate purposes, including to fund a portion of the approximately $9.2 billion cash consideration for the January 2026 acquisition of Cidara, including related fees and expenses (see Note 3 to the consolidated financial statements).

In September 2025, the Company issued $6.0 billion aggregate principal amount of senior unsecured notes.

The Company used the net proceeds from the offering for general corporate purposes, including to fund a portion of the $10.4 billion cash consideration for the October 2025 acquisition of Verona Pharma, including related fees and expenses (see Note 3 to the consolidated financial statements).

In May 2024, MSD Netherlands Capital B.V., a wholly owned finance subsidiary of Merck, completed a registered public offering of €3.4 billion in aggregate principal amount of euro-dominated senior notes.

1 unchanged sentence

In May 2023, the Company issued $6.0 billion in aggregate principal amount of senior unsecured notes.

The Company used a portion of the $5.9 billion net proceeds from this offering to fund a portion of the cash consideration paid for the acquisition of Prometheus, including related fees and expenses, and used the remaining net proceeds for general corporate purposes including to repay commercial paper borrowings and other indebtedness with upcoming maturities.

The Company used a portion of the net proceeds from the offering to fund a portion of the $11.0 billion cash consideration paid for the acquisition of Prometheus Biosciences, Inc., including related fees and expenses, and used the remaining net proceeds for general corporate purposes including to repay commercial paper borrowings and other indebtedness with upcoming maturities.

In 2025, the Company’s $2.5 billion, 2.75% notes matured in accordance with their terms and were repaid.

In 2024, the Company’s $750 million, 2.90% notes and the Company’s €500 million, 0.50% euro-denominated notes matured in accordance with their terms and were repaid.

In 2023, the Company’s $1.75 billion, 2.80% notes matured in accordance with their terms and were repaid.

In 2022, the Company’s $1.25 billion, 2.35% notes and the Company’s $1.0 billion, 2.40% notes matured in accordance with their terms and were repaid.

The Company has a $6.0 billion credit facility that matures in May 2030.

4 unchanged sentences

Effective as of November 3, 2009, the Company executed a full and unconditional guarantee of the then existing debt of its subsidiary Merck Sharp & Dohme Corp.

(MSD) and MSD executed a full and unconditional guarantee of the then existing debt of the Company (excluding commercial paper), including for payments of principal and interest.

(MSD, now Merck Sharp & Dohme LLC) and MSD executed a full and unconditional guarantee of the then existing debt of the Company (excluding commercial paper), including for payments of principal and interest.

These guarantees do not extend to debt issued subsequent to that date.

1 unchanged sentence

In January 2026, the Board of Directors declared a quarterly dividend of $0.85 per share on the Company’s outstanding common stock for the second quarter of 2026 payable in April 2026.

In 2018, Merck’s Board of Directors authorized purchases of up to $10 billion of Merck’s common stock for its treasury.

In January 2025, Merck’s Board of Directors authorized purchases of up to $10 billion of Merck’s common stock for its treasury.

The treasury stock purchase authorization has no time limit and will be made over time in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions.

In 2024, the Company purchased $1.3 billion (approximately 11 million shares) of its common stock for its treasury under this program.

In 2025, the Company purchased $5.1 billion (approximately 59 million shares) of its common stock for its treasury under this and a previously authorized share repurchase program.

As of December 31, 2025, the Company’s remaining share repurchase authorization was $7.3 billion.

The Company purchased $1.3 billion of its common stock during 2023 under the authorized share repurchase program.

The Company did not purchase any shares of its common stock under this program in 2022.

In January 2025, Merck’s Board of Directors authorized purchases of up to an additional $10 billion of Merck’s common stock for its treasury.

The Company purchased $1.3 billion of its common stock during 2024 under an authorized share repurchase program.

The Company believes it maintains a conservative financial profile.

2 unchanged sentences

The Company does not participate in any off-balance sheet arrangements involving unconsolidated subsidiaries that provide financing or potentially expose the Company to unrecorded financial obligations.

The Company expects foreseeable liquidity and capital resource requirements to be met through existing cash and cash equivalents and anticipated cash flows from operations, as well as commercial paper borrowings and long-term borrowings if needed.

long-term borrowings if needed.

Merck believes that its sources of financing will be adequate to meet its future requirements.

The Company’s material cash requirements arising in the normal course of business primarily include:

Table of Content s

Debt Obligations and Interest Payments — See Note 9 to the consolidated financial statements for further detail of the Company’s debt obligations and the timing of expected future principal and interest payments.

Tax Liabilities — In connection with the enactment of the TCJA, the Company is required to pay a one-time transition tax, which the Company has elected to pay over a period of eight years through 2025 as permitted under the TCJA.

Additionally, the Company has liabilities for unrecognized tax benefits, including interest and penalties.

See Note 15 to the consolidated financial statements for further information pertaining to the transition tax and liabilities for unrecognized tax benefits.

Operating Leases — See Note 9 to consolidated financial statements for further details of the Company’s lease obligations and the timing of expected future lease payments.

Collaboration-Related Payments — At December 31, 2024, the Company has accrued liabilities for contingent sales-based milestone payments related to a collaboration with AstraZeneca where the related sales-based milestones were achieved, but payment was not yet due according to the payment terms.

These sales-based milestones were subsequently paid in January 2025.

Additionally, the Company has an accrued liability for a future continuation payment related to a collaboration with Daiichi Sankyo.

License-Related Payments — At December 31, 2025, the Company has accrued liabilities for contingent sales-based milestone payments of $890 million related to a license agreement with Alteogen Inc.

where payment is dependent upon the achievement of the corresponding milestone.

See Note 3 to the consolidated financial statements for additional information related to these payments.

Purchase Obligations — Purchase obligations are enforceable and legally binding obligations for purchases of goods and services including minimum inventory contracts, research and development and advertising.

Purchase obligations also include future inventory purchases the Company has committed to in connection with certain divestitures.

As of December 31, 2025, the Company had total purchase obligations of $6.5 billion, of which $2.7 billion is estimated to be payable in 2026.

18 unchanged sentences

The Company does not enter into derivatives for trading or speculative purposes.

Table of Content s

Because Merck principally sells foreign currency in its revenue hedging program, a uniform weakening of the U.S.

33 unchanged sentences

The Company does not use leveraged swaps and, in general, does not leverage any of its investment activities that would put principal at risk.

At December 31, 2024, the Company was a party to six pay-floating, receive-fixed interest rate swap contracts designated as fair value hedges of the fixed-rate notes as detailed in the table below.

Table of Content s

At December 31, 2025, the Company was a party to seven pay-floating, receive-fixed interest rate swap contracts designated as fair value hedges of the fixed-rate notes as detailed in the table below.

($ in millions)

3 unchanged sentences

$ 1,500 6 $ 1,500

5.00% notes due 2053

The interest rate swap contracts are designated hedges of the fair value changes in the notes attributable to changes in the benchmark Secured Overnight Financing Rate (SOFR) swap rate.

The fair value changes in the notes attributable to changes in the SOFR swap rate are recorded in interest expense along with the offsetting fair value changes in the swap contracts.

In January 2025, the Company entered into an additional interest rate swap with a notional amount of $250 million related to its 5.00% notes due 2053.

The fair value changes in the notes attributable to changes in the SOFR swap rate are recorded in interest expense along with the offsetting fair

value changes in the swap contracts.

In February 2026, the Company entered into an additional interest rate swap with a notional amount of $250 million related to its 5.00% notes due 2053.

The cash flows from these contracts are reported as operating activities in the Consolidated Statement of Cash Flows.

11 unchanged sentences

Estimates are used when accounting for amounts recorded in connection with acquisitions, including initial fair value determinations of assets and liabilities in a business combination (primarily IPR&D, other intangible assets and contingent consideration), as well as subsequent fair value measurements.

Additionally, estimates are used in determining such items as provisions for sales discounts, rebates and returns, depreciable and amortizable lives, recoverability of inventories, including those produced in preparation for product launches, amounts recorded for contingencies, environmental liabilities, accruals for contingent sales-based milestone payments and other reserves, pension and other postretirement benefit plan assumptions, share-based compensation assumptions, restructuring costs, impairments of long-lived assets (including intangible assets and goodwill) and investments, and taxes on income.

Additionally, estimates are used in determining such items as provisions for sales discounts, rebates and returns, depreciable and amortizable lives, recoverability of inventories (including those produced in preparation for product launches), amounts recorded for contingencies, environmental liabilities, contingent sales-based milestone payments and other reserves, pension and other postretirement benefit plan assumptions, share-based compensation assumptions, restructuring costs, impairments of long-lived assets (including intangible assets and goodwill) and investments, and taxes on income.

Because of the uncertainty inherent in such estimates, actual results may differ from these estimates.

13 unchanged sentences

Any excess of the purchase price (consideration transferred) over the estimated fair values of net assets acquired is recorded as goodwill.

Transaction costs and costs to

Table of Content s

restructure the acquired company are expensed as incurred.

Transaction costs and costs to restructure the acquired company are expensed as incurred.

The operating results of the acquired business are reflected in the Company’s consolidated financial statements after the date of the acquisition.

1 unchanged sentence

The fair values of identifiable intangible assets related to currently marketed products are primarily determined by using an income approach through which fair value is estimated based on each asset’s discounted projected net cash flows.

The Company’s estimates of market participant net cash flows consider historical and projected pricing, margins and expense levels;

The Company’s estimates of market participant net cash flows consider historical and

projected pricing, margins and expense levels;

the performance of competing products where applicable;

1 unchanged sentence

current and expected trends in technology and product life cycles;

the time and investment that will be required to develop products and technologies;

the ability to obtain additional marketing and regulatory approvals;

13 unchanged sentences

Changes in any of the inputs may result in a significantly different fair value adjustment.

If the Company determines the transaction will not be accounted for as an acquisition of a business, the transaction will be accounted for as an asset acquisition rather than a business combination and, therefore, no goodwill will be recorded.

In an asset acquisition, acquired IPR&D with no alternative future use is charged to expense and contingent consideration is not recognized at the acquisition date.

If the Company determines the assets acquired do not meet the definition of a business under the acquisition method of accounting, the transaction will be accounted for as an asset acquisition rather than a business combination and, therefore, no goodwill will be recorded.

In an asset acquisition, acquired IPR&D with no alternative future use is charged to expense, currently marketed products are capitalized as intangible assets, and contingent consideration is not recognized at the acquisition date.

Contingent Sales-Based Milestones

9 unchanged sentences

Therefore, shipping is not deemed a separately recognized performance obligation.

Table of Content s

The vast majority of revenues from sales of products are recognized at a point in time when control of the goods is transferred to the customer, which the Company has determined is when title and risks and rewards of ownership transfer to the customer and the Company is entitled to payment.

15 unchanged sentences

Merck remains committed to the 340B Program and to providing 340B discounts to eligible covered entities.

See Note 10 to the consolidated financial statements for information regarding 340B legal proceedings.

Summarized information about changes in the aggregate customer discount accrual related to U.S.

9 unchanged sentences

Outside of the U.S., variable consideration in the form of discounts and rebates are a combination of commercially-driven discounts in highly competitive product classes, discounts required to gain or maintain reimbursement, or legislatively mandated rebates.

In certain European countries, legislatively mandated rebates are calculated based on an estimate of the government’s total unbudgeted spending and the Company’s specific payback obligation.

In certain European countries, legislatively mandated rebates are calculated based on an estimate of the government’s total unbudgeted health care spending and the Company’s specific payback obligation.

Rebates may also be required based on specific product sales thresholds.

4 unchanged sentences

Additionally, the Company considers factors such as levels of inventory in the distribution channel, product dating and expiration period, whether products have been discontinued, entrance in the market of generic or other competition, changes in formularies or launch of over-the-counter products, among others.

The product returns

Table of Content s

provision for U.S.

The product returns provision for U.S.

pharmaceutical sales as a percentage of U.S.

2 unchanged sentences

Merck’s payment terms for U.S.

pharmaceutical customers are typically 36 days from receipt of invoice and for U.S.

animal health customers are typically 30 days from receipt of invoice;

pharmaceutical products are typically 35 days from receipt of invoice and for U.S.

animal health products are typically 30 days from receipt of invoice;

however, certain products have longer payment terms, including Keytruda , which has payment terms of 90 days.

Payment terms for vaccine sales in the U.S.

Payment terms for vaccine products in the U.S.

typically range from 30 days to 60 days.

1 unchanged sentence

Through its distribution programs with U.S.

wholesalers, the Company encourages wholesalers to align purchases with underlying demand and maintain inventories below specified levels.

The terms of the programs allow the wholesalers to earn fees upon providing visibility into their inventory levels, as well as by achieving certain performance parameters such as inventory management, customer service levels, reducing shortage claims and reducing product returns.

Information provided through the wholesaler distribution programs includes items such as sales trends, inventory on-hand, on-order quantity and product returns.

Inventories Produced in Preparation for Product Launches

wholesalers, the Company encourages wholesalers to align purchases with underlying demand and maintain inventories within certain ranges.

The terms of the programs allow

the wholesalers to earn fees upon providing visibility into their inventory levels, as well as by achieving certain performance parameters such as inventory management, customer service levels, reporting of data, and providing central product distribution.

Information provided through the wholesaler distribution programs includes items such as sales trends, inventory on-hand, on-order quantity and customer service level metrics.

Inventories are valued at the lower of cost or net realizable value.

Inventories consist of currently marketed products, as well as certain inventories produced in preparation for product launches that are considered by the Company to be probable of obtaining regulatory approval.

The Company capitalizes inventories produced in preparation for product launches sufficient to support estimated initial market demand.

2 unchanged sentences

If the Company is aware of any specific risks or contingencies other than the normal regulatory approval process or if there are any specific issues identified during the research process relating to safety, efficacy, manufacturing, marketing or labeling, the related inventory would generally not be capitalized.

The Company makes ongoing estimates relating to the net realizable value of inventories based upon its assumptions about future demand in relation to inventory levels and expiry dates.

Expiry dates of the inventory are affected by the stage of completion.

The Company manages the levels of inventory at each stage to optimize the shelf life of the inventory in relation to anticipated market demand in order to avoid product expiry issues.

For inventories that are capitalized, anticipated future sales and shelf lives support the realization of the inventory value as the inventory shelf life is sufficient to meet initial product launch requirements.

Inventories produced in preparation for product launches capitalized at December 31, 2024 and 2023 were $412 million and $790 million, respectively.

If future demand for the Company’s products are less favorable than forecasted, inventory write-downs may be required.

Contingencies and Environmental Liabilities

The Company is involved in various claims and legal proceedings of a nature considered normal to its business, including product liability, intellectual property, commercial litigation and securities litigation, as well as certain additional matters, including governmental and environmental matters (see Note 10 to the consolidated financial statements).

See Note 10 to the consolidated financial statements for additional information.

The Company records accruals for contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated.

14 unchanged sentences

Accruals are adjusted as site investigations, feasibility studies and related cost assessments of remedial techniques are completed, and as the extent to which other potentially responsible parties who may be jointly and severally liable can be expected to contribute is determined.

Table of Content s

The Company is also remediating environmental contamination resulting from past industrial activity at certain of its sites and takes an active role in identifying and accruing for these costs.

10 unchanged sentences

Management also does not believe that these expenditures should result in a material adverse effect on the Company’s financial condition, results of operations or liquidity for any year.

Share-Based Compensation

The Company expenses all share-based payment awards to employees, including grants of stock options, over the requisite service period based on the grant date fair value of the awards.

The Company determines the fair value of certain share-based awards using the Black-Scholes option-pricing model which uses both historical and current market data to estimate the fair value.

This method incorporates various assumptions such as the risk-free interest rate, expected volatility, expected dividend yield and expected life of the options.

Total pretax share-based compensation expense was $761 million in 2024, $645 million in 2023 and $541 million in 2022.

At December 31, 2024, there was $1.1 billion of total pretax unrecognized compensation expense related to nonvested stock option, restricted stock unit and performance share unit awards which will be recognized over a weighted-average period of 1.9 years.

For segment reporting, share-based compensation costs are unallocated expenses.

Pensions and Other Postretirement Benefit Plans

Net periodic benefit cost for pension plans totaled $107 million in 2024, $126 million in 2023 and $554 million in 2022.

Net periodic benefit credit for other postretirement benefit plans was $84 million in 2024, $61 million in 2023 and $93 million in 2022.

Pension and other postretirement benefit plan information for financial reporting purposes is calculated using actuarial assumptions including a discount rate for plan benefit obligations and an expected rate of return on plan assets.

The changes in net periodic benefit cost year over year for pension plans are primarily attributable to lower settlement charges incurred by certain plans in 2024 and 2023 compared with 2022, as well as changes in expected returns and the discount rates.

The Company reassesses its benefit plan assumptions on a regular basis.

For both the pension and other postretirement benefit plans, the discount rate is evaluated on measurement dates and modified to reflect the prevailing market rate of a portfolio of high-quality fixed-income debt instruments that would provide the future cash flows needed to pay the benefits included in the benefit obligation as they come due.

The discount rates for the Company’s U.S.

pension and other postretirement benefit plans ranged from 5.50% to 5.70% at December 31, 2024, compared with a range of 5.25% to 5.45% at December 31, 2023.

The expected rate of return for both the pension and other postretirement benefit plans represents the average rate of return to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid.

In developing the expected rate of return, the Company considers long-term compound annualized returns of historical market data, current market conditions and actual returns on the Company’s plan assets.

Using this reference information, the Company develops forward-looking return expectations for each asset category and a weighted-average expected long-term rate of return for a target portfolio allocated across these investment categories.

The expected portfolio performance reflects the contribution of active management as appropriate.

For 2025, the expected rate of return for the Company’s U.S.

pension and other postretirement benefit plans will be 7.70% compared with 7.75% in 2024.

The Company has established investment guidelines for its U.S.

pension and other postretirement plans to create an asset allocation that is expected to deliver a rate of return sufficient to meet the long-term obligation of each plan, given an acceptable level of risk.

The target investment portfolio of the Company’s U.S.

pension and other

Table of Content s

postretirement benefit plans is allocated 25% to 40% in U.S.

equities, 15% to 30% in international equities, 40% to 50% in fixed-income investments, and up to 8% in cash and other investments.

The portfolio’s equity weighting is consistent with the long-term nature of the plans’ benefit obligations.

The expected annual standard deviation of returns of the target portfolio, which approximates 12%, reflects both the equity allocation and the diversification benefits among the asset classes in which the portfolio invests.

For international pension plans, the targeted investment portfolio varies based on the duration of pension liabilities and local government rules and regulations.

Although a significant percentage of plan assets are invested in U.S.

equities, concentration risk is mitigated through the use of strategies that are diversified within management guidelines.

Actuarial assumptions are based upon management’s best estimates and judgment.

A reasonably possible change of plus (minus) 25 basis points in the discount rate assumption, with other assumptions held constant, would have had an estimated $45 million favorable (unfavorable) impact on the Company’s net periodic benefit cost in 2024.

A reasonably possible change of plus (minus) 25 basis points in the expected rate of return assumption, with other assumptions held constant, would have had an estimated $57 million favorable (unfavorable) impact on Merck’s net periodic benefit cost in 2024.

Required funding obligations for 2025 relating to the Company’s pension and other postretirement benefit plans are not expected to be material.

The preceding hypothetical changes in the discount rate and expected rate of return assumptions would not impact the Company’s funding requirements.

Net gain/loss amounts, which primarily reflect differences between expected and actual returns on plan assets as well as the effects of changes in actuarial assumptions, are recorded as a component of AOCL .

Expected returns for pension plans are based on a calculated market-related value of assets.

Net gain/loss amounts in AOCL in excess of certain thresholds are amortized into net periodic benefit cost over the average remaining service life of employees.

Restructuring Costs

19 unchanged sentences

Other acquired intangible assets (excluding IPR&D) are initially recorded at fair value, assigned an estimated useful life, and amortized primarily on a straight-line basis over their estimated useful lives.

When events or

Table of Content s

circumstances warrant a review, the Company will assess recoverability from future operations using pretax undiscounted cash flows derived from the lowest appropriate asset groupings.

When events or circumstances warrant a review, the Company will assess recoverability from future operations using pretax undiscounted cash flows derived from the lowest appropriate asset groupings.

Impairments are recognized in operating results to the extent that the carrying value of the intangible asset exceeds its fair value, which is determined based on the net present value of estimated future cash flows.

1 unchanged sentence

The amounts are capitalized and accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of the projects.

The Company evaluates IPR&D for impairment at least annually, or more frequently if impairment indicators exist (such as unfavorable clinical trial data, changes in the commercial landscape or delays in the clinical development program and related regulatory filing and approval timelines), by performing a quantitative test that compares the fair value of the IPR&D intangible asset with its carrying value.

quantitative test that compares the fair value of the IPR&D intangible asset with its carrying value.

For impairment testing purposes, the Company may combine separately recorded IPR&D intangible assets into one unit of account based on the relevant facts and circumstances.

12 unchanged sentences

For tax positions that are not more likely than not of being sustained upon audit, the Company does not recognize any portion of the benefit in the financial statements.

If the more likely than not threshold is not met in the period for which a tax position is taken, the Company may subsequently recognize the benefit of that tax position if the tax matter is effectively settled, the statute of limitations expires, or if the more likely than not threshold is met in a subsequent period (see Note 15 to the consolidated financial statements).

Tax regulations require items to be included in the tax return at different times than the items are reflected in the financial statements.

9 unchanged sentences

One can also identify them by the fact that they do not relate strictly to historical or current facts.

These statements are likely to address the Company’s growth strategy, financial results, product approvals, product potential, development programs, environmental or other sustainability initiatives.

One must carefully consider any

Table of Content s

such statement and should understand that many factors could cause actual results to differ materially from the Company’s forward-looking statements.

These statements are likely to address the Company’s growth strategy, financial results, product approvals, product potential, or development programs.

One must carefully consider any such statement and should understand that many factors could cause actual results to differ materially from the Company’s forward-looking statements.

These factors include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not.

4 unchanged sentences

The Company notes these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995.

One should understand that it is not possible to predict or identify all such factors.

One should understand that it is not possible to

predict or identify all such factors.

Consequently, the reader should not consider any such list to be a complete statement of all potential risks or uncertainties.

2 unchanged sentences

“Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Table of Content s

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis