What changed in this filing

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Item 1. Business

2024-02-26 compared with 2023-02-24 · 394 added, 353 removed, 559 unchanged (57% of the section changed)

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Human health vaccine products consist of preventive pediatric, adolescent and adult vaccines.

The Company sells these human health vaccines primarily to physicians, wholesalers, physician distributors and government entities.

The Company sells these human health vaccines primarily to physicians, wholesalers, distributors and government entities.

The Animal Health segment discovers, develops, manufactures and markets a wide range of veterinary pharmaceutical and vaccine products, as well as health management solutions and services, for the prevention, treatment and control of disease in all major livestock and companion animal species.

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The established brands included in the transaction consisted of dermatology, non-opioid pain management, respiratory, select cardiovascular products, as well as the rest of Merck’s diversified brands franchise.

Merck’s existing research pipeline programs continue to be owned and developed within Merck as planned.

All product or service marks appearing in type form different from that of the surrounding text are trademarks or service marks owned, licensed to, promoted or distributed by Merck, its subsidiaries or affiliates, except as noted.

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8,886 6,897 5,673

Lagevrio 5,684 952 —

Januvia/Janumet 3,366 4,513 5,288

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Bridion 1,842 1,685 1,532

Lagevrio 1,428 5,684 952

Alliance revenue - Lynparza (1)

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RotaTeq 769 783 807

Simponi 706 825 838

Animal Health 5,625 5,550 5,568

Livestock 3,337 3,300 3,295

Companion Animals 2,250 2,273 1,764

Companion Animal

2,288 2,250 2,273

Other Revenues (2)

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(2) Other revenues are primarily comprised of miscellaneous corporate revenues, including revenue hedging activities, as well as revenue from third-party manufacturing arrangements.

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Pharmaceutical

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Certain of the products within the Company’s franchises are as follows:

Keytruda (pembrolizumab), the Company’s anti-PD-1 (programmed death receptor-1) therapy, as monotherapy for the treatment of certain patients with cervical cancer, classical Hodgkin lymphoma (cHL), cutaneous squamous cell carcinoma (cSCC), esophageal or gastroesophageal junction (GEJ) carcinoma, head and neck squamous cell carcinoma (HNSCC), hepatocellular carcinoma (HCC), non-small-cell lung cancer (NSCLC), melanoma, Merkel cell carcinoma, microsatellite instability-high (MSI-H) or mismatch repair deficient (dMMR) cancer (solid tumors), including MSI-H/dMMR colorectal cancer (CRC), MSI-H/dMMR advanced endometrial carcinoma, primary mediastinal large B-cell lymphoma (PMBCL), tumor mutational burden-high (TMB-H) cancer (solid tumors), and urothelial carcinoma, including non-muscle invasive bladder cancer.

Keytruda is also approved for the treatment of certain patients in combination with chemotherapy for metastatic squamous and non-squamous NSCLC, in combination with chemotherapy for HNSCC, in combination with trastuzumab, fluoropyrimidine- and platinum-containing chemotherapy for human epidermal growth factor 2 (HER2)-positive gastric or GEJ adenocarcinoma, in combination with platinum-and fluoropyrimidine-based chemotherapy for esophageal or GEJ carcinoma, in combination with chemotherapy, with or without bevacizumab, for advanced cervical cancer, in combination with chemotherapy for locally recurrent unresectable or metastatic triple-negative breast cancer (TNBC), and in combination with axitinib for advanced renal cell carcinoma (RCC).

Keytruda is also approved for certain patients with high-risk early-stage TNBC in combination with chemotherapy as neoadjuvant treatment, and then continued as a single agent as adjuvant treatment after surgery.

Keytruda is also approved as a monotherapy for the adjuvant treatment of certain patients with RCC, for certain patients with completely resected stage IIB, IIC or III melanoma, and for adjuvant treatment following resection and platinum-based chemotherapy for adult patients with stage IB (T2a ≥4 cm), II, or IIIA NSCLC.

Keytruda is an anti-PD-1 (programmed death receptor-1) therapy that has been approved as monotherapy for the treatment of certain patients with cervical cancer, classical Hodgkin lymphoma, cutaneous squamous cell carcinoma, esophageal or gastroesophageal junction (GEJ) carcinoma, head and neck squamous cell carcinoma (HNSCC), hepatocellular carcinoma (HCC), melanoma, Merkel cell carcinoma, microsatellite instability-high (MSI-H) or mismatch repair deficient (dMMR) solid tumors (including MSI-H/dMMR colorectal cancer and endometrial carcinoma), non-small-cell lung cancer (NSCLC), primary mediastinal large B-cell lymphoma (PMBCL), tumor mutational burden-high (TMB-H) solid tumors, and urothelial cancer including non-muscle invasive bladder cancer.

Keytruda is also approved as monotherapy for the adjuvant treatment of certain patients with melanoma, and for certain patients with renal cell carcinoma (RCC) post-surgery.

Keytruda is approved for adjuvant treatment following resection and platinum-based chemotherapy for certain patients with NSCLC.

Additionally, Keytruda is approved for patients with certain types of resectable NSCLC in combination with chemotherapy as neoadjuvant treatment, and then continued as a single agent as adjuvant treatment after surgery.

Keytruda is also approved for patients with high-risk early stage triple-negative breast cancer (TNBC) in combination with chemotherapy as neoadjuvant treatment, and then continued as a single agent as adjuvant treatment after surgery.

In addition, Keytruda is approved in combination with chemotherapy for the treatment of certain patients with advanced NSCLC, in combination with chemotherapy for certain types of advanced biliary tract cancer, in combination with chemotherapy with or without bevacizumab for advanced cervical cancer, in combination with chemotherapy for advanced esophageal cancer, in combination with trastuzumab and chemotherapy for certain patients with advanced human epidermal growth factor receptor 2 (HER2)-positive gastric or GEJ adenocarcinoma with PD-L1 (CPS ≥1) and in combination with chemotherapy for advanced HER2-negative gastric or GEJ adenocarcinoma, in combination with chemotherapy for HNSCC, in combination with chemotherapy for advanced TNBC, in combination with axitinib for advanced RCC, in combination with Lenvima (lenvatinib) for patients with advanced RCC or certain types of advanced endometrial carcinoma, and in combination with enfortumab vedotin for adult patients with locally advanced or metastatic urothelial cancer.

Welireg (belzutifan) is a medication for the treatment of adult patients with certain von Hippel-Lindau disease-associated tumors and for the treatment of adult patients with advanced RCC following a PD-1 or programmed death-ligand 1 (PD-L1) inhibitor and a vascular endothelial growth factor tyrosine kinase inhibitor.

In addition, the Company recognizes alliance revenue related to sales of Lynparza (olaparib), an oral poly (ADP-ribose) polymerase (PARP) inhibitor, for certain types of advanced or recurrent ovarian, early or metastatic breast, metastatic pancreatic, and metastatic castration-resistant prostate cancers;

alliance revenue related to sales of Lenvima (lenvatinib), an oral receptor tyrosine kinase inhibitor, for 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 sales of Lenvima, an oral receptor tyrosine kinase inhibitor, for 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;

and alliance revenue related to Reblozyl (luspatercept-aamt) for the treatment of certain types of anemia.

Gardasil (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant)/ Gardasil 9 (Human Papillomavirus 9-valent Vaccine, Recombinant), vaccines to help prevent certain diseases caused by certain types of human papillomavirus (HPV);

Gardasil (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant)/ Gardasil 9 (Human Papillomavirus 9-valent Vaccine, Recombinant), vaccines to help prevent certain cancers and diseases caused by certain types of human papillomavirus (HPV);

ProQuad (Measles, Mumps, Rubella and Varicella Virus Vaccine Live), a pediatric combination vaccine to help protect against measles, mumps, rubella and varicella;

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RotaTeq (Rotavirus Vaccine, Live Oral, Pentavalent), a vaccine to help protect against rotavirus gastroenteritis in infants and children;

Vaxneuvance (Pneumococcal 15-valent Conjugate Vaccine), a vaccine to help prevent invasive pneumococcal disease in individuals 6 weeks of age and older;

Pneumovax 23 (pneumococcal vaccine polyvalent), a vaccine to help prevent pneumococcal disease;

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Hospital Acute Care

Bridion (sugammadex) Injection, a medication for the reversal of two types of neuromuscular blocking agents used during surgery;

Prevymis (letermovir) for the prophylaxis of cytomegalovirus (CMV) reactivation and disease in adult CMV-seropositive recipients [R+] of an allogeneic hematopoietic stem cell transplant;

Bridion (sugammadex), a medication for the reversal of two types of neuromuscular blocking agents used during surgery;

Prevymis (letermovir) for the prophylaxis of cytomegalovirus (CMV) infection and disease, or of CMV disease, in certain high risk adult recipients of an allogeneic hematopoietic stem cell transplant or of a kidney transplant, respectively;

Dificid (fidaxomicin) for the treatment of C.

difficile -associated diarrhea;

Primaxin (imipenem and cilastatin) for injection, an antibiotic for the treatment of certain bacterial infections;

Zerbaxa (ceftolozane and tazobactam) for injection, a combination antibacterial and beta-lactamase inhibitor for the treatment of certain

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bacterial infections;

Noxafil (posaconazole), an antifungal agent for the prevention of certain invasive fungal infections;

Invanz (ertapenem) for injection, an antibiotic for the treatment of certain bacterial infections;

Cancidas (caspofungin acetate) for injection, an anti-fungal agent for the treatment of certain fungal infections;

and Zerbaxa (ceftolozane and tazobactam) for injection, a combination antibacterial and beta-lactamase inhibitor for the treatment of certain bacterial infections.

and Primaxin (imipenem and cilastatin) for injection, an antibiotic for the treatment of certain bacterial infections.

Cardiovascular

Adempas (riociguat), a cardiovascular drug for the treatment of chronic thromboembolic pulmonary hypertension or pulmonary arterial hypertension in certain patients;

Verquvo (vericiguat), a medicine to reduce the

risk of cardiovascular death and heart failure hospitalization following a hospitalization for heart failure or need for outpatient intravenous diuretics in certain adults with symptomatic chronic heart failure and reduced ejection fraction.

Verquvo (vericiguat), a medicine to reduce the risk of cardiovascular death and heart failure hospitalization following a hospitalization for heart failure or need for outpatient intravenous diuretics in certain adults with symptomatic chronic heart failure and reduced ejection fraction.

Lagevrio , an investigational oral antiviral COVID-19 medicine available in the U.S.

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Zuprevo (Tildipirosin) for bovine respiratory disease;

Zilmax (zilpaterol hydrochloride) and Revalor (trenbolone acetate and estradiol) to improve production efficiencies in beef cattle;

Revalor (trenbolone acetate and estradiol) to improve production efficiencies in beef cattle;

Safe-Guard (fenbendazole) de-wormer for cattle;

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Aquavac (Avirulent Live Culture)/ Norvax vaccines against bacterial and viral disease in fish;

Compact PD vaccine for salmon;

Aquaflor (Florfenicol) antibiotic for farm-raised fish;

Flexolt (fluralaner) against lice in sheep;

and Allflex Livestock Intelligence solutions for animal identification, monitoring and traceability.

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Nobivac vaccine lines for flexible dog and cat vaccination;

GilvetMab , an immune checkpoint inhibitor monoclonal antibody conditionally licensed for melanoma and mastocytoma tumors;

Otomax (Gentamicin sulfate, USP;

Betamethasone valerate USP;

and Clotrimazole USP ointment)/ Mometamax (Gentamicin sulfate, USP, Mometasone Furoate Monohydrate and Clotrimazole, USP, Otic Suspension)/ Posatex (Orbifloxacin, Mometasone Furoate Monohydrate and Posaconazole, Suspension) ear ointments for acute and chronic otitis;

and Clotrimazole USP ointment)/ Mometamax (Gentamicin sulfate, USP, Mometasone Furoate Monohydrate and Clotrimazole, USP, Otic Suspension)/ Mometamax Ultra (gentamicin sulfate, mometasone furoate monohydrate and posaconazole suspension)/ Posatex (Orbifloxacin, Mometasone Furoate Monohydrate and Posaconazole, Suspension) ear ointments for acute and chronic otitis;

Caninsulin / Vetsulin (porcine insulin zinc suspension) diabetes mellitus treatment for dogs and cats;

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Regumate (altrenogest) fertility management for horses;

Prestige vaccine line for horses;

Prestige vaccine line

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Scalibor (Deltamethrin) /Exspot for protecting against bites from fleas, ticks, mosquitoes and sandflies;

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Product Approvals

Set forth below is a summary of significant product approvals received by the Company in 2022.

Set forth below is a summary of significant product approvals received by the Company in 2023 and, to date, in 2024.

Product Date Approval

Keytruda January 2022 European Commission (EC) approved Keytruda as monotherapy for the adjuvant treatment of adults with RCC at increased risk of recurrence following nephrectomy, or following nephrectomy and resection of metastatic lesions.

February 2022 Japan’s Ministry of Health, Labor and Welfare (MHLW) approved Keytruda plus Lenvima for radically unresectable or metastatic RCC.

February 2022 MHLW approved Keytruda for the treatment of adult patients with advanced or recurrent TMB-H solid tumors that have progressed after chemotherapy (limited to use when difficult to treat with standard of care).

March 2022 U.S.

Food and Drug Administration (FDA) approved Keytruda as a single agent for the treatment of patients with advanced endometrial carcinoma that is MSI-H or dMMR who have disease progression following prior systemic therapy in any setting and are not candidates for curative surgery or radiation.

April 2022 EC approved Keytruda in combination with chemotherapy, with or without bevacizumab, for the treatment of persistent, recurrent or metastatic cervical cancer in certain adults whose tumors express PD-L1.

April 2022 EC approved Keytruda as monotherapy for the treatment of certain patients with unresectable or metastatic MSI-H/dMMR colorectal, gastric, small intestine or biliary cancer, as well as advanced or recurrent MSI-H/dMMR endometrial carcinoma.

May 2022 EC approved Keytruda in combination with chemotherapy as neoadjuvant treatment, and then continued as monotherapy as adjuvant treatment after surgery for adults with locally advanced or early-stage TNBC at high risk of recurrence.

Keytruda June 2022

EC approved Keytruda as monotherapy for the adjuvant treatment of adults and adolescents aged 12 years and older with stage IIB or IIC melanoma and who have undergone complete resection.

Additionally, EC approved expanded indications in advanced (unresectable or metastatic) melanoma and stage III melanoma with lymph node involvement (as adjuvant treatment following complete resection) to include adolescent patients aged 12 years and older.

MHLW approved Keytruda as monotherapy for the adjuvant treatment of certain patients with RCC at increased risk of recurrence following nephrectomy, or following nephrectomy and resection of metastatic lesions.

September 2022 MHLW approved Keytruda in combination with chemotherapy as neoadjuvant treatment, and then continued as monotherapy as adjuvant treatment after surgery for patients with hormone receptor-negative and HER2-negative breast cancer at high risk of recurrence.

Keytruda January 2023

Food and Drug Administration (FDA) approval as a single agent for adjuvant treatment following surgical resection and platinum-based chemotherapy for adult patients with stage IB (T2a ≥4 cm), II, or IIIA NSCLC, based on the KEYNOTE-091 trial.

FDA full approval for the treatment of adult and pediatric patients with unresectable or metastatic MSI-H or dMMR solid tumors that have progressed following prior treatment and who have no satisfactory alternative treatment options.

The conversion from an accelerated to a full (regular) approval is based on the KEYNOTE-158, KEYNOTE-164 and KEYNOTE-051 trials.

FDA accelerated approval in combination with Padcev (enfortumab vedotin-ejfv) for the treatment of adult patients with locally advanced or metastatic urothelial carcinoma who are not eligible for cisplatin-containing chemotherapy, based on the KEYNOTE-869 trial dose escalation cohort, Cohort A and Cohort K, which was conducted in collaboration with Seagen (now Pfizer Inc.

(Pfizer)) and Astellas.

Japan’s Ministry of Health, Labor and Welfare (MHLW) approval for the treatment of patients with relapsed or refractory PMBCL, based on the KEYNOTE-170 and the KEYNOTE-A33 trials.

European Commission (EC) approval in combination with trastuzumab, fluoropyrimidine- and platinum-containing chemotherapy, for the first-line treatment of locally advanced unresectable or metastatic HER2-positive gastric or GEJ adenocarcinoma in adults whose tumors express PD-L1, based on the KEYNOTE-811 trial.

September 2023

MHLW approved Keytruda in combination with chemotherapy, with or without bevacizumab, for the treatment of patients with advanced or recurrent cervical cancer with no prior chemotherapy who are not amenable to curative treatment.

September 2022 MHLW approved Keytruda as monotherapy for the adjuvant treatment of patients with stage IIB or IIC melanoma after complete resection.

October 2022 China’s National Medical Products Administration (NMPA) approved Keytruda as monotherapy for the treatment of patients with HCC who have been previously treated with sorafenib or oxaliplatin-based chemotherapy.

November 2022 NMPA approved Keytruda for the treatment of patients with high-risk early-stage TNBC whose tumors express PD-L1, in combination with chemotherapy as neoadjuvant treatment, and then continued as a monotherapy as adjuvant treatment after surgery.

December 2022 NMPA granted emergency conditional approval for Lagevrio for the treatment of mild to moderate COVID-19 in adults who are at risk for progressing to severe COVID-19.

March 2022 FDA approved Lynparza for the adjuvant treatment of adult patients with deleterious or suspected deleterious germline BRCA -mutated, HER2-negative high-risk early breast cancer who have been treated with neoadjuvant or adjuvant chemotherapy.

August 2022 MHLW approved Lynparza for the adjuvant treatment for patients with BRCA -mutated, HER2-negative high recurrent risk breast cancer.

August 2022 EC approved Lynparza as monotherapy or in combination with endocrine therapy for the adjuvant treatment of adult patients with germline BRCA1/2-mutations who have HER2-negative, high-risk early breast cancer previously treated with neoadjuvant or adjuvant chemotherapy.

September 2022 NMPA approved Lynparza as first-line maintenance treatment for adult patients with advanced epithelial ovarian, fallopian tube or primary peritoneal cancer who are in complete or partial response to first-line platinum-based chemotherapy in combination with bevacizumab and whose cancer is associated with homologous recombination deficiency (HRD)-positive status.

December 2022 EC approved Lynparza in combination with abiraterone and prednisone or prednisolone for the treatment of adult patients with metastatic castration-resistant prostate cancer (mCRPC) in whom chemotherapy is not clinically indicated.

June 2022 FDA approved an expanded indication for Vaxneuvance (Pneumococcal 15-valent Conjugate Vaccine) to include children 6 weeks through 17 years of age.

Vaxneuvance is now indicated for active immunization for the prevention of invasive disease caused by Streptococcus pneumoniae serotypes 1, 3, 4, 5, 6A, 6B, 7F, 9V, 14, 18C, 19A, 19F, 22F, 23F and 33F in individuals 6 weeks of age and older.

September 2022 MHLW approved Vaxneuvance for prevention of infections caused by Streptococcus pneumoniae in the elderly or adults who are considered at increased risk for disease caused by Streptococcus pneumoniae.

October 2022 EC approved an expanded indication for Vaxneuvance to include active immunization for the prevention of invasive disease, pneumonia and acute otitis media caused by Streptococcus pneumoniae in infants, children and adolescents from 6 weeks to less than 18 years of age.

(1) Being jointly developed in collaboration with Ridgeback Biotherapeutics LP.

China’s National Medical Products Administration (NMPA) approval as monotherapy for the treatment of adult patients with advanced unresectable or metastatic MSI-H or dMMR solid tumors, including patients with colorectal cancer that have progressed following treatment with fluoropyrimidine, oxaliplatin or irinotecan, or those with other solid tumors that have progressed following prior therapy and who have no satisfactory alternative treatment options, based on the KEYNOTE-158 and KEYNOTE-164 trials.

EC approval as a monotherapy for the adjuvant treatment of adults with NSCLC who are at high risk of recurrence following complete resection and platinum-based chemotherapy, based on the KEYNOTE-091 trial.

FDA approval for the treatment of patients with resectable (tumors >=4cm or node positive) NSCLC in combination with platinum-containing chemotherapy as neoadjuvant treatment, and then continued as a single agent as adjuvant treatment after surgery, based on the KEYNOTE-671 trial.

FDA full approval for the treatment of adult and pediatric patients with recurrent locally advanced or metastatic Merkel cell carcinoma.

The conversion from an accelerated to a full (regular) approval is based on the KEYNOTE-913 and KEYNOTE-017 trials.

FDA approval in combination with gemcitabine and cisplatin for the treatment of patients with locally advanced unresectable or metastatic biliary tract cancer, based on the KEYNOTE-966 trial.

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November 2023

FDA approval in combination with fluoropyrimidine- and platinum-containing chemotherapy, for the first-line treatment of adults with locally advanced unresectable or metastatic HER2-negative gastric or GEJ adenocarcinoma, based on the KEYNOTE-859 trial.

December 2023

FDA full approval in combination with Padcev (enfortumab vedotin-ejfv), an antibody-drug conjugate, for the treatment of adult patients with locally advanced or metastatic urothelial cancer.

The conversion from an accelerated to a full (regular) approval is based on the KEYNOTE-A39 trial that was conducted in collaboration with Seagen (now Pfizer) and Astellas.

December 2023

EC approval in combination with fluoropyrimidine- and platinum-containing chemotherapy, for the first-line treatment of locally advanced unresectable or metastatic HER2-negative gastric or GEJ adenocarcinoma in adults whose tumors express PD-L1, based on the KEYNOTE-859 trial.

December 2023

EC approval in combination with gemcitabine and cisplatin for the first-line treatment of locally advanced unresectable or metastatic biliary tract carcinoma in adults, based on the KEYNOTE-966 trial.

December 2023

China’s NMPA approval in combination with fluoropyrimidine- and platinum-containing chemotherapy for the first-line treatment of patients with locally advanced unresectable or metastatic HER2-negative gastric or GEJ adenocarcinoma, based on the KEYNOTE-859 trial.

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

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/PD-L1 containing regimen.

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

February 2024

China’s 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.

FDA approval in combination with abiraterone and prednisone or prednisolone for the treatment of adult patients with deleterious or suspected deleterious BRCA-mutated ( BRCAm ) metastatic castration-resistant prostate cancer (mCRPC), based on the PROpel trial.

Japan’s MHLW approval in combination with abiraterone and prednisolone for treatment of adult patients with BRCAm mCRPC with distant metastasis, based on the PROpel trial.

FDA approval for CMV prophylaxis in Donor CMV-seropositive/Recipient CMV-seronegative adult kidney transplant recipients, based on the P002 trial.

November 2023

EC approval for CMV prophylaxis Donor CMV-seropositive/Recipient CMV-seronegative adult kidney transplant recipients, based on the P002 trial.

FDA approval of an expanded indication for the prevention of disease caused by Zaire ebolavirus in individuals 12 months of age and older.

The vaccine was previously approved for use in individuals 18 years of age and older.

September 2023

EC approval of an expanded indication for active immunization of individuals one year of age or older to protect against Ebola Virus Disease caused by Zaire ebolavirus .

The vaccine was previously approved for use in the EU for individuals 18 years of age or older.

December 2023

FDA approval for the treatment of adult patients with advanced RCC following both a PD-1 or PD-L1 inhibitor and a vascular endothelial growth factor tyrosine kinase inhibitor, based on the LITESPARK-005 trial.

EC approval of injectable formulation for dogs for the persistent killing of fleas and ticks for 12 months after treatment.

(1) Being jointly developed and commercialized in a worldwide collaboration with AstraZeneca .

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Competition and the Health Care Environment

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With its long-standing emphasis on research and development, the Company is well-positioned to compete in the search for technological innovations.

The Company is active in acquiring and

marketing products through external alliances, such as licensing arrangements and collaborations and has been refining its sales and marketing efforts to address changing industry conditions.

The Company is active in acquiring and marketing products through external alliances, such as licensing arrangements and collaborations and has been refining its sales and marketing efforts to address changing industry conditions.

However, the introduction of new products and processes by competitors may result in price reductions and product displacements, even for products protected by patents.

For example, the number of compounds available to treat a particular disease typically increases over time and can result in slowed sales growth or reduced sales for the Company’s products in that therapeutic category.

For example, the number of compounds available to treat a particular disease typically increases over time and can result in slowed sales growth or reduced sales of the Company’s products in that therapeutic category.

The highly competitive animal health business is affected by several factors including regulatory and legislative issues, scientific and technological advances, product innovation, the quality and price of the Company’s products as well as competitors’ products, effective promotional efforts and the frequent introduction of generic products by competitors.

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United States

The Company faces increasing pricing pressure from managed care organizations, government agencies and programs that could negatively affect the Company’s sales and profit margins, including, through (i) practices of managed care organizations, federal and state exchanges, and institutional and governmental purchasers, and (ii) federal laws and regulations related to Medicare and Medicaid, including the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the Patient Protection and Affordable Care Act of 2010 (ACA), the American Rescue Plan Act of 2021 (American Rescue Plan Act), and the Inflation Reduction Act of 2022 (Inflation Reduction Act).

In the U.S., federal and state governments for many years have pursued methods to reduce the cost of drugs and vaccines for which they pay.

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Failure to obtain timely or adequate pricing or formulary placement for Merck’s products or obtaining such placement at unfavorable pricing could adversely affect revenue.

In addition to formulary tier co-pay differentials, private health insurance companies and self-insured employers have been increasing the cost-sharing required from beneficiaries, particularly for branded pharmaceuticals and biotechnology products.

In addition to formulary

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tier co-pay differentials, private health insurance companies and self-insured employers have been increasing the cost-sharing required from beneficiaries, particularly for branded pharmaceuticals and biotechnology products.

Private health insurance companies also are increasingly imposing utilization management tools, such as clinical protocols, requiring prior authorization for a branded product or requiring the patient to first fail on one or more generic products before permitting access to a branded medicine.

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Legislative Changes

In 2022, Congress passed the Inflation Reduction Act, which makes 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, and government price-setting for certain Medicare Part D drugs, starting in 2026, and Medicare Part B drugs starting in 2028.

The long-term implications of the Inflation Reduction Act remain uncertain and subject to various factors, including the manner in which U.S.

In 2022, Congress passed the IRA, which makes 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, and government price-setting for certain Medicare Part D drugs, starting in 2026, and Medicare Part B drugs starting in 2028.

In August 2023, the U.S.

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

Pursuant to the IRA’s Program, discussions with the government occurred in 2023 and will continue in 2024, with government price setting becoming effective on January 1, 2026.

The Company has sued the U.S.

government regarding the IRA’s Program (see Item 8 “Financial Statements and Supplementary Data,” Note 11.

“Contingencies and Environmental Liabilities” below).

Furthermore, the Biden Administration and Congress continue to discuss legislation designed to control health care costs, including the cost of drugs.

The long-term implications of the IRA remain uncertain and subject to various factors, including the manner in which the U.S.

Department of Health and Human Services decides to implement the statute.

Many experts and analysts, both within the industry and outside, have predicted that the law will harm innovation in the pharmaceutical industry and result in fewer new treatments being developed and approved over time.

Merck is working to mitigate the potentially harmful effects that the law could have on innovation.

Merck is working to mitigate the potentially harmful effects that the law could have, which could include a detrimental impact on innovation.

In addition, in 2021, Congress passed the American Rescue Plan Act, which included a provision that eliminates the statutory c ap on rebates drug manufacturers pay to Medicaid beginning in January 2024.

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Prior to this change, manufacturers have not been required to pay more than 100% of the Average Manufacturer Price (AMP) in rebates to state Medicaid programs for Medicaid-covered drugs.

As a result of this provision, beginning in 2024, it is possible that manufacturers may have to pay state Medicaid programs more in rebates than they received on sales of particular products.

This change could present a risk to Merck in the future for drugs that have high Medicaid utilization and rebate exposure that is more than 100% of the AMP.

As a result of this provision, beginning in 2024, manufacturers may have to pay state Medicaid programs more in rebates than they received on sales of particular products.

This change presents a risk to Merck for drugs that have high Medicaid utilization and rebate exposure that is more than 100% of the AMP.

The Company also faces increasing pricing pressure in the states, which are looking to exert greater influence over the price of prescription drugs.

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The Company expects that states will continue their focus on pharmaceutical pricing and will increasingly shift to more aggressive price control tools such as Prescription Drug Affordability Boards that have the authority to conduct affordability reviews and establish upper payment limits.

In addition, recently, the FDA authorized, for a two-year period, Florida’s application to import prescription drugs from Canada.

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Regulatory Changes

In November 2020, the Department of Health and Human Services Office of Inspector General issued a Final Rule that would have, effective January 1, 2023, eliminated the Anti-Kickback Statute safe harbor for rebates paid to Medicare Part D plans or to PBMs on behalf of such plans.

Congress has delayed implementation of this Final Rule until January 1, 2026 and pending federal legislation would repeal it entirely.

While the Company cannot anticipate the effects of this change to the way it currently contracts, this new framework could significantly alter the way it does business with Part D Plan Sponsors and PBMs on behalf of such plans.

This rulemaking also established, effective January 1, 2021, a new safe harbor for point of sale discounts at the pharmacy counter and a new safe harbor for certain service arrangements between pharmaceutical manufacturers and PBMs.

The pharmaceutical industry also could be considered a potential source of savings via other legislative and administrative proposals that have been debated but not enacted.

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Some EU Member States provide that drug products may be marketed only after a reimbursement price has been agreed.

Some EU Member States may require the completion of additional studies that compare the cost-effectiveness of a particular product candidate to already available therapies or so-called health technology assessments (HTA), in order to obtain reimbursement or pricing approval.

The HTA of pharmaceutical products is becoming an increasingly common part of the pricing and reimbursement procedures in

most EU Member States.

Some EU Member States may require the completion of additional studies that compare the cost-effectiveness of a particular product candidate to already available therapies or a so-called health technology assessment (HTA), in order to obtain reimbursement or pricing approval.

The HTA of pharmaceutical products is becoming an increasingly common part of the pricing and reimbursement procedures in most EU Member States.

The HTA process, which is governed by the national laws of these countries, involves the assessment of the cost-effectiveness, public health impact, therapeutic impact and/or the economic and social impact of use of a given pharmaceutical product in the national health care system of the individual country in which it is conducted.

Ultimately, HTA measures the added value of a new health technology compared to existing ones.

Ultimately, an HTA measures the added value of a new health technology compared to existing ones.

The outcome of HTAs regarding specific pharmaceutical products will often influence the pricing and reimbursement status granted to these pharmaceutical products by the regulatory authorities of individual EU Member States.

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The next government-mandated price reduction will occur in April 2024.

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The Company’s business in China has grown rapidly in the past few years, and the importance of China to the Company’s overall pharmaceutical and vaccines business has increased accordingly.

Continued growth of the Company’s business in China is dependent upon ongoing development of a favorable environment for innovative pharmaceutical products and vaccines, sustained access for the Company’s current in-line products, and the absence of trade impediments or adverse pricing controls.

Continued growth of the Company’s business in China is dependent upon ongoing development of a favorable environment for innovative pharmaceutical products and vaccines, sustained access for the Company’s currently marketed products, and the absence of trade impediments or adverse pricing controls.

In recent years, the Chinese government has introduced and implemented a number of structural reforms to accelerate the shift to innovative products and reduce costs.

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While the mechanism for drugs being added to the government’s National Reimbursement Drug List (NRDL) evolves, inclusion may require a price negotiation which could impact the outlook in the market for selected brands.

In 2021, drugs were added to the NRDL with an average of more than 60% price reductions.

A new NRDL was recently completed in which new entries averaged 60% price reductions.

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The Company anticipates that pricing pressures and market access challenges will continue in the future to varying degrees in the emerging markets.

Beyond pricing and market access challenges, other conditions in emerging market countries can affect the Company’s efforts to continue to grow in these markets, including potential political instability, changes in trade sanctions and embargoes, significant currency fluctuation and controls, financial crises, limited or changing availability of funding for health care, credit worthiness of health care partners, such as hospitals, and other

developments that may adversely impact the business environment for the Company.

Further, the Company may engage third-party agents to assist in operating in emerging market countries, which may affect its ability to realize continued growth and may also increase the Company’s risk exposure.

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In some cases, the FDA requirements and practices have increased the amount of time and resources necessary to develop new products and bring them to market in the U.S.

At the same time, the FDA has committed to expediting the development and review of products bearing the “breakthrough therapy” designation, which has accelerated the regulatory review process for medicines with this designation.

At the same time, the FDA has committed to expediting the development and review of products bearing the “breakthrough therapy” designation, which has accelerated the

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regulatory review process for medicines with this designation.

The FDA has also undertaken efforts to bring generic competition to market more efficiently and in a more timely manner.

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The Company’s approach is designed to enable it to serve the greatest number of patients today, while meeting the needs of patients in the future.

The Company’s efforts in this regard are wide-ranging and include a set of principles that the Company strives to embed into its operations and business strategies to guide the Company’s worldwide approach to expanding access to health care.

The Company systematically evaluates its pipeline candidates to identify potential to address significant public health burden and unmet medical needs in underserved health care settings.

Products continue to be evaluated for their potential throughout their life cycle to account for changes in the external environment.

The Company also collaborates with different stakeholders,

including private, governmental, multilateral and non-profit organizations, to design and deliver sustainable solutions to help address access challenges at the payer, provider and patient levels.

In addition, through innovative social investments, including philanthropic programs and impact investing, Merck is helping to strengthen health systems and build capacity, particularly in under-resourced communities.

The Company's wide-ranging efforts to expand access to health encompass a set of principles embedded in its business strategies and operations.

These principles guide the Company's global approach to addressing significant public health burdens and unmet medical needs.

The Company systematically evaluates its pipeline candidates to assess their potential in low-resource settings.

Throughout the life cycle of its products, the Company seeks to continually evaluate their potential and adapt to changes in the external environment.

Collaborating with various stakeholders, including private, governmental, multilateral, and non-profit organizations, the Company seeks to design and deliver sustainable solutions to address access challenges at the payer, provider, and patient levels.

Furthermore, the Company incorporates access to health metrics in its scorecard, making it a component of calculating annual incentive pay for the majority of its global employees.

In addition, through social investments, including philanthropic programs and impact investing, Merck is helping to strengthen health systems and build capacity, particularly in under-resourced communities.

The Merck Patient Assistance Program provides certain medicines and adult vaccines for free to people in the U.S.

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The GDPR increased responsibility and liability in relation to personal data that the Company processes.

It also imposes a number of strict obligations and restrictions on the ability to process (which includes collection, analysis and transfer of) personal data, including health data from clinical trials and adverse event reporting.

It also imposes a number of strict obligations and restrictions on the

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ability to process (which includes collection, analysis and transfer of) personal data, including health data from clinical trials and adverse event reporting.

The GDPR also includes requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals prior to processing their personal data or personal health data, notification of data processing obligations to the national data protection authorities, and the security and confidentiality of the personal data.

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In light of the implications of this decision, the Company may face difficulties regarding the transfer of personal data from the EU to third countries.

Since then, the Company diligently entered into the EU-approved Standard Contractual Clauses with its vendors, suppliers, collaboration partners and clinical trial sites in order to facilitate the lawful transfer of personal data from the EU to the U.S.

In addition, President Biden issued an Executive Order on October 7, 2022 to address the data privacy concerns raised in the Schrems II decision through introducing, among other measures, further safeguards and oversight of personal data collection by U.S.

Since then, the Company entered into the EU-approved Standard Contractual Clauses with its vendors, suppliers, collaboration partners and clinical trial sites in order to facilitate the lawful transfer of personal data from the EU to the U.S.

In addition, President Biden issued Executive Order 14086 on October 7, 2022 to address the data privacy concerns raised in the Schrems II decision through introducing, among other measures, further safeguards and oversight of personal data collection by U.S.

signals intelligence activities and providing individuals with a redress mechanism in the U.S.

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Data Privacy Framework (successor to the invalidated EU-U.S.

Privacy Shield) may come by way of a new EU Adequacy Decision, issued in draft form by the EU Commission on December 13, 2022 and expected to come into force in mid-2023.

However, it remains likely that such a new Adequacy Decision will be contested by privacy advocates and be subject to legal review.

Privacy Shield) came about by way of a new EU Adequacy Decision, issued by the EC on July 10, 2023.

However, the new Adequacy Decision has already been contested by privacy advocates and is subject to legal review.

Failure to comply with the requirements of the GDPR and the related national data protection laws of the EU Member States may result in significant monetary fines and other administrative penalties as well as civil liability claims from individuals whose personal data was processed.

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Failing to comply with these obligations could lead to government enforcement actions and significant penalties against the Company, harm to its reputation, and adversely impact its business and operating results.

The uncertainty regarding the interplay between

different regulatory frameworks further adds to the complexity that the Company faces with regard to data protection regulation.

The uncertainty regarding the interplay between different regulatory frameworks further adds to the complexity that the Company faces with regard to data protection regulation.

In August 2021, China passed the Personal Information Protection Law (PIPL) that aims to standardize the handling of personal information in China which became effective in November 2021.

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While similar to the GDPR, the PIPL contains unique requirements not found in the GDPR.

The Company has developed and implemented comprehensive plans to ensure compliance with the PIPL, with those relating to data localization and cross-border transfers yet to be completed pending forthcoming guidance from the Cyberspace Administration of China.

Additional laws and regulations enacted in the U.S.

(such as comprehensive data protection acts in California, Virginia, Colorado, Utah and Connecticut), Canada, Europe, Asia, and Latin America, have increased enforcement and litigation activity in the U.S.

The Company has developed and implemented comprehensive plans to ensure compliance with the PIPL, with plans relating to data localization and cross-border transfers pending forthcoming guidance from the Cyberspace Administration of China.

Additional laws and regulations enacted in certain states in the U.S., Canada, Europe, Asia, and Latin America, have increased enforcement and litigation activity in the U.S.

and other developed markets, as well as increased regulatory cooperation among privacy authorities globally.

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The Company sells its human health pharmaceutical products primarily to drug wholesalers and retailers, hospitals, government agencies and managed health care providers, such as health maintenance organizations, PBMs and other institutions.

Human health vaccines are sold primarily to physicians, wholesalers, physician distributors and government entities.

Human health vaccines are sold primarily to physicians, wholesalers, distributors and government entities.

The Company’s professional representatives communicate the effectiveness, safety and value of the Company’s pharmaceutical and vaccine products to health care professionals in private practice, group practices, hospitals and managed care organizations.

The Company sells its animal health products to veterinarians, distributors, animal producers, farmers and pet owners.

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Raw Materials

The Company obtains raw materials essential to its business from numerous suppliers worldwide.

Most of the principal materials the Company uses in its manufacturing operations are available from more than one source.

However, the Company obtains certain raw or intermediate materials primarily from only one source.

The Company attempts, if possible, to mitigate the potential risk associated with raw materials, components and supplies through inventory and appropriate supplier management.

Patents, Trademarks and Licenses

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Patents may cover products per se , pharmaceutical formulations, processes for, or intermediates useful in, the manufacture of products, or the uses of products.

Protection for individual products extends for varying periods in accordance with the legal life of patents in the various countries.

Patent protection for individual products extends for varying periods in accordance with the legal life of patents in the various countries.

The protection afforded, which may also vary from country to country, depends upon the type of patent and its scope of coverage.

The Food and Drug Administration Modernization Act includes a Pediatric Exclusivity Provision that may provide an additional six months of market exclusivity in the U.S.

for indications of new or currently marketed drugs if certain agreed upon pediatric studies are completed by the applicant.

patent law provides additional patent term for periods when the patented product was under regulatory review by the FDA.

The EU also provides an additional six months of pediatric market exclusivity attached to a product’s Supplementary Protection Certificate (SPC).

Japan provides the additional term for pediatric studies attached to market exclusivity unrelated to patent term.

Patent portfolios developed for products introduced by the Company normally provide market exclusivity.

The Company has the following key patent protection in the U.S., the EU, Japan and China (including the potential for patent term extensions (PTE) and SPCs where indicated) for the following marketed products:

Key patents may be subject to a patent term restoration (also known as patent term extension or PTE) of up to five years in the U.S., Japan, and certain other jurisdictions, or in Europe, up to five years of extended term may be available in the form of a Supplementary Protection Certificate (SPC).

PTEs and SPCs are awarded to offset a portion of the patent term lost during the clinical testing and regulatory review process of a product prior to approval.

The Food and Drug Administration Modernization Act includes a Pediatric Exclusivity Provision that may provide an additional six months of market exclusivity (added to the patent term for all Orange Book-listed patents, and to the regulatory data exclusivity term for small molecule and biologic products) in the U.S.

for indications of new or currently marketed drugs if certain agreed upon pediatric studies are completed by the applicant.

The EU also provides an additional six months of pediatric market exclusivity attached to a product’s SPC term.

Japan attaches the additional term for pediatric studies to market exclusivity and this extension is unrelated to patent term.

Regulatory data exclusivity tied to the protection of clinical data is complementary to patent protection and, in some cases, may provide more effective or longer lasting marketing exclusivity than a product’s patent portfolio.

In the U.S., the regulatory data protection term generally runs five years from first marketing approval of a new chemical entity, extended to seven years for an orphan drug indication, and twelve years from first marketing approval of a biological product.

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The table below provides a list of expiration dates, which include any pending PTE and SPC periods where indicated, for the key patent protection in the U.S., the EU, Japan and China for the following marketed products:

Product Year of Expiration (U.S.) Year of Expiration (EU) (1)

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Year of Expiration (China)

Januvia Expired (3)

Januvia 2026 (3)

Expired 2025-2026 Expired

Janumet Expired (3)

Janumet 2026 (3)

Expired N/A Expired

Janumet XR Expired (3)

Janumet XR 2026 (3)

N/A N/A Expired

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Simponi N/A (6)

2026 (8) (SPCs)

Bridion 2026 (9)

2023 2024 Expired

Bravecto 2026 (with pending PTE) 2025 (patents), 2029 (SPCs) 2029 2025

Gardasil 2028 Expired Expired N/A

2028 2025 (patents) , 2030 (8) (SPCs)

Bravecto 2026 (with pending PTE) 2029

Gardasil 2028 Expired Expired Expired

2028 2030 (9)

Keytruda 2028 2031 2032-2033 2028

Lynparza (10)

2027 (9) (with pending PTE)

2024 (patents), 2029 (8) (SPCs)

2028-2029 2024

Zerbaxa 2028 (9)

2023 (patents), 2028 (8) (SPCs)

2027-2028 2023

2027-2028 Expired

Belsomra 2029 N/A 2031 N/A

Prevymis 2029 (9) (with pending PTE)

2024 (patents), 2029 (8) (SPCs)

2035 (with pending PTE) N/A (12)

2031 (with pending PTE) No Patent No Patent N/A

Delstrigo 2032 (with pending PTE) 2031 (patents), 2033 (SPCs) N/A 2031

Pifeltro 2032 (with pending PTE) 2031 (patents), 2033 (SPCs) 2036 2031

Recarbrio 2033 (8) (with pending PTE)

2029 (patents), 2034 (SPCs) 2034 (with pending PTE) N/A

No Patent (14)

Delstrigo 2032 (with pending PTE) 2033 (9)

Pifeltro 2032 (with pending PTE) 2033 (9)

Welireg 2035 (with pending PTE) N/A N/A N/A

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This may result in multiple PTE approvals for a given patent, each with its own expiration date.

(3) 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 these products will not lose market exclusivity in the U.S.

before the end of 2023, and it is likely that exclusivity will extend through May 2026.

(4) Expiry date reflects the approved product and includes granted PTE for the 600 mg tablet in Japan.

(3) As a result of settlement agreements related to a patent directed to the specific sitagliptin salt form of the products, exclusivity will extend through May 2026 for Januvia and Janumet , and through July 2026 for Janumet XR .

(4) Generic entry is not anticipated in 2024.

(5) Expiry date reflects granted PTE for the 600 mg tablet in Japan.

(6) The Company has no marketing rights in the U.S., Japan or China.

(6) The distribution agreement with Janssen Pharmaceuticals, Inc.

expires on October 1, 2024.

(7) The distribution agreement with Johnson & Johnson Innovative Medicine expires on October 1, 2024.

(8) Part of a global strategic oncology collaboration with Eisai Co., Ltd.

(8) Eligible for 6 months Pediatric Exclusivity.

(9) Eligible for six months pediatric market exclusivity.

(10) Part of a global strategic oncology collaboration with AstraZeneca.

(10) Being commercialized in a worldwide collaboration with Bayer AG.

(11) Commercialized under a worldwide collaboration with Bayer AG.

(12) The Company has no marketing rights in the U.S.

(12) The Company has no marketing rights in the EU, Japan or China.

(13) PTE pending but is not included in the listed patent expiry date.

Data exclusivity has been granted in the U.S.

and expires July 16, 2033.

(14) Data exclusivity has been granted in the EU and Japan, and expires on December 13, 2031 and September 25, 2030, respectively.

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The Company has the following key U.S.

patent protection for drug candidates under review in the U.S.

Additional patent term may be provided for these pipeline candidates based on Patent Term Restoration and Pediatric Exclusivity.

Under Review in the U.S.

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MK-7264 (gefapixant) (1)

MK-7962 (sotatercept)

MK-1022 (patritumab deruxtecan)

V116 (pneumococcal vaccine)

(1) Received a Complete Response Letter from the FDA in December 2023.

(2) As a biologic product, MK-7962 (sotatercept) will be eligible for 12 years of data exclusivity upon approval in the U.S.

Granted patents covering methods of treating pulmonary arterial hypertension with MK-7962 (sotatercept), which will expire in 2037 (absent PTE), may also provide additional exclusivity.

The Company also has the following key U.S.

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Year of Expiration (in the U.S.)

MK-7962 (sotatercept) (1)

MK-8591A (doravirine + islatravir) 2032 (pending PTE for doravirine)

MK-8591A (doravirine + islatravir) 2032 (with pending PTE for doravirine patent)

MK-1308A (quavonlimab + pembrolizumab)

MK-1026 (nemtabrutinib)

MK-7684A (vibostolimab + pembrolizumab)

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MK-1654 (clesrovimab)

MK-3543 (bomedemstat)

MK-4482 Lagevrio (2)

V-116 (pneumococcal vaccine) 2038

MK-3475A (pembrolizumab + hyaluronidase subcutaneous) 2039

(1) As a biologic product, sotatercept will be eligible for 12 years of data exclusivity upon approval in the U.S.

MK-7240 (tulisokibart)

(1) Being developed in a collaboration.

(2) Received Emergency Use Authorization from the FDA for the treatment of high-risk adults with mild to moderate COVID-19.

Unless otherwise noted, the patents in the above charts are compound patents.

Each patent may be subject to a future patent term restoration of up to five years and six month pediatric market exclusivity, either or both of which may be available.

In addition, depending on the circumstances surrounding any final regulatory approval of the compound, there may be other listed patents or patent applications pending that could have relevance to the product as finally approved;

the relevance of any such application would depend upon the claims that ultimately may be granted and the nature of the final regulatory approval of the product.

Also, regulatory exclusivity tied to the protection of clinical data is complementary to patent protection and, in some cases, may provide more effective or longer lasting marketing exclusivity than a compound’s patent estate.

In the U.S., the data protection generally runs five years from first marketing approval of a new chemical entity, extended to seven years for an orphan drug indication and 12 years from first marketing approval of a biological product.

While the expiration of a compound patent normally results in a loss of market exclusivity for the covered pharmaceutical product, commercial benefits may continue to be derived from:

Unless otherwise noted, the patents in the above tables are compound patents.

For those drug candidates under review or in development, the key U.S.

patents may be subject to a future PTE of up to five years and/or six month pediatric market exclusivity.

In addition, depending on the circumstances surrounding any final regulatory approval of the product, there may be other granted patents or pending patent applications that could have relevance to the product as finally approved.

While the expiration of a compound patent generally results in a loss of market exclusivity for the covered pharmaceutical product, commercial benefits may continue to be derived from:

(i) later-expiring patents on processes and intermediates related to the most economical method of manufacture of the active ingredient of such product;

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and certain other countries, market exclusivity that may be available under relevant law.

The effect of product patent expiration on pharmaceutical products also depends upon many other factors such as the nature of the market and the position of the product in it, the growth of the market, the complexities and economics of the process for manufacture of the active ingredient of the product and the requirements of new drug provisions of the Federal Food, Drug and Cosmetic Act or similar laws and regulations in other countries.

The effect of product patent expiration on pharmaceutical product sales may also depend upon many other factors such as the nature of the market and the position of the product in it, the growth of the market, the complexities and economics of the process for manufacture of the active ingredient of the product and the requirements of new drug provisions of the Federal Food, Drug and Cosmetic Act or similar laws and regulations in other countries.

Additions to market exclusivity are sought in the U.S.

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and other countries through reform of patent and other relevant laws and implementation of international treaties.

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For further information with respect to the Company’s patents, see Item 1A.

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The Company’s research and development model is designed to increase productivity and improve the probability of success by prioritizing the Company’s research and development resources on candidates the Company believes are capable of providing unambiguous, promotable advantages to patients and payers and delivering the maximum value of its approved medicines and vaccines through new indications and new formulations.

Merck is pursuing emerging product opportunities independent of therapeutic area or modality (small molecule, biologics and vaccines) and is building its biologics capabilities.

Merck is pursuing emerging product opportunities independent of therapeutic area or modality.

The Company is committed to ensuring that externally sourced programs remain an important component of its pipeline strategy, with a focus on supplementing its internal research through acquisitions as well as a licensing and external alliance strategy focused on the entire spectrum of collaborations from early research to late-stage compounds, as well as access to new technologies.

The Company’s clinical pipeline includes candidates in multiple disease areas, including cancer, cardiovascular diseases, metabolic diseases, infectious diseases, neurosciences, respiratory diseases, and vaccines.

In the development of human health products, industry practice and government regulations in the U.S.

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Pre-marketing vaccine clinical trials are typically done in three phases.

Initial Phase 1 clinical studies are conducted in normal subjects to evaluate the safety, tolerability and immunogenicity of the vaccine candidate.

Initial Phase 1 clinical studies are conducted in normal subjects to evaluate

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the safety, tolerability and immunogenicity of the vaccine candidate.

Phase 2 studies are dose-ranging studies and provide additional data on safety, immunogenicity and/or effectiveness.

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If successful, the Company submits regulatory filings with the appropriate regulatory agencies.

United States

In the U.S., the FDA review process begins once a complete NDA or BLA is submitted, received and accepted for review by the agency.

Within 60 days after receipt, the FDA determines if the application is sufficiently complete to permit a substantive review.

The FDA also assesses, at that time, whether the application will be granted

a priority review or standard review.

Pursuant to the Prescription Drug User Fee Act V (PDUFA), the FDA review period target for NDAs or original BLAs is either six months, for priority review, or ten months, for a standard review, from the time the application is deemed sufficiently complete.

Once the review timelines are determined, the FDA will generally act upon the application within those timelines, unless a major amendment has been submitted (either at the Company’s own initiative or the FDA’s request) to the pending application.

The FDA also assesses, at that time, whether the application will be granted a priority review or standard review.

Pursuant to the Prescription Drug User Fee Act VII (PDUFA), the FDA review period target for NDAs or original BLAs is either six months, for priority review, or ten months, for a standard review, from the time the application is deemed sufficiently complete.

For original efficacy supplements to an NDA or BLA, the FDA review period target is six months, for priority review, or ten months, for a standard review, from the time the supplemental application is received.

Once the review timelines are determined, the FDA will generally act upon the application within those timeline goals, unless a major amendment has been submitted (either at the Company’s own initiative or the FDA’s request) to the pending application.

If this occurs, the FDA may extend the review period to allow for review of the new information, but by no more than three months.

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More than one of these special designations can be granted for a given application (i.e., a product designated as a Breakthrough Therapy may also be eligible for Priority Review).

Due to the COVID-19 public health crisis, the U.S.

Secretary of Health and Human Services has exercised statutory authority to determine that a public health emergency exists, and declared these circumstances justify the emergency use of drugs and biological products as authorized by the FDA.

While in effect, this declaration enables the FDA to issue Emergency Use Authorizations (EUAs) permitting distribution and use of specific medical products absent NDA/BLA submission or approval, including products to treat or prevent diseases or conditions caused by the SARS-CoV-2 virus, subject to the terms of any such EUAs.

Due to the COVID-19 public health crisis, in 2020, the U.S.

Secretary of Health and Human Services (Secretary) exercised statutory authority to determine that a public health emergency existed, and declared those circumstances justified the emergency use of drugs and biological products as authorized by the FDA.

In 2023, the Secretary issued an amended determination that a public health emergency or a significant potential for a public health emergency existed, and declared that circumstances continued to justify authorization of emergency use of these products.

While in effect, this declaration (as amended) enables the FDA to issue Emergency Use Authorizations (EUAs) permitting distribution and use of specific medical products absent NDA/BLA submission or approval, including products to treat or prevent diseases or conditions caused by the SARS-CoV-2 virus, subject to the terms of any such EUAs.

The FDA must make certain findings to grant an EUA, including that it is reasonable to believe based on the totality of evidence that the drug or biologic may be effective, and that known or potential benefits when used under the terms of the EUA outweigh known or potential risks.

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The FDA may revise or revoke an EUA if the circumstances justifying its issuance no longer exist, the criteria for its issuance are no longer met, or other circumstances make a revision or revocation appropriate to protect the public health or safety.

The primary method the Company uses to obtain marketing authorization of pharmaceutical products in the EU is through the “centralized procedure.” This procedure is compulsory for certain pharmaceutical products, in particular those using biotechnological processes, and is also available for certain new chemical compounds and products.

European Union

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A company seeking to market an innovative pharmaceutical product through the centralized procedure must file a complete set of safety data and efficacy data as part of a Marketing Authorization Application (MAA) with the European Medicines Agency (EMA).

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It is also possible for new chemical products to obtain marketing authorization in the EU through a “mutual recognition procedure” in which an application is made to a single member state and, if the member state approves the pharmaceutical product under a national procedure, the applicant may submit that approval to the mutual recognition procedure of some or all other EU Member States.

Other Markets

Outside of the U.S.

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and internationally or in late-stage clinical development.

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.

Merck is developing Lagevrio in collaboration with Ridgeback Biotherapeutics LP (Ridgeback).

The FDA granted Emergency Use Authorization (EUA) for Lagevrio in December 2021;

last issued in February 2023, to authorize Lagevrio for the treatment of adults with a current diagnosis of mild-to-moderate COVID-19, and who are at high risk for progression to severe COVID-19, including hospitalization or death, and for whom alternative COVID-19 treatment options approved or authorized by the FDA are not accessible or clinically appropriate.

The authorization is based on the Phase 3 MOVe-OUT trial.

Lagevrio is not approved for any use in the U.S.

and is authorized only for the duration of the declaration that circumstances exist justifying the authorization of its emergency use under the Food, Drug and Cosmetic Act, unless the authorization is terminated or revoked sooner.

In November 2021, the EMA issued a positive scientific opinion for Lagevrio , which is intended to support national decision-making on the possible use of Lagevrio prior to marketing authorization.

In October 2021, the EMA initiated a rolling review for Lagevrio for the treatment of COVID-19 in adults.

On February 24, 2023, Merck and Ridgeback announced that the Committee for Medicinal Products for Human Use (CHMP) of the EMA has recommended the refusal of the marketing authorization for Lagevrio .

Merck and Ridgeback will appeal the decision and request a re-examination of the CHMP’s opinion.

Applications to other regulatory bodies worldwide are underway.

In October 2022, Merck provided an update on new clinical and non-clinical studies of Lagevrio .

A preliminary analysis of the University of Oxford’s PANORAMIC study, conducted in the UK in highly-vaccinated adults mostly over 65 years of age, showed no evidence of a difference between Lagevrio added to usual care compared to usual care alone for the reduction of hospitalizations and deaths through Day 28 (primary endpoint was not met);

the incidence of hospitalizations and death through Day 28 was very low overall.

The main secondary endpoint (time to first self-reported recovery) in the PANORAMIC study was 6 days shorter with the Lagevrio group compared to the usual care group;

in addition, the use of Lagevrio also was associated with earlier recovery across a wide range of other symptom measures, as compared to the usual care group.

Additionally, an analysis of real-world data from a separate study conducted by investigators in Israel (known as the Clalit study) showed that in a cohort of non-hospitalized, high-risk patients, Lagevrio reduced hospitalizations and mortality due to COVID-19 in patients 65 years and above;

no evidence of benefit was found in younger adults ages 40 to 64 years.

Also, Merck reported results from a separate, non-clinical 6-month carcinogenicity study in transgenic mice, which demonstrated that Lagevrio was not carcinogenic at any dose tested.

MK-7264, gefapixant, is an investigational, orally administered, selective P2X3 receptor antagonist, for the treatment of refractory chronic cough or unexplained chronic cough in adults under review by the FDA and the EMA.

The marketing applications for gefapixant are based on results from the COUGH-1 and COUGH-2 clinical trials.

In January 2022, the FDA issued a Complete Response Letter (CRL) regarding Merck’s NDA for gefapixant.

In the CRL, the FDA requested additional information related to the cough counting system that was used to assess efficacy.

MK-1022, patritumab deruxtecan, a potential first-in-class HER3 directed DXd antibody drug conjugate (ADC), is under priority review by the FDA for the treatment of adult patients with locally advanced or metastatic EGFR-mutated NSCLC previously treated with two or more systemic therapies.

The BLA is based on the primary results from the HERTHENA-Lung01 pivotal Phase 2 trial and data results presented at the IASLC 2023 World Conference on Lung Cancer, which were simultaneously published in the Journal of Clinical Oncology.

The FDA set a PDUFA date of June 26, 2024 for the BLA.

The priority review follows receipt of Breakthrough Therapy designation granted by the FDA in December 2021.

The BLA is being reviewed under the Real-Time Oncology Review program.

Patritumab deruxtecan (HER3-DXd) was discovered by Daiichi Sankyo and is being jointly developed by Daiichi Sankyo and Merck.

MK-7962, sotatercept, Merck’s novel investigational activin signaling inhibitor, is under priority review by the FDA for the treatment of adult patients with pulmonary arterial hypertension (World Health Organization Group 1).

The application is based on the results from the Phase 3 STELLAR trial.

The FDA set a PDUFA date of March 26, 2024.

Sotatercept is also under review by the EMA.

Sotatercept was granted Breakthrough Therapy designation and Orphan Drug designation by the FDA, as well as Priority Medicines (PRIME) scheme and Orphan Drug designation by the EMA for the treatment of pulmonary arterial hypertension.

Sotatercept is the subject of a licensing agreement with Bristol-Myers Squibb Company (BMS).

V116, the Company’s investigational 21-valent pneumococcal conjugate vaccine specifically designed to help prevent invasive pneumococcal disease and pneumococcal pneumonia in adults, is under priority review by the FDA.

The BLA for V116 is supported by results from multiple Phase 3 clinical studies evaluating V116 in both vaccine-naïve and vaccine-experienced adult patient populations, including STRIDE-3, STRIDE-4, STRIDE-5 and STRIDE-6.

The FDA set a PDUFA date of June 17, 2024.

V116 was granted Breakthrough Therapy designation from the FDA for the prevention of invasive pneumococcal disease and pneumococcal pneumonia caused by Streptococcus pneumoniae serotypes 3, 6A/C, 7F, 8, 9N, 10A, 11A, 12F, 15A, 15B/C, 16F, 17F, 19A, 20, 22F, 23A, 23B, 24F, 31, 33F, 35B in adults 18 years of age and older.

MK-7264, gefapixant, is a non-narcotic, oral selective P2X3 receptor antagonist, for the treatment of refractory or unexplained chronic cough in adults.

In December 2023, the FDA issued a second CRL regarding the resubmission of Merck’s NDA for gefapixant.

In the CRL, the FDA concluded that Merck’s application did not meet substantial evidence of effectiveness for treating refractory chronic cough and unexplained chronic cough.

The CRL was not related to the safety of gefapixant.

The Company is performing additional analyses and anticipates submitting this information to the FDA in the first half of 2023 in response to the CRL.

The review period in the EU has been extended pending the receipt of additional information from the Company.

Merck plans to submit the information to the EMA in the first half of 2023.

Merck is reviewing the FDA’s feedback to determine next steps.

MK-3475, Keytruda , is an anti-PD-1 therapy approved for the treatment of many cancers that is in clinical development for expanded indications.

These approvals were the result of a broad clinical development program that currently consists of more than 1,650 clinical trials, including more than 1,200 trials that combine Keytruda with other cancer treatments.

These studies encompass more than 30 cancer types including:

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Further trials are being planned for other cancers.

Keytruda is under review by the FDA for the treatment of patients with previously treated advanced HCC.

This submission is based on data from the Phase 3 KEYNOTE-394 trial along with supportive data from the KEYNOTE-240 and KEYNOTE-224 trials.

Keytruda is approved for this indication in the U.S.

under the FDA’s accelerated approval process.

This submission is to convert the accelerated approval to full (regular) approval.

Keytruda is under priority review by the FDA for use in combination with Padcev (enfortumab vedotin-ejfv) for the treatment of certain patients with locally advanced or metastatic urothelial cancer who are not eligible to receive cisplatin-containing chemotherapy.

The FDA set a PDUFA date of April 21, 2023 for the supplemental BLAs

for Keytruda and Pedcev.

The combination regimen was granted Breakthrough Therapy designation by the FDA in February 2020.

The applications are supported by efficacy and safety data from the Phase 1b/2 EV-103 trial (also known as KEYNOTE-869) Dose Escalation/Cohort A and Cohort K.

Results from Dose Escalation/Cohort A were published in the Journal of Clinical Oncology .

Results from Cohort K were presented in a late-breaking session at the 2022 European Society for Medical Oncology Congress.

Keytruda is also under review by the FDA for the treatment of adult and pediatric patients with recurrent locally advanced or metastatic Merkel cell carcinoma.

This submission is based on data from the Phase 3 KEYNOTE-913 trial.

Keytruda is approved for this indication in the U.S.

under the FDA’s accelerated approval process.

This submission is to convert the accelerated approval to full (regular) approval.

Additionally, Keytruda is under review by the FDA for the treatment of adult and pediatric patients with unresectable or metastatic microsatellite instability-high (MSI-H) or mismatch repair deficient (dMMR) solid tumors, as determined by an FDA-approved test, that have progressed following prior treatment and who have no satisfactory alternative treatment options.

This submission is based on data from the Phase 2 KEYNOTE-158 trial along with supportive data from the KEYNOTE-164 and KEYNOTE-051 trials.

Keytruda is approved for this indication in the U.S.

under the FDA’s accelerated approval process.

This submission is to convert the accelerated approval to full (regular) approval.

Keytruda is under review in the EU for the adjuvant treatment of patients with stage IB (≥4 cm), II or IIIA NSCLC following complete surgical resection.

The submission is based on data from the pivotal Phase 3 KEYNOTE-091 trial, also known as EORTC-1416-LCG/ETOP-8-15 – PEARLS.

Keytruda is under review in Japan for the treatment of patients with relapsed or refractory PMBLC.

This submission is based on data from the Phase 2 KEYNOTE-170 study and the Phase 1 KEYNOTE-A33 study.

In January 2023, Merck announced that it will stop the Phase 3 KEYNOTE-991 trial investigating Keytruda in combination with enzalutamide and androgen deprivation therapy (ADT) for the treatment of patients with metastatic hormone-sensitive prostate cancer.

Merck is discontinuing the study based on the recommendation of an independent Data Monitoring Committee (DMC) which reviewed data from a planned interim analysis.

At the interim analysis, Keytruda in combination with enzalutamide and ADT did not demonstrate an improvement in overall survival or radiographic progression-free survival, the trial’s dual primary endpoints, compared to placebo plus enzalutamide and ADT.

Data from this study will be presented at an upcoming medical meeting.

MK-7339, Lynparza, is an oral PARP inhibitor currently approved for certain types of advanced or recurrent ovarian, early or metastatic breast, metastatic pancreatic and metastatic castration-resistant prostate cancers being co-developed for multiple cancer types as part of a collaboration with AstraZeneca PLC.

In August 2022, the FDA granted priority review for a supplemental NDA for Lynparza in combination with abiraterone and prednisone or prednisolone for the treatment of adult patients with mCRPC.

The supplemental NDA was based on results from the Phase 3 PROpel trial, which were presented at the 2022 American Society of Clinical Oncology Genitourinary Cancers Symposium and later published in NEJM Evidence .

The FDA initially set a PDUFA date in the fourth quarter of 2022, but in December 2022 the FDA extended the PDUFA date by three months to provide further time for the full review of the submission.

Lynparza is also under review in Japan for the treatment of certain patients with mCRPC based on the PROpel trial.

MK-7902, Lenvima, is an oral receptor tyrosine kinase inhibitor being developed as part of a collaboration with Eisai Co., Ltd.

Merck and Eisai are studying the Keytruda plus Lenvima combination through the LEAP (LEnvatinib And Pembrolizumab) clinical program that includes studies across 13 different tumor types (biliary cancer, CRC, endometrial carcinoma, esophageal cancer, gastric cancer, HCC, HNSCC, melanoma, pancreatic cancer, prostate cancer, NSCLC, small-cell-lung cancer (SCLC) and RCC).

The Company also has several other programs in Phase 3 clinical development.

Keytruda is under priority review by the FDA in combination with standard of care chemotherapy (carboplatin and paclitaxel), followed by Keytruda as a single agent for the treatment of patients with primary

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advanced or recurrent endometrial carcinoma, based on the KEYNOTE-868 trial.

The FDA set a PDUFA date of June 21, 2024 for the supplemental BLA.

Keytruda is under review in the EU and Japan as a perioperative treatment regimen for patients with resectable stage II, IIIA or IIIB NSCLC based on the KEYNOTE-671 study.

A perioperative treatment regimen includes treatment before surgery (neoadjuvant) and continued after surgery (adjuvant).

In February 2024, the EMA’s Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion recommending approval of Keytruda in combination with platinum-containing chemotherapy as neoadjuvant treatment, then continued as a monotherapy as adjuvant treatment, for the treatment of resectable NSCLC at high risk of recurrence in adults, based on the KEYNOTE-671 trial.

The CHMP’s recommendation will now be reviewed by the EC for marketing authorization in the EU, and a final decision is expected in the first half of 2024.

In addition, Keytruda is under review in the EU and Japan in combination with Padcev (enfortumab vedotin-ejfv), an ADC, for the treatment of adult patients with locally advanced or metastatic urothelial carcinoma, based on the KEYNOTE-A39 trial that was conducted in collaboration with Seagen (now Pfizer) and Astellas.

Keytruda is also under review in the EU in combination with chemoradiotherapy for the treatment of patients with high-risk locally advanced cervical cancer, based on the KEYNOTE-A18 trial.

Additionally, Keytruda is under review in Japan 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.

Keytruda is also under review in Japan 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.

Welireg is under review in the EU for the treatment of previously treated advanced renal cell carcinoma based on the LIGHTSPARK-005 clinical trial and for the treatment of von Hippel-Lindau disease based on the LIGHTSPARK-004 clinical trial.

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 has numerous Phase 3 oncology programs within these pillars.

Immuno-oncology

• Keytruda in the therapeutic areas of cutaneous squamous cell, hepatocellular, mesothelioma, ovarian and small-cell lung cancers.

• MK-1308A is the coformulation of quavonlimab, Merck’s novel investigational anti-CTLA-4 antibody, with pembrolizumab, being evaluated for the treatment of RCC.

Subcutaneous MK-3475, pembrolizumab, is being evaluated for comparability with the intravenous formulation of pembrolizumab in NSCLC.

Subcutaneous MK-3475A, the coformulation of pembrolizumab with hyaluronidase, is being evaluated for comparability with the intravenous formulation of pembrolizumab in NSCLC.

MK-4280A is the coformulation of favezelimab, Merck’s novel investigational anti-LAG3 therapy, with pembrolizumab, being evaluated for the treatment of CRC and hematological malignancies.

MK-6482, Welireg (belzutifan), is a hypoxia-inducible factor-2α (HIF-2α) inhibitor being evaluated for a supplemental indication for the treatment of patients with RCC.

MK-7119, Tukysa (tucatinib), is a small molecule tyrosine kinase inhibitor, for the treatment of HER2-positive cancers in development for the treatment of breast cancer and colorectal cancer.

In September 2020, Seagen granted Merck an exclusive license and entered into a co-development agreement with Merck to accelerate the global reach of Tukysa.

MK-7684A is the coformulation of vibostolimab, an anti-TIGIT therapy, with pembrolizumab being evaluated for the treatment of melanoma, NSCLC and SCLC.

In December 2021, Merck announced that the FDA had placed clinical holds on the investigational new drug applications for islatravir (MK-8591) programs that were in development for the treatment and prevention of HIV-1 infection.

The FDA’s clinical hold was based on observations of decreases in total lymphocyte and CD4+ T-cell counts in some participants receiving islatravir in clinical studies.

In September 2022, Merck announced it will initiate a new doravirine/islatravir (MK-8591A) Phase 3 clinical program for the treatment of people with HIV-1 infection.

These new Phase 3 studies will evaluate a once-daily oral combination of doravirine 100 mg and a lower dose of islatravir in previously untreated adults and as a switch in antiretroviral therapy in virologically suppressed adults with HIV-1 infection.

The Phase 2 clinical trial evaluating an investigational oral once-weekly combination treatment regimen of islatravir and Gilead Sciences’ lenacapavir in adults with HIV-1 infection who are virologically suppressed will resume under an amended protocol with a lower dose of islatravir.

The investigational NDA for the islatravir + lenacapavir once-weekly treatment regimen remains under a partial clinical hold for any studies that would use weekly oral islatravir doses higher than the doses considered for the revised clinical program.

Additionally, Merck announced it will discontinue the development of once-monthly oral islatravir for PrEP.

The Company remains committed to developing compounds for long-acting HIV prevention and believes in the potential of the nucleoside reverse transcriptase translocation inhibitor (NRTTI) mechanism.

A Phase 1b study in adults with HIV-1 infection assessing MK-8527, a novel NRTTI candidate, will commence shortly.

V116 is an investigational 21-valent pneumococcal conjugate vaccine (PCV) for treatment of pneumococcal infection in adults.

In June 2022, Merck announced the presentation of positive results from a Phase 1/2 study evaluating the safety, tolerability and immunogenicity of V116 in pneumococcal vaccine-naïve adults 18-49 years of age (Phase 1) and 50 years of age and older (Phase 2).

In both populations, V116 met the primary immunogenicity objectives and was well-tolerated with an overall safety profile generally comparable to Pneumovax 23 across age groups.

In April 2022, Merck announced that V116 received Breakthrough Therapy designation from the FDA for the prevention of invasive pneumococcal disease and pneumococcal pneumonia caused by Streptococcus pneumoniae serotypes 3, 6A/C, 7F, 8, 9N, 10A, 11A, 12F, 15A, 15B/C, 16F, 17F, 19A, 20, 22F, 23A, 23B, 24F, 31, 33F, 35B in adults 18 years of age and older.

Phase 3 trials evaluating V116 are ongoing.

MK-7962, sotatercept, is an investigational activin receptor type IIA-Fc fusion protein being evaluated as an add-on to stable background therapy for the treatment of pulmonary arterial hypertension (PAH).

Sotatercept was obtained in connection with Merck’s acquisition of Acceleron Pharma Inc.

In October 2022, Merck announced positive top-line results from the pivotal Phase 3 STELLAR trial evaluating the safety and efficacy of sotatercept for the treatment of PAH (World Health Organization [WHO] Group 1).

The trial met its primary efficacy outcome measure, demonstrating a statistically significant and clinically meaningful improvement in 6-minute walk distance (6MWD, which measures how far patients can walk in 6 minutes).

Eight of nine secondary efficacy outcome measures achieved statistical significance, including the outcome measure of proportion of participants achieving multicomponent improvement (defined as improvement in 6MWD, improvement in N-terminal pro-B-type natriuretic peptide level, and either improvement in WHO Functional Class [FC] or maintenance of WHO FC II), and the outcome measure of time to death or the first occurrence of a clinical worsening event.

The Cognitive/Emotional Impacts domain score of PAH-SYMPACT, which was assessed as the ninth and final secondary outcome measure, did not achieve statistical significance.

Results will be presented at the upcoming American College of Cardiology Annual Scientific Session.

The Company anticipates filing sotatercept with regulatory authorities in 2023.

MK-1654, clesrovimab, is a respiratory syncytial virus (RSV) monoclonal antibody that is being evaluated for the prevention of RSV medically attended lower respiratory tract infection in infants and certain children over 1 year of age.

Two Phase 3 trials are currently enrolling.

In October 2022, Merck and Royalty Pharma plc (Royalty Pharma) entered into a funding arrangement under which Royalty Pharma paid Merck $50 million to co-fund Merck’s development costs for a Phase 2b trial of MK-8189, an investigational oral phosphodiesterase 10A (PDE10A) inhibitor, which is being evaluated for the treatment of schizophrenia.

Under the agreement, Royalty Pharma has no rights to MK-8189 and has no decision-making authority over the program.

If Merck elects to advance MK-8189 into a Phase 3 study, Royalty Pharma has the option to provide additional funding of 50% of the development costs up to $375 million for the Phase 3 trial.

such additional funding is provided, Royalty Pharma becomes eligible to receive future regulatory milestone payments contingent upon certain marketing approvals, as well as royalties.

The charts below reflect the Company’s research pipeline as of February 17, 2023.

• Subcutaneous MK-3475A, the coformulation of pembrolizumab with hyaluronidase, is being evaluated for comparability with the intravenous formulation of pembrolizumab in certain types of NSCLC.

• MK-4280A is the coformulation of favezelimab, Merck’s novel investigational anti-LAG3 therapy, with pembrolizumab, being evaluated for the treatment of colorectal cancer and hematological malignancies.

• MK-7684A is the coformulation of vibostolimab, an anti-TIGIT therapy, with pembrolizumab being evaluated for the treatment of certain types of melanoma, NSCLC and SCLC.

• V940 (mRNA-4157) is an investigational individualized neoantigen therapy being evaluated in combination with Keytruda as an adjuvant treatment in patients with certain types of melanoma in the INTerpath-001 clinical trial.

The FDA and EMA granted Breakthrough Therapy designation and PRIME scheme, respectively, for V940 (mRNA-4157) in combination with Keytruda for the adjuvant treatment of patients with certain stages of high-risk melanoma following complete resection.

V940 (mRNA-4157) is also being evaluated in the Phase 3 INTerpath-002 clinical trial as adjuvant treatment for certain patients with NSCLC.

V940 is being developed as part of a collaboration with Moderna.

Precision molecular targeting

• MK-7339, Lynparza, is an oral PARP inhibitor being developed as part of a collaboration with AstraZeneca PLC.

The Company is currently evaluating Lynparza in combination with pembrolizumab for expanded indications in the therapeutic areas of NSCLC and SCLC.

• MK-7902, Lenvima, is an oral receptor tyrosine kinase inhibitor being evaluated in combination with Keytruda for expanded indications in the therapeutic areas of esophageal and gastric cancers.

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

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• MK-1026, nemtabrutinib, is an 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-3543, bomedemstat, is an investigational orally available lysine-specific demethylase 1 inhibitor, being evaluated for the treatment of certain patients with essential thrombocythemia.

Bomedemstat has FDA Orphan Drug and Fast Track Designation for the treatment of essential thrombocythemia and myelofibrosis, Orphan Drug Designation for the treatment of acute myeloid leukemia and Priority Medicines (PRIME) scheme designation by the EMA for the treatment of myelofibrosis.

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

MK-5684 is being developed as part of a collaboration with Orion Corporation.

Tissue targeting

• MK-2870, is an investigational trophoblast cell-surface antigen 2 (TROP2)-directed ADC, which is being evaluated for certain patients with NSCLC and certain patients with previously treated endometrial carcinoma.

MK-2870 is being developed as part of a collaboration with Kelun-Biotech.

The Company also terminated certain of its Phase 3 oncology development programs.

• The Company has discontinued development of ladiratuzumab vedotin, an ADC targeting LIV-1 which was being developed in collaboration with Seagen Inc.

(now Pfizer).

Additionally, in December 2023, the Company and Pfizer terminated their license and co-development agreement for Tukysa (tucatinib).

• In December 2023, Merck announced it was stopping the Phase 3 KEYLYNK-008 trial evaluating Keytruda in combination with maintenance Lynparza for the treatment of patients with metastatic squamous NSCLC.

Merck discontinued the study based on the recommendation of an independent Data Monitoring Committee, which reviewed data from a planned interim analysis.

At the interim analysis, Keytruda in combination with chemotherapy followed by Keytruda plus Lynparza did not demonstrate an improvement in overall survival, one of the study’s dual primary endpoints, compared to Keytruda in combination with chemotherapy followed by Keytruda plus placebo.

• Also in December 2023, Merck and Eisai announced that the Phase 3 LEAP-001 trial evaluating Keytruda plus Lenvima did not meet its dual primary endpoints of overall survival and progression-free survival for the first-line treatment of patients with advanced or recurrent endometrial carcinoma whose disease is mismatch repair proficient (pMMR)/not microsatellite instability-high (MSI-H) or mismatch repair deficient (dMMR)/MSI-H.

At the final analysis, Keytruda plus Lenvima did not improve overall survival or progression-free survival sufficiently to meet the study’s prespecified statistical criteria versus a standard of care, platinum-based chemotherapy doublet (carboplatin plus paclitaxel).

The companies will work with investigators to share the results with the scientific community.

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

• MK-0616 is an investigational, oral proprotein convertase subtilisin/kexin type 9 (PCSK9) inhibitor being evaluated for hypercholesterolemia.

In 2023, the first participants enrolled in two registrational Phase 3 studies evaluating low-density lipoprotein (LDL) cholesterol reduction and a Phase 3 cardiovascular outcomes study.

• MK-1654, clesrovimab, is a respiratory syncytial virus (RSV) monoclonal antibody that is being evaluated for the prevention of RSV medically attended lower respiratory tract infection in infants and certain children over one year of age.

• MK-7240, tulisokibart, is a humanized monoclonal antibody directed to tumor necrosis factor-like ligand 1A, a target associated with both intestinal inflammation and fibrosis, being evaluated for the treatment of ulcerative colitis.

• MK-8591A is a new doravirine/islatravir once-daily oral combination of doravirine 100 mg and a lower dose of islatravir being evaluated, beginning in 2023, in a Phase 3 program in previously untreated adults and as a switch in antiretroviral therapy in virologically suppressed adults.

MK-8591, islatravir, is an investigational nucleoside reverse transcriptase translocation inhibitor (NRTTI) being evaluated for the treatment of HIV-1 infection.

In December 2021, the FDA placed clinical holds on the islatravir investigational new drug applications based on observations of decreases in total lymphocyte and CD4+ T-cell counts in some participants receiving islatravir in clinical studies.

In 2023, the Phase 2 clinical trial evaluating an oral once-weekly combination of a lower dose of islatravir and Gilead Sciences’ lenacapavir in virologically suppressed adults completed enrollment.

The investigational NDAs for the doravirine/islatravir and the islatravir +

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lenacapavir once-weekly treatment regimens remain under a partial clinical hold for any studies that would use islatravir doses higher than the doses considered for the revised clinical programs.

• 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.

Merck is developing Lagevrio in collaboration with Ridgeback Biotherapeutics LP (Ridgeback).

The FDA granted Emergency Use Authorization for Lagevrio in December 2021, which was last reissued in October 2023.

Lagevrio is authorized for the treatment of adults with a current diagnosis of mild to moderate COVID-19, and who are at high risk for progression to severe COVID-19, including hospitalization or death, and for whom alternative COVID-19 treatment options approved or authorized by the FDA are not accessible or clinically appropriate.

The authorization is based on the Phase 3 MOVe-OUT trial.

Lagevrio is not approved for any use in the U.S.

In November 2021, the EMA issued a positive scientific opinion for Lagevrio , which was intended to support national decision-making on the possible use of Lagevrio prior to marketing authorization.

In October 2021, the EMA initiated a rolling review for Lagevrio for the treatment of COVID-19 in adults.

In February 2023, Merck and Ridgeback announced that the Committee for Medicinal Products for Human Use (CHMP) of the EMA recommended the refusal of the marketing authorization application (MAA) for Lagevrio .

Merck and Ridgeback appealed the decision and requested a re-examination of the MAA.

In June 2023, Merck and Ridgeback announced that they have withdrawn the EU application for marketing authorization of Lagevrio based on the CHMP’s view that the data submitted are not sufficient to satisfy EU regulatory requirements for marketing authorization of Lagevrio .

Applications to other regulatory bodies are under review.

The chart below reflects the Company’s research pipeline as of February 23, 2024.

Candidates shown in Phase 3 include the date such candidate entered into Phase 3 development.

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Except as otherwise noted, candidates in Phase 1, additional indications in the same therapeutic area (other than with respect to cancer) and additional claims, line extensions or formulations for in-line products are not shown.

Non-Small-Cell Lung

MK-1026 (nemtabrutinib)

Hematological Malignancies

MK-1308 (quavonlimab) (2)

1 unchanged sentence

MK-1308A (quavonlimab+pembrolizumab)

Hepatocellular

Small-Cell Lung

MK-2140 (zilovertamab vedotin)

Hematological Malignancies

Non-Small-Cell Lung

MK-2400 (ifinatamab deruxtecan) (1)

Small-Cell Lung

MK-2870 (1)(3)

2 unchanged sentences

Advanced Solid Tumors

MK-3543 (bomedemstat)

Myeloproliferative Disorders

MK-3475A (pembrolizumab+hyaluronidase subcutaneous)

Cutaneous Squamous Cell

MK-4280 (favezelimab) (2)

1 unchanged sentence

MK-4280A (favezelimab+pembrolizumab)

Small-Cell Lung

Non-Small-Cell Lung

Small-Cell Lung

Cutaneous Squamous Cell

MK-5890 (boserolimab) (2)

Non-Small-Cell Lung

Small-Cell Lung

MK-6440 (ladiratuzumab vedotin) (1)(3)

Head and Neck

Non-Small-Cell Lung

Small-Cell Lung

Neoplasm Malignant

MK-6482 Welireg (3)

Hepatocellular

Von Hippel-Lindau Disease-Associated Tumors (EU)

MK-7119 Tukysa (1)

Advanced Solid Tumors

Non-Small-Cell Lung

MK-7339 Lynparza (1)(3)

2 unchanged sentences

Head and Neck

Hematological Malignancies

Hepatocellular

MK-7902 Lenvima (1)(2)

Small-Cell Lung

Head and Neck

Dengue Fever Virus Vaccine

2 unchanged sentences

MK-8591D (islatravir+lenacapavir) (1)(5)

Hypercholesterolemia

HIV-1 Prevention

Nonalcoholic Steatohepatitis (NASH)

MK-6024 (efinopegdutide)

Overgrowth Syndrome

MK-7075 (miransertib)

Pulmonary Arterial Hypertension

2 unchanged sentences

Schizophrenia

Treatment Resistant Depression

Systemic Lupus Erythematosus

Table of C o ntent s

Phase 3 (Phase 3 entry date) Under Review

1 unchanged sentence

MK-4482 Lagevrio (U.S.) (May 2021) (1)(7)

MK-1022 (patritumab deruxtecan) (1)

Non-Small-Cell Lung (May 2022) (EU)

MK-1026 (nemtabrutinib)

Hematological Malignancies (March 2023)

MK-1308A (quavonlimab+pembrolizumab)

Renal Cell (April 2021)

MK-2870 (1)(3)

Endometrial (December 2023)

Non-Small-Cell Lung (November 2023)

MK-3475 Keytruda

Biliary (September 2019)

Cutaneous Squamous Cell (August 2019) (EU)

Gastric (May 2015) (EU)

Hepatocellular (May 2016) (EU)

1 unchanged sentence

Ovarian (December 2018)

Prostate (May 2019)

Small-Cell Lung (May 2017)

MK-3475 (pembrolizumab subcutaneous)

Non-Small-Cell Lung (August 2021)

MK-3475A (pembrolizumab+hyaluronidase subcutaneous)

Non-Small-Cell Lung (February 2023)

MK-3543 (bomedemstat)

Myeloproliferative Disorders

MK-4280A (favezelimab+pembrolizumab)

1 unchanged sentence

Hematological Malignancies (October 2022)

MK-6482 Welireg (3)

Renal Cell (February 2020)

MK-7119 Tukysa (1)

Breast (October 2019)

Colorectal (August 2022)

Prostate (December 2023)

MK-7339 Lynparza (1)(2)

6 unchanged sentences

MK-7902 Lenvima (1)(2)

Colorectal (April 2021)

Esophageal (July 2021)

Gastric (December 2020)

Head and Neck (February 2020)

Melanoma (March 2019)

Non-Small-Cell Lung (March 2019)

Melanoma (July 2023)

Non-Small-Cell Lung (December 2023)

HIV-1 Infection

MK-8591A (doravirine+islatravir) (February 2020) (5)

Hypercholesterolemia

MK-0616 (August 2023)

Pneumococcal Vaccine Adult

V116 (July 2022)

Pulmonary Arterial Hypertension

MK-7962 (sotatercept) (January 2021)

V116 (July 2022) (EU)

Respiratory Syncytial Virus

MK-1654 (clesrovimab) (November 2021)

Ulcerative Colitis

MK-7240 (tulisokibart) (October 2023)

New Molecular Entities

Antiviral COVID-19

MK-4482 Lagevrio (EU) (1)

MK-7264 (gefapixant) (U.S.) (8) (EU)

MK-1022 (patritumab deruxtecan) (1)

Non-Small-Cell Lung (U.S.)

MK-6482 Welireg

Von Hippel-Lindau (VHL) Disease (EU)

MK-7264 (gefapixant) (U.S.) (8)

Pneumococcal Vaccine Adult

Pulmonary Arterial Hypertension

MK-7962 (sotatercept) (U.S.) (EU)

Certain Supplemental Filings

MK-3475 Keytruda

• Second-Line Hepatocellular Cancer

(KEYNOTE-394) (U.S.)

• First-Line Locally Advanced Or Metastatic Urothelial Carcinoma

(KEYNOTE-869) (U.S.)

• Locally Advanced Or Metastatic Merkel Cell Carcinoma

• Primary Advanced or Recurrent Endometrial Carcinoma

(KEYNOTE-868) (U.S.)

• Adjuvant Non-Small-Cell Lung Cancer

(KEYNOTE-091) (EU)

• Relapsed Or Refractory Primary Mediastinal B-Cell Lymphoma

(KEYNOTE-170/KEYNOTE-A33) (JPN)

MK-7339 Lynparza (1)

• First-Line Metastatic Prostate Cancer

(PROpel) (U.S.) (JPN)

• Resectable Stage II, IIIA or IIIB NSCLC

(KEYNOTE-671) (EU) (JPN)

• First-Line Locally Advanced or Metastatic Urothelial Cancer

(KEYNOTE-A39) (EU) (JPN)

• High-Risk Locally Advanced Cervical Cancer

(KEYNOTE-A18) (EU)

• First-Line HER2 Negative Locally Advanced Unresectable or Metastatic Gastric Cancer

(KEYNOTE-859) (JPN)

• First-Line Locally Advanced Unresectable or Metastatic Biliary Tract Cancer

(KEYNOTE-966) (JPN)

MK-6482 Welireg

• Previously Treated Advanced Renal Cell Carcinoma

(LIGHTSPARK-005) (EU)

(1) Being developed in a collaboration.

6 unchanged sentences

under Emergency Use Authorization.

(8) In response to the CRL received from the FDA for this application in January 2022, Merck is performing additional analyses and anticipates submitting this information to the FDA in the first half of 2023.

(8) In December 2023, the FDA issued a CRL for the NDA for gefapixant.

Merck is reviewing the FDA’s feedback to determine next steps.

Human Capital

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The Company provides training to its

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managers and external recruiting organizations on strategies to mitigate unconscious bias in the candidate selection and hiring process.

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In addition to these efforts, the Company has ten Employee Business Resource Groups that provide opportunities for employees to take an active part in contributing to the Company’s inclusive culture through their work in talent acquisition and development, business and customer insights and social and community outreach.

The Company’s diversity goals include increasing representation in senior management roles (defined as an individual holding either a Vice President or Senior Vice President title) by 2024 of (i) women globally to 40%, up from 31% in 2020, (ii) Black/African Americans in the U.S.

to 10%, up from 3% in 2020, and (iii) Hispanics/Latinos in the U.S.

to 10%, up from 5% in 2020.

As of December 31, 2022, representation in senior management roles at the Company for (i) women globally was 34%, (ii) Black/African Americans in the U.S.

was 6%, and (iii) Hispanics/Latinos in the U.S.

In addition, by 2025, the Company seeks to maintain or exceed both its current inclusion index score and its current employee engagement index score based on employee surveys.

Gender and Ethnicity Data (1)

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As self-identified to the Company.

(2) 2020 data has not been restated to adjust for the Organon Spin-Off in 2021.

(2) “Senior management role” is defined as an individual holding either a Vice President or Senior Vice President title.

(4) “Management role” is defined as all managers with direct reports other than individuals holding an Executive Vice President title.

(3) “Management role” is defined as all managers with direct reports.

Compensation and Benefits

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In the U.S., the Company’s benefits rank in the top quartile of Fortune 100 companies under the Aon 2023 Benefits Index.

The Company has been included in the

Seramount (previously the Working Mother) 100 Best Companies ranking for 36 consecutive years and was named a top ten Best Company for Moms in 2022.

The Company has been included in the Seramount (previously the Working Mother) 100 Best Companies ranking for 37 consecutive years and was named a top ten Best Company for Moms in 2023.

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Employee Well-being

The Company is committed to helping its employees and their families improve their own health and well-being, whether physical, mental, financial, or social.

The Company’s programs ensure quality, competitive value, protection from significant financial hardship and access to tools and resources to support employees and their families in all stages of their career and their lives, winning the Company awards such as the Best Employers Excellence in Health & Well-being from the Business Group on Health 2022.

The Company’s programs ensure quality, competitive value, protection from significant financial hardship and access to tools and resources to support employees and their families in all stages of their career and their lives, earning the Company accolades such as the Business Group on Health’s Best Employers Excellence in Health & Well-being and the CEO Roundtable on Cancer’s Global Gold Standard Employer accreditation in 2023.

The Company fosters an array of flexible work arrangements that includes flextime, summer hours, remote work, telework, job sharing and part-time work to help employees succeed personally as well as professionally.

As part of the Company’s overall culture of well-being, it also offers onsite services so employees can thrive.

For example, in the U.S., these include onsite health care professionals at many major sites, cafeterias committed to healthy menu offerings, onsite childcare, onsite gyms, and the convenient option to bank through its two employee credit unions.

COVID-19 Response

The Company recognizes that it has a unique responsibility to help in response to the COVID-19 pandemic and is committed to supporting and protecting its employees and their families, ensuring that its supply of medicines and vaccines reaches its patients, contributing its scientific expertise to the development of antiviral approaches and supporting its health care providers and the communities in which they serve.

The Company continues to provide employees with easy and regular access to information, including guidance around hygiene measures and travel and how to best collaborate via the Company’s hybrid work model.

Examples of pandemic support resources and programs available to the Company’s employees include pay continuation for workers who have been sick or exposed, an updated policy that enables employees with medical backgrounds to volunteer in SARS-CoV-2-related activities, resources to prioritize physical and mental wellness, adjustments to medical plans to cover 100% of a COVID-19-related diagnosis, testing and treatment, childcare resources and more.

Engaging Employees

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Environmental Sustainability

The Company strives to be a strong environmental steward, and realizes that its strategy and efforts need to continuously evolve in the face of a changing climate.

The Company is committed to enabling a safe, sustainable and healthy future and strives to be a strong environmental steward, evolving its efforts in the face of a changing world.

The Company’s environmental sustainability strategy has three focus areas:

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• Reducing any impacts in the Company’s upstream and downstream value chain.

A primary focus of the Company in each of these areas is on climate action.

The Company ensures its ongoing commitment to these areas through thoughtful governance.

The Company’s efforts in this area are overseen by its Environmental Health and Safety (EHS) Council.

The Company’s EHS Council is a cross-functional body with leadership representation from each area of the Company’s business including top-level executives.

The EHS Council provides enterprise leadership and sponsorship for the Company’s environmental sustainability strategy, monitors progress towards the Company’s public targets and influences decisions for environmental sustainability strategy implementation, while increasing visibility and transparency internally to the business, executive team and the Board of Directors.

In addition, the Company’s Environmental Sustainability Implementation Steering Committee, also comprising top-level executives, oversees progress of initiatives at the enterprise level and provides support and guidance on the implementation plans and resourcing of the Company’s environmental sustainability strategy globally.

This steering committee is informed by leaders from the Environmental Sustainability Center of Excellence (CoE), Global Energy & Sustainability CoE and Energy Procurement CoE, who develop the Company’s goals in alignment with stakeholder expectations, track their progress, and develop and provide continuous improvement on plans to achieve and sustain the Company’s public commitments.

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Merck believes that climate change could present risks to its business, as discussed in further detail in Item 1A.

“Risk Factors” under the

headings “Climate change or legal, regulatory or market measures to address climate change may negatively affect the Company’s business, results of operations, cash flows and prospects” and “Environmental, social and governance (ESG) matters may impact the Company’s business and reputation.” Some of the potential impacts of climate change to the Company’s business include increased operating costs due to additional regulatory requirements, physical risks to the Company’s facilities, water limitations and disruptions to its supply chain.

“Risk Factors” below under the headings “Climate change or legal, regulatory or market measures to address climate change may negatively affect the Company’s business, results of operations, cash flows and prospects” and “Environmental, social and governance (ESG) matters may impact the Company’s business and reputation.” Some of the potential impacts of climate change to the Company’s business include increased operating costs due to additional regulatory requirements, physical risks to the Company’s facilities, water limitations and disruptions to its supply chain.

These potential risks are integrated into the Company’s business planning, including investment in reducing energy usage, water use and greenhouse gas emissions.

In 2021, the Company’s Scope 1, 2 and 3, reduction targets were verified by the Science-Based Targets initiative (SBTi).

The Company has made progress toward its climate goals and aspires to meet and exceed the evolving expectations of its stakeholders and employees.

These goals include achieving carbon neutrality for greenhouse gas emissions across operations (Scopes 1 and 2) by 2025, reducing Scope 1 and 2 operational greenhouse gas emissions 46% by 2030 (from a 2019 baseline), reducing Scope 3 greenhouse gas emissions by 30% by 2030 (from a 2019 baseline), and sourcing 100% of its purchased electricity from renewables by 2025.

The Company has adopted a set of climate goals to help position it to succeed in an increasingly resource-constrained world.

These goals were developed to align with the latest climate science and address the rising expectations of the Company’s customers, investors, external stakeholders and employees regarding the environmental impact of its operations and supply chain.

The Company’s climate goals include reducing Scope 1 and 2 operational greenhouse gas emissions 46% by 2030 (from a 2019 baseline), achieving carbon neutrality for Scope 1 and 2 greenhouse emissions across operations by 2025, sourcing 100% of its purchased electricity from renewable sources by 2025, and reducing Scope 3 greenhouse gas emissions 30% by 2030 (from a 2019 baseline).

The Company has also committed to the Science-Based Targets initiative (SBTi) to set a net-zero target for its greenhouse gas emissions across its global operations (Scopes 1, 2, and 3).

Other environmental sustainability initiatives of the Company include:

• Low Carbon Transition Playbook .

In 2021, the Company launched its Low Carbon Transition Playbook, a tool intended to help create a site strategy by identifying gaps, uncovering opportunities and creating a common platform for assessment of levers and resource deployment across a range of sustainability initiatives.

It also details how employees and stakeholders can accelerate the Company’s environmental work, along with explanations of the collective benefits of these actions for the business and for stakeholders.

Functions across the Company are expected to take advantage of this document to strategize and develop new ways to meet many of the Company’s broader sustainability goals and streamline the Company’s tracking and reporting of specific metrics and categories.

• Waste Diversion Playbook .

In 2022, the Company created its Waste Diversion Playbook, which is a tool, similar to the Low Carbon Transition Playbook, to help sites self-assess and develop their waste diversion strategies to achieve the Company’s corporate waste goals.

The objectives are to identify and prioritize the most effective and least resource intensive actions, improve tracking and reporting and generate knowledge sharing between sites.

• Playbooks for a sustainable environment.

The Company’s local sites are crucial to achieving its ambitious environmental sustainability goals, and the Company continues to launch tools to assist them, particularly for its climate and waste targets.

In 2021, the Company launched its Low Carbon Transition Playbook (LCTP), a common platform that includes a gap assessment to help the Company’s global sites evaluate the maturity of their energy programs and help create short- and long-term plans to reduce sites’ carbon intensity and build toward a low-carbon future.

Based on learnings from use, the Company issued LCTP 2.0 in 2022 with a capability to facilitate knowledge sharing across sites.

In 2022, the Company also created the Waste Diversion Playbook, which takes a similar approach to guide sites on developing a roadmap to their and the Company’s shared 2025 goals on waste diversion, including local waste-diversion strategies and environmentally responsible procurement practices.

These tools aid in the reporting and tracking of projects that support achievements towards meeting the Company’s corporate targets.

• Realizing the benefits of green and sustainable science .

The Company believes that meeting its environmental sustainability goals is intrinsically linked to the creation of innovative, cost-efficient manufacturing processes with low environmental impact.

The Company aims to develop efficient and sustainable processes at product launch, with the goal of minimizing material use and waste from its commercial manufacturing.

The Company utilizes an innovative “green-by-design” development strategy with a goal to progress from an initial early clinical supply route to a fully optimized and sustainable commercial manufacturing process.

In 2023, for the fourth year in a row, the Company received the Peter J.

Dunn Award for Green Chemistry and Engineering Impact, an award given by the American Chemical Society in recognition of outstanding implementation of novel green chemistry in the pharmaceutical industry.

• Partnering for progress across the Company’s value chain.

The Company is a signatory to Schneider Electric’s Energize program, a pioneering collaboration to help pharmaceutical and health care suppliers address their own operational Scope 2 greenhouse gas emissions through green power procurement, which in turn is intended to help the signatories reduce their Scope 3 emissions.

• Product stewardship and green and sustainable science.

The Company’s product stewardship program focuses on identifying and either preventing or minimizing potential safety and environmental hazards throughout a product’s life cycle.

The Company is also committed to understanding, managing and reducing the environmental impacts of its products and the materials associated with discovering and producing them.

The Company’s green and sustainable science program uses a “green-by-design” approach.

By using more efficient and innovative processing methods and technologies, the Company is reducing the amount of energy, water and raw materials the Company uses to make the Company’s products, thereby reducing the amount of waste the Company generates and lowering the Company’s production costs.

The Company is engaging with its strategic suppliers to identify ways to reduce greenhouse gas emissions in its supply chain.

• Waste diversion .

The Company continuously evaluates its sites’ waste disposal methods to gain a better understanding of its network and changes therein, as well as to identify risks and opportunities in its value chain.

Based on its evaluation, the Company implemented programs to divert non-hazardous landfill waste from its two highest landfill-generating sites.

The Company remains committed to its 2025 public waste diversion goals of no more than 20% of the Company’s global operational waste sent to landfills or incinerators (without energy recovery) and that 50% of its sites will send zero waste to landfills by 2025.

• Water as a shared resource.

As water is a key input to the Company’s manufacturing operations, the Company assesses water risk throughout its network as a standard business practice.

Both of the Company’s priority water-stress risk sites have conservation plans in place and are actively working on water use reduction and recycling improvement projects.

These projects are consistent with the Company’s ongoing commitment to achieving its stated target of maintaining global water use at or below 2015 levels by 2025.

The Company’s sites are employing various technologies and techniques aimed at reducing its water footprint and improving operational performance.

The Company’s

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continued endorsement of the United Nations CEO Water Mandate enables continued alignment of the Company’s water program with the mandate’s principles directly in the Company’s operations.

The Company has continued to identify partnerships to help it advance its water stewardship priorities in the areas in which it operates.

The Company continues to review and explore other opportunities to further its environmental strategy and will evaluate potential impacts and commitments.

Management does not believe that expenditures related to these initiatives should have a material adverse effect on the Company’s financial condition, results of operations, liquidity or capital resources for any year.

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Although it is not possible to predict with certainty the outcome of these matters, or the ultimate costs of remediation, management does not believe that any reasonably possible expenditures that may be incurred in excess of the liabilities accrued should exceed approximately $40 million in the aggregate.

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

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.

Geographic Area Information

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Sales worldwide by subsidiaries outside the U.S.

as a percentage of total Company sales was 54% in both 2022 and 2021 and 53% in 2020.

as a percentage of total Company sales was 53% in 2023 and 54% in both 2022 and 2021.

The Company’s worldwide business is subject to risks of currency fluctuations, governmental actions and other governmental proceedings abroad.

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In addition, the Company will provide without charge a copy of its Annual Report on Form 10-K, including financial statements and schedules, upon the written request of any shareholder to the Office of the Secretary, Merck & Co., Inc., 126 East Lincoln Avenue, Rahway, NJ 07065 U.S.A.

The Company’s corporate governance guidelines and the charters of the Board of Directors’ four standing committees are available on the Company’s website at https://www.merck.com/company-overview/leadership/board-of-directors/ and all such information is available in print to any shareholder who requests it from the Company.

The Company’s 2021/2022 Environmental, Social & Governance (ESG) Progress Report, which provides enhanced ESG disclosures, is available on the Company’s website at https://www.merck.com/company-overview/esg/esg-resources/.

Information in the Company’s ESG Progress Report is not incorporated by reference into this Form 10-K.

The Company’s corporate governance guidelines and the charters of the Board of Directors’ four standing committees are available on the Company’s website at www.merck.com/company-overview/leadership/board-of-directors/ and all such information is available in print to any shareholder who requests it from the Company.

The Company’s 2022/2023 Impact Report, which provides enhanced ESG disclosures, is available on the Company’s website at www.merck.com/company-overview/esg/esg-resources/.

Information in the Company’s Impact Report is not incorporated by reference into this Form 10-K.

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 1. Business