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MRK - Merck & Co Inc
$111.07
-1.23(-1.10%)8:00:58 PM 5/26/2023
Merck & Co., Inc., d.b.a. Merck Sharp & Dohme outside the United States and Canada, is an American multinational pharmaceutical company and one of the largest pharmaceutical companies in the world. Merck is incorporated in New Jersey. In 1887 a German-born, long-time Merck employee, Theodore Weicker, went to the United States to represent the Darmstadt firm. In 1891, with a capital of $200,000 received from E. Merck, Weicker started the American Merck & Co, with headquarters in lower Manhattan. That year George Merck, the twenty-three-year- old son of the then head of E. Merck joined Weicker in New York. The company was established as the United States subsidiary of the German company Merck, which was founded in 1668 by the Merck family. Merck & Co. was expropriated by the US government during World War I and subsequently established as an independent American company in 1917. While it operates as Merck & Co. in the United States and Canada, the original Merck based in Darmstadt holds the rights to the Merck name everywhere else. Merck & Co. is the world's seventh largest pharmaceutical company by market capitalization and revenue. Its headquarters is located in Kenilworth, New Jersey. The company ranked No. 78 in the 2018 Fortune 500 list of the largest United States corporations by total revenue.

Financials

Quarterly financials
(USD)Mar 2023Q/Q
Revenue14.5B+5%
Gross Profit10.6B-
Cost Of Revenue3.9B+1%
Operating Income3.6B+4%
Operating Expenses6.9B-
Net Income2.8B-6%
R&D4.3B+13%
G&A2.5B-8%
Interest Expense242MM+3%

Revenue Breakdowns

The revenue breakdowns above are extracted from this specific SEC Edgar 10-K filling, with report date as 2022-12-31 and filed on 2023-02-24. The process is fully automated and without human validation. Although we make every effort getting the relevant information, please be advised that We make no representation or warranties of any kind about completeness, accuracy, reliability, suitability or availability of the information exacted from Edgar 10-K/10-Q filings.

Highlights of Management Discussion and Risk Factors in 10-K/10-Q filling

Positive
1.
With its long-standing emphasis on research and development, the Company is well-positioned to compete in the search for technological innovations.
2.
Although no one can predict the effect of these and other factors on the Company’s business, the Company continually takes measures to evaluate, adapt and improve the organization and its business practices to better meet customer needs and believes that it is well-positioned to respond to the evolving health care environment and market forces.
3.
Health plans and pharmacy benefit managers (PBMs) have been consolidating into fewer, larger entities, thus enhancing their purchasing strength and importance.
4.
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.
5.
The Company is committed to ensuring a reliable, safe global supply of its quality medicines and vaccines, and to developing, testing and implementing innovative solutions that address barriers to access and affordability of its medicines and vaccines.
6.
The Company believes that it will continue to be able to conduct its operations, including launching new drugs, in this regulatory environment.
7.
The Company also recognizes that, in collaboration with key stakeholders, it has a role to play in helping to ensure that its science advances health care, and its products are accessible and affordable.
8.
This has led to a significant increase in the number of new products being approved each year.
9.
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.
10.
The FDA has also undertaken efforts to bring generic competition to market more efficiently and in a more timely manner.
11.
Since 2017, there have been multiple new policies introduced by the government to improve access to new innovation, reduce the complexity of regulatory filings, and accelerate the review and approval process.
12.
Globally, Merck has made substantial contributions to access to health through key initiatives, including product donations for humanitarian assistance in low-income countries through the Medical Outreach Program.
13.
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.
Negative
1.
The Company anticipates all of these actions and additional actions in the future will continue to negatively affect sales and profits.
2.
In addition, the Company’s sales performance in 2022 was negatively affected by other cost-reduction measures taken by governments and other third parties to lower health care costs.
3.
Changes to the U.S. health care system as part of health care reform enacted in prior years, as well as increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid, and private sector beneficiaries, have contributed to pricing pressure.
4.
The Company anticipates that pricing pressures and market access challenges will continue in the future to varying degrees in the emerging markets.
5.
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.
6.
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.
7.
While pricing pressure has always existed in China, health care reform has increased this pressure in part due to the acceleration of generic substitution through volume based procurement (VBP).
8.
The Company faces competitive pricing pressure resulting from generic and biosimilar drugs.
9.
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.The Company also faces increasing pricing pressure in the states, which are looking to exert greater influence over the price of prescription drugs.
10.
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.
11.
Operating conditions have become more challenging under the global pressures of competition, industry regulation and cost containment efforts.
12.
Health Care Environment and Government RegulationGlobal efforts toward health care cost containment continue to exert pressure on product pricing and market access.
13.
Governments in many emerging markets are also focused on constraining health care costs and have enacted price controls and measures impacting intellectual property, including in exceptional cases, threats of compulsory licenses, that aim to put pressure on the price of innovative pharmaceuticals or result in constrained market access to innovative medicine.
14.
The Company’s operations may be adversely affected by generic and biosimilar competition as the Company’s products mature, as well as technological advances of competitors, industry consolidation, patents granted to competitors, competitive combination products, new products of competitors, the generic availability of competitors’ branded products, and new information from clinical trials of marketed products or post-marketing surveillance.
15.
An adverse result in a patent dispute can preclude commercialization of products or negatively affect sales of existing products and could result in the payment of royalties or in the recognition of an impairment charge with respect to intangible assets associated with certain products.
16.
Non-compliance with post-authorization conditions, pharmacovigilance and other obligations can lead to regulatory action, including the variation, suspension or withdrawal of the marketing authorizations, or other enforcement or regulatory actions, including the imposition of financial penalties.
17.
A negative HTA of one of the Company’s products may mean that the product is not reimbursable or may force the Company to reduce its reimbursement price or offer discounts or rebates.
18.
In some EU Member States, cross-border imports from low-priced markets also exert competitive pressure that may reduce pricing within an EU Member State.
19.
As the U.S. payor market concentrates further, the Company may face greater pricing pressure from private third-party payors.
20.
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.
21.
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.
22.
In 2022, the Company’s gross U.S. sales were reduced by 39.7% as a result of rebates, discounts and returns.
23.
There has been increased attention to privacy and data protection issues in both developed and emerging markets with the potential to affect directly the Company’s business, including the EU General Data Protection Regulation (GDPR), which imposes penalties of up to 4% of global revenue.
24.
A negative HTA by a leading and recognized HTA body could also undermine the Company’s ability to obtain reimbursement for the relevant product outside a jurisdiction.
25.
The uncertainty regarding the interplay between 10Table of Contentsdifferent regulatory frameworks further adds to the complexity that the Company faces with regard to data protection regulation.
The management discussion contents above are extracted from this specific SEC Edgar 10-K filling, with report date as 2022-12-31 and filed on 2023-02-24. The process is fully automated and without human validation. Although we make every effort getting the relevant information, please be advised that We make no representation or warranties of any kind about completeness, accuracy, reliability, suitability or availability of the information exacted from Edgar 10-K/10-Q filings.
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