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How Merck Performed in 2Q17

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Merck’s revenue trends

In 2Q17, Merck (MRK) generated revenues of ~$9.9 billion, which reflected ~1% growth on a year-over-year (or YoY) basis and 5% growth on a quarter-over-quarter basis. In 2Q17, Merck’s Pharmaceutical segment generated revenues of ~$8.8 billion, which reflects ~1% growth on a YoY basis. Keytruda, Zepatier, and Bridion primarily contributed to Merck’s revenue growth in 2Q17.

In 2Q17, Merck reported GAAP[1. generally accepted accounting principles] net income attributable to the company of ~$1.9 billion compared to ~$1.6 billion in 1Q17. In 2Q17, Merck reported GAAP[1. generally accepted accounting practices] earnings per share (or EPS) of $0.71 compared to $0.56 in 1Q17.

The graph above characterizes the revenue trends of Merck from 1Q16 to 2Q17 and analysts’ estimates for 3Q17 and 4Q17. To learn more about Merck’s revenue prospects, please refer to How Merck Is Expected to Perform in 2017.

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Geographical revenue trends

In 1H17, Merck reported revenues of around $19.3 billion, which is an ~1% decline on a YoY basis. In 2Q17, in the US market, Merck generated revenues of ~$3.9 billion, which reflected an ~6% decline YoY and ~4% growth quarter-over-quarter.

In 2Q17, the US market contributed ~44.9% to Merck’s net revenues. In the Europe, Japan, and Asia-Pacific markets, Merck generated 2Q17 revenues of ~$2.1 billion, $818.0 million, and $946.0 million, respectively, in these markets. These revenues reflected ~4%, ~22%, and ~6% growth, respectively, on a YoY basis.

2Q17 expenses

In 2Q17, Merck (MRK) reported the cost of materials and production of ~$3.1 billion compared to $3.6 billion in 2Q16. In 2Q17, Merck reported marketing and administrative expenses of ~$2.4 billion and research and development expenses of around $1.7 billion.

Merck’s peers in the pharmaceuticals sector include Johnson & Johnson (JNJ), Novartis (NVS), Pfizer (PFE), GlaxoSmithKline, Bristol-Myers Squibb, AbbVie, and Amgen. Merck’s revenue growth could boost the Vanguard S&P 500 ETF (VOO). Merck comprises ~1.3% of VOO’s total portfolio holdings.

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