Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Merck & Co. Inc., profitability ratios
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Gross Profit Margin
- The gross profit margin demonstrates an overall upward trend from 67.74% in 2020 to 76.32% in 2024. Initially rising significantly to 72.02% in 2021, it slightly dipped to 70.63% in 2022 before recovering to 73.17% in 2023 and reaching its highest level in 2024. This suggests sustained improvement in cost management or pricing power over the period.
- Operating Profit Margin
- The operating profit margin exhibits considerable volatility. It increased markedly from 16.47% in 2020 to 30.27% in 2022, with a peak of 25.74% in 2021. However, in 2023, there was a sharp decline to 3.92%, indicating a significant drop in operational efficiency or increased expenses. The margin rebounded strongly in 2024 to 31.03%, surpassing previous years and indicating a recovery in operational performance.
- Net Profit Margin
- The net profit margin closely mirrors the operating profit margin trend. It rose from 14.72% in 2020 to a high of 26.79% in 2021, followed by a slight decrease to 24.49% in 2022. The margin almost collapsed to 0.61% in 2023, reflecting a year of notably diminished profitability. By 2024, the margin recovered substantially to 26.68%, returning to levels comparable to earlier years.
- Return on Equity (ROE)
- Return on equity shows a generally strong upward trend with fluctuations. Beginning at 27.91% in 2020, ROE increased to 34.17% in 2021, then moderated slightly to 31.57% in 2022. A significant contraction to 0.97% occurred in 2023, indicating a collapse in equity returns. The ROE then surged to 36.96% in 2024, reaching its highest level in the five-year span and signaling improved efficiency in generating returns from shareholders' equity.
- Return on Assets (ROA)
- The return on assets also follows the pattern of increase followed by a temporary sharp decline and subsequent recovery. ROA grew from 7.72% in 2020 to 13.3% in 2022, dipping to a minimal 0.34% in 2023. In 2024, ROA rebounded strongly to 14.62%, the highest in the dataset, reflecting enhanced asset utilization after a period of underperformance.
Return on Sales
Return on Investment
Gross Profit Margin
Merck & Co. Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | 48,975) | 43,989) | 41,872) | 35,078) | 32,509) | |
| Sales | 64,168) | 60,115) | 59,283) | 48,704) | 47,994) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 76.32% | 73.17% | 70.63% | 72.02% | 67.74% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| AbbVie Inc. | 69.99% | 62.42% | 70.00% | 68.96% | 66.41% | |
| Amgen Inc. | 59.85% | 68.60% | 74.17% | 73.44% | 74.59% | |
| Bristol-Myers Squibb Co. | 71.08% | 76.24% | 78.04% | 78.57% | 72.31% | |
| Danaher Corp. | 59.50% | 58.74% | 60.21% | 60.95% | 55.98% | |
| Eli Lilly & Co. | 81.31% | 79.25% | 76.77% | 74.18% | 77.66% | |
| Gilead Sciences Inc. | 78.15% | 75.87% | 79.03% | 75.56% | 81.23% | |
| Johnson & Johnson | 69.07% | 68.82% | 67.26% | 68.16% | 65.58% | |
| Pfizer Inc. | 71.94% | 58.10% | 66.05% | 62.48% | 79.63% | |
| Regeneron Pharmaceuticals Inc. | 86.13% | 86.16% | 87.18% | 84.83% | 86.82% | |
| Thermo Fisher Scientific Inc. | 41.28% | 39.90% | 42.24% | 50.08% | 49.67% | |
| Vertex Pharmaceuticals Inc. | 86.11% | 87.21% | 87.90% | 88.06% | 88.14% | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Sales
= 100 × 48,975 ÷ 64,168 = 76.32%
2 Click competitor name to see calculations.
- Gross Profit Trend
- Gross profit has demonstrated consistent growth over the observed period. Beginning at 32,509 million US dollars in 2020, it rose to 48,975 million US dollars by 2024, reflecting a strong upward trajectory each year.
- Sales Trend
- Sales figures also show steady expansion, increasing from 47,994 million US dollars in 2020 to 64,168 million US dollars in 2024. The most notable jump occurred between 2021 and 2022, where sales increased significantly by approximately 10,579 million US dollars.
- Gross Profit Margin Analysis
- The gross profit margin, expressed as a percentage, exhibits an overall upward trend, moving from 67.74% in 2020 to 76.32% in 2024. This improvement suggests enhanced profitability per unit of sales, with some fluctuation observed in 2022 when it dipped slightly from 72.02% to 70.63% but then resumed its increase in subsequent years.
- Insights
- The consistent rise in both sales and gross profit alongside the improving gross profit margin indicates effective cost management and possibly successful pricing strategies. The slight dip in the margin in 2022 could reflect temporary increased costs or pricing pressures that were subsequently addressed. Overall, the financial data presents a positive outlook with elevated profitability and growing revenue streams.
Operating Profit Margin
Merck & Co. Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 19,912) | 2,355) | 17,945) | 12,538) | 7,905) | |
| Sales | 64,168) | 60,115) | 59,283) | 48,704) | 47,994) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 31.03% | 3.92% | 30.27% | 25.74% | 16.47% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| AbbVie Inc. | 16.22% | 23.49% | 31.21% | 31.89% | 24.81% | |
| Amgen Inc. | 22.66% | 29.35% | 38.57% | 31.44% | 37.70% | |
| Bristol-Myers Squibb Co. | -15.50% | 16.18% | 17.96% | 15.91% | -21.60% | |
| Danaher Corp. | 20.37% | 21.77% | 27.61% | 25.35% | 18.99% | |
| Eli Lilly & Co. | 28.64% | 18.92% | 24.97% | 22.45% | 24.69% | |
| Gilead Sciences Inc. | 5.81% | 28.24% | 27.17% | 36.72% | 16.72% | |
| Johnson & Johnson | 23.42% | 24.90% | 24.63% | 24.95% | 23.60% | |
| Pfizer Inc. | 19.51% | 2.15% | 35.37% | 24.70% | 20.92% | |
| Regeneron Pharmaceuticals Inc. | 28.10% | 30.85% | 38.93% | 55.67% | 42.09% | |
| Thermo Fisher Scientific Inc. | 17.11% | 16.00% | 18.69% | 25.57% | 24.19% | |
| Vertex Pharmaceuticals Inc. | -2.11% | 38.83% | 48.23% | 36.73% | 46.03% | |
| Operating Profit Margin, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 17.84% | 18.01% | 28.59% | 26.98% | 18.87% | |
| Operating Profit Margin, Industry | ||||||
| Health Care | 10.05% | 10.60% | 15.03% | 14.99% | 11.62% | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Operating profit margin = 100 × Operating income ÷ Sales
= 100 × 19,912 ÷ 64,168 = 31.03%
2 Click competitor name to see calculations.
- Operating Income
- Operating income demonstrated a predominantly upward trend from 2020 to 2024, beginning at 7,905 million USD in 2020 and increasing to 19,912 million USD by 2024. Notable growth occurred in 2021 and 2022, with operating income rising substantially each year. However, there was a significant decline in 2023, where operating income dropped sharply to 2,355 million USD, before rebounding strongly in 2024.
- Sales
- Sales consistently increased over the analyzed periods, starting at 47,994 million USD in 2020 and reaching 64,168 million USD in 2024. The growth was steady year over year, with no periods of decline, indicating a stable increase in revenue generation capacity.
- Operating Profit Margin
- The operating profit margin followed a generally positive trajectory, rising from 16.47% in 2020 to 31.03% in 2024. This indicates an improvement in operational efficiency and profitability. However, a distinct anomaly is observed in 2023 when the margin plummeted drastically to 3.92%, aligning with the significant drop in operating income during the same period. This sharp decline suggests extraordinary challenges or costs impacting profitability in that year, which were subsequently resolved or mitigated by 2024.
Net Profit Margin
Merck & Co. Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Merck & Co., Inc. | 17,117) | 365) | 14,519) | 13,049) | 7,067) | |
| Sales | 64,168) | 60,115) | 59,283) | 48,704) | 47,994) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 26.68% | 0.61% | 24.49% | 26.79% | 14.72% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| AbbVie Inc. | 7.59% | 8.95% | 20.39% | 20.54% | 10.08% | |
| Amgen Inc. | 12.77% | 24.96% | 26.42% | 24.25% | 29.97% | |
| Bristol-Myers Squibb Co. | -18.53% | 17.83% | 13.71% | 15.08% | -21.20% | |
| Danaher Corp. | 16.33% | 19.94% | 22.91% | 21.84% | 16.36% | |
| Eli Lilly & Co. | 23.51% | 15.36% | 21.88% | 19.71% | 25.24% | |
| Gilead Sciences Inc. | 1.68% | 21.03% | 17.02% | 23.05% | 0.51% | |
| Johnson & Johnson | 15.84% | 41.28% | 18.90% | 22.26% | 17.82% | |
| Pfizer Inc. | 12.62% | 3.56% | 31.01% | 26.76% | 22.53% | |
| Regeneron Pharmaceuticals Inc. | 31.07% | 30.14% | 35.64% | 50.25% | 41.35% | |
| Thermo Fisher Scientific Inc. | 14.77% | 13.99% | 15.47% | 19.70% | 19.79% | |
| Vertex Pharmaceuticals Inc. | -4.86% | 36.68% | 37.20% | 30.92% | 43.70% | |
| Net Profit Margin, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 12.30% | 17.95% | 22.55% | 23.38% | 14.07% | |
| Net Profit Margin, Industry | ||||||
| Health Care | 7.02% | 9.24% | 11.62% | 12.42% | 8.45% | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Net profit margin = 100 × Net income attributable to Merck & Co., Inc. ÷ Sales
= 100 × 17,117 ÷ 64,168 = 26.68%
2 Click competitor name to see calculations.
- Sales Trends
- Sales exhibited a positive growth trend over the period analyzed, increasing from approximately $47.99 billion in 2020 to $64.17 billion in 2024. There was a noticeable acceleration in sales between 2021 and 2022, followed by continued, though more moderate, growth in subsequent years.
- Net Income Trends
- Net income showed significant fluctuations across the years. The figure rose substantially from about $7.07 billion in 2020 to a peak of approximately $14.52 billion in 2022. However, there was a sharp decline in 2023 to $365 million, followed by a recovery to $17.12 billion in 2024, indicating possible extraordinary events or one-time charges impacting the 2023 result.
- Net Profit Margin Trends
- The net profit margin mirrored the volatility observed in net income. After nearly doubling from 14.72% in 2020 to 26.79% in 2021, it slightly decreased to 24.49% in 2022. There was a dramatic drop in 2023 to 0.61%, which corresponds with the decline in net income, before rebounding strongly to 26.68% in 2024. This pattern suggests variability in profitability relative to sales, likely influenced by factors affecting earnings in 2023.
- Overall Insight
- The data reveals a generally upward trajectory in sales accompanied by significant volatility in profitability during the period under review. The sharp profit contraction in 2023, in contrast to other years, is a notable anomaly that significantly influences net income and margin metrics. Apart from this year, profitability has remained robust, sustaining net profit margins above 24% in multiple years, indicative of strong operational performance or pricing power. The recovery in 2024 suggests that the 2023 downturn was likely an isolated event rather than a continuing trend.
Return on Equity (ROE)
Merck & Co. Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Merck & Co., Inc. | 17,117) | 365) | 14,519) | 13,049) | 7,067) | |
| Total Merck & Co., Inc. stockholders’ equity | 46,313) | 37,581) | 45,991) | 38,184) | 25,317) | |
| Profitability Ratio | ||||||
| ROE1 | 36.96% | 0.97% | 31.57% | 34.17% | 27.91% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| AbbVie Inc. | 128.66% | 46.94% | 68.60% | 74.91% | 35.30% | |
| Amgen Inc. | 69.59% | 107.78% | 178.97% | 87.96% | 77.20% | |
| Bristol-Myers Squibb Co. | -54.78% | 27.27% | 20.37% | 19.46% | -23.84% | |
| Danaher Corp. | 7.87% | 8.91% | 14.39% | 14.24% | 9.17% | |
| Eli Lilly & Co. | 74.62% | 48.65% | 58.64% | 62.16% | 109.79% | |
| Gilead Sciences Inc. | 2.48% | 24.81% | 21.62% | 29.55% | 0.68% | |
| Johnson & Johnson | 19.68% | 51.11% | 23.36% | 28.20% | 23.25% | |
| Pfizer Inc. | 9.11% | 2.38% | 32.79% | 28.47% | 15.21% | |
| Regeneron Pharmaceuticals Inc. | 15.03% | 15.22% | 19.14% | 43.03% | 31.86% | |
| Thermo Fisher Scientific Inc. | 12.78% | 12.83% | 15.80% | 18.94% | 18.47% | |
| Vertex Pharmaceuticals Inc. | -3.26% | 20.59% | 23.88% | 23.19% | 31.22% | |
| ROE, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 15.57% | 20.65% | 27.99% | 29.75% | 17.22% | |
| ROE, Industry | ||||||
| Health Care | 14.75% | 18.50% | 22.94% | 23.78% | 15.95% | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROE = 100 × Net income attributable to Merck & Co., Inc. ÷ Total Merck & Co., Inc. stockholders’ equity
= 100 × 17,117 ÷ 46,313 = 36.96%
2 Click competitor name to see calculations.
- Net Income Attributable to Merck & Co., Inc.
- The net income showed substantial variation over the five-year period. There was a significant increase from 7,067 million US dollars in 2020 to 13,049 million in 2021, continuing to rise to 14,519 million in 2022. However, in 2023, net income dropped drastically to 365 million, representing a sharp decline. Subsequently, in 2024, net income recovered strongly to reach 17,117 million US dollars, the highest value in the dataset.
- Total Stockholders’ Equity
- The total stockholders’ equity followed an overall upward trend with some fluctuations. It increased from 25,317 million US dollars in 2020 to 38,184 million in 2021, and further to 45,991 million in 2022. In 2023, equity decreased notably to 37,581 million, before rising again to 46,313 million in 2024, reaching a new peak.
- Return on Equity (ROE)
- The ROE indicated strong profitability for most years, starting at 27.91% in 2020, increasing to 34.17% in 2021, and slightly declining to 31.57% in 2022. In 2023, ROE drastically fell to 0.97%, mirroring the sharp decline in net income that year. In 2024, ROE rebounded significantly, achieving 36.96%, the highest rate observed in the five-year span.
- Summary of Trends and Insights
- Overall, the financial data reveal a pattern of growth in profitability and equity through 2022, interrupted by a marked downturn in 2023, followed by a robust recovery in 2024. The simultaneous decrease in net income, equity, and ROE in 2023 suggests that the company faced significant challenges during this year. The strong rebound in 2024 indicates an effective recovery, with net income and ROE surpassing previous highs, supported by an increase in equity levels. This pattern of volatility highlights potential vulnerabilities but also resilience in the company’s financial performance.
Return on Assets (ROA)
Merck & Co. Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Merck & Co., Inc. | 17,117) | 365) | 14,519) | 13,049) | 7,067) | |
| Total assets | 117,106) | 106,675) | 109,160) | 105,694) | 91,588) | |
| Profitability Ratio | ||||||
| ROA1 | 14.62% | 0.34% | 13.30% | 12.35% | 7.72% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| AbbVie Inc. | 3.17% | 3.61% | 8.53% | 7.88% | 3.07% | |
| Amgen Inc. | 4.45% | 6.91% | 10.06% | 9.63% | 11.54% | |
| Bristol-Myers Squibb Co. | -9.66% | 8.43% | 6.53% | 6.40% | -7.61% | |
| Danaher Corp. | 5.03% | 5.64% | 8.55% | 7.73% | 4.79% | |
| Eli Lilly & Co. | 13.45% | 8.19% | 12.62% | 11.44% | 13.28% | |
| Gilead Sciences Inc. | 0.81% | 9.12% | 7.27% | 9.16% | 0.18% | |
| Johnson & Johnson | 7.81% | 20.98% | 9.57% | 11.47% | 8.41% | |
| Pfizer Inc. | 3.76% | 0.94% | 15.91% | 12.11% | 6.23% | |
| Regeneron Pharmaceuticals Inc. | 11.69% | 11.95% | 14.85% | 31.75% | 20.47% | |
| Thermo Fisher Scientific Inc. | 6.51% | 6.07% | 7.15% | 8.12% | 9.23% | |
| Vertex Pharmaceuticals Inc. | -2.38% | 15.92% | 18.30% | 17.44% | 23.07% | |
| ROA, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 5.30% | 7.25% | 10.67% | 10.42% | 5.45% | |
| ROA, Industry | ||||||
| Health Care | 5.25% | 6.71% | 8.71% | 8.70% | 5.45% | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROA = 100 × Net income attributable to Merck & Co., Inc. ÷ Total assets
= 100 × 17,117 ÷ 117,106 = 14.62%
2 Click competitor name to see calculations.
- Net Income
- Net income attributable to the company demonstrated a substantial increase from 7,067 million US dollars in 2020 to 13,049 million US dollars in 2021. This growth trend continued in 2022 with a further rise to 14,519 million US dollars. However, 2023 experienced a sharp decline to 365 million US dollars, marking a significant drop compared to previous years. The net income rebounded strongly in 2024, reaching 17,117 million US dollars, the highest in the five-year period.
- Total Assets
- Total assets showed a general increase over the years, starting at 91,588 million US dollars in 2020 and growing to 105,694 million US dollars in 2021. The upward trend continued, albeit with a slower rate of growth, reaching 109,160 million US dollars in 2022. In 2023, total assets slightly declined to 106,675 million US dollars before climbing again in 2024 to 117,106 million US dollars, indicating ongoing asset expansion with minor fluctuations.
- Return on Assets (ROA)
- The return on assets exhibited a pattern consistent with net income performance. ROA increased from 7.72% in 2020 to 12.35% in 2021, rising further to 13.3% in 2022. A significant drop was recorded in 2023, with ROA falling to 0.34%, reflecting reduced asset profitability. This metric improved markedly in 2024, reaching 14.62%, surpassing previous years and suggesting enhanced efficiency in generating earnings from the asset base.
- Overall Insights
- The data reveal a notable volatility in profitability metrics, specifically net income and ROA, with a severe decline in 2023 followed by strong recovery in 2024. Total assets generally grew over the analyzed period, indicating expansion or investment activity despite the temporary downturn in profitability. The sharp dip in net income and ROA in 2023 may warrant further investigation to identify underlying causes, while the subsequent recovery suggests effective corrective actions or favorable market conditions.