Analysis of Reportable Segments
Merck & Co. Inc. operates in 2 segments: Pharmaceutical and Animal Health.
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Selected Financial Data since 2005
- Total Asset Turnover since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
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Segment Profit Margin
Merck & Co. Inc., profit margin by reportable segment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Pharmaceutical | |||||
| Animal Health |
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).
- Pharmaceutical Segment Profit Margin
- The pharmaceutical segment profit margin demonstrates an overall upward trend from 2020 to 2024. Starting at 69.09% in 2020, the margin increased to 72.45% in 2021, followed by a slight dip to 70.86% in 2022. After this minor decline, the margin rebounded to 72.56% in 2023 and then showed a significant increase, reaching 77.58% in 2024. This pattern indicates strengthening profitability in the pharmaceutical segment, with a notable acceleration in profit margin improvement in the most recent year.
- Animal Health Segment Profit Margin
- The animal health segment profit margin displays a relatively stable yet slightly declining trend overall. The margin started at 35.08% in 2020 and showed minimal fluctuation, recording 35.02% in 2021 and 35.37% in 2022. However, there was a notable decline in 2023 when the margin dropped to 30.88%. In 2024, the margin partially recovered to 32.98%, but it remained below the earlier levels observed in the first three years. This trend suggests some challenges affecting profit margins in the animal health segment, with a recovery attempt in the latest period though profitability has not returned to earlier heights.
- Comparative Analysis
- Comparing the two segments, the pharmaceutical segment consistently maintains substantially higher profit margins than the animal health segment throughout the period. The gap between their respective profit margins has widened over time, particularly by 2024, when the pharmaceutical segment reached 77.58% while the animal health segment was at 32.98%. This divergence highlights the pharmaceutical segment’s superior and improving profitability relative to the animal health segment, which experiences greater volatility and a lower margin baseline.
Segment Profit Margin: Pharmaceutical
Merck & Co. Inc.; Pharmaceutical; segment profit margin calculation
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment profits | |||||
| Sales | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
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
Segment profit margin = 100 × Segment profits ÷ Sales
= 100 × ÷ =
- Segment Profits
- The segment profits have demonstrated a consistent upward trajectory from 2020 to 2024. Starting at $29,722 million in 2020, profits increased modestly to $30,977 million in 2021, then experienced more significant growth to $36,852 million in 2022. This positive momentum continued through 2023 and 2024, reaching $38,880 million and $44,533 million respectively, indicating strong profitability growth within the segment.
- Sales
- Sales figures exhibit an overall positive trend with some fluctuations. Sales remained relatively stable between 2020 and 2021, declining slightly from $43,021 million to $42,754 million. However, there was a substantial increase in 2022 to $52,005 million, followed by continued growth through 2023 and 2024 to $53,583 million and $57,400 million respectively. This suggests an expanding market presence and growing revenue base within the segment over the period.
- Segment Profit Margin
- The segment profit margin has maintained strong and increasing levels throughout the period under review. Beginning at 69.09% in 2020, the margin rose to 72.45% in 2021, temporarily declining slightly to 70.86% in 2022. Subsequently, it increased again in 2023 to 72.56%, followed by a significant rise in 2024 to 77.58%. This trend reflects improving operational efficiency and enhanced profitability relative to sales over time.
- Overall Analysis
- The data reveals a pharmaceutical segment characterized by robust financial performance with steady growth in both sales and segment profits, underscored by progressively improving profit margins. The increased sales from 2022 onward likely contributed to higher segment profits, which grew at an even faster rate, indicating effective cost management or favorable pricing strategies. The consistent rise in profit margin further supports the conclusion of enhanced profitability and operational efficiency in recent years.
Segment Profit Margin: Animal Health
Merck & Co. Inc.; Animal Health; segment profit margin calculation
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Segment profits | |||||
| Sales | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
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
Segment profit margin = 100 × Segment profits ÷ Sales
= 100 × ÷ =
- Sales
- Sales for the segment showed a steady upward trend over the five-year period. Beginning at $4,703 million in 2020, they increased consistently each year, reaching $5,877 million by 2024. The growth was relatively stable, with a slight deceleration in 2022 compared to 2021, but it rebounded and grew again in the subsequent years.
- Segment Profits
- Segment profits increased from $1,650 million in 2020 to a peak of $1,963 million in 2022. However, there was a noticeable decline to $1,737 million in 2023 before recovering to $1,938 million in 2024. This pattern suggests some volatility in profitability, with a dip in 2023 partially reversed in the following year.
- Segment Profit Margin
- The profit margin showed a relatively stable level around 35% during the initial three years (2020-2022), with a high of 35.37% in 2022. In 2023, the margin declined to 30.88%, indicating reduced profitability relative to sales. This margin improved to 32.98% in 2024, showing a partial recovery but still below the peak levels observed earlier in the period.
- Overall Analysis
- The segment demonstrated overall growth in sales and profits over the five-year window, although profitability experienced fluctuations. The decrease in profit margin and segment profits in 2023, despite continuing sales growth, may indicate increased costs or pricing pressures during that year. The partial recovery in 2024 suggests some improvement in controlling expenses or enhancing efficiency, yet profit margins have not fully returned to earlier highs. Monitoring cost structures and margin sustainability will be important for future performance assessment.
Sales
Merck & Co. Inc., sales by reportable segment
US$ in millions
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Pharmaceutical | |||||
| Animal Health | |||||
| Other segments | |||||
| Total segment |
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).
- Pharmaceutical Segment Sales
- The Pharmaceutical segment demonstrates a generally positive growth trend over the observed period. Starting at US$ 43,021 million in 2020, sales slightly decreased to US$ 42,754 million in 2021, marking a minor decline of approximately 0.62%. However, from 2021 onward, the segment exhibits consistent growth: increasing to US$ 52,005 million in 2022, US$ 53,583 million in 2023, and reaching US$ 57,400 million in 2024. This reflects a total growth of over 34% from 2020 to 2024, indicating strong recovery and expansion following the initial dip.
- Animal Health Segment Sales
- The Animal Health segment shows steady improvement across the five years. Sales rose from US$ 4,703 million in 2020 to US$ 5,568 million in 2021, representing an increase of approximately 18.4%. The sales figures in 2022 and 2023 remained relatively stable at US$ 5,550 million and US$ 5,625 million respectively. A further increase to US$ 5,877 million in 2024 marks continued moderate growth. Overall, the segment experienced a total uplift of about 25% from 2020 to 2024, with the most significant jump occurring between 2020 and 2021.
- Other Segments
- The reported sales for Other segments are minimal and only appear for 2020 at US$ 23 million, with no data available for subsequent years. This suggests either the segment was discontinued, reclassified, or its sales became negligible after 2020, signifying limited impact on total segment sales.
- Total Segment Sales
- Total segment sales illustrate consistent growth over the period from US$ 47,747 million in 2020 to US$ 63,277 million in 2024. There was a modest increase from 2020 to 2021 by approximately 1.2%, followed by a more pronounced rise to US$ 57,555 million in 2022. The upward trend continued steadily with US$ 59,208 million in 2023 and US$ 63,277 million in 2024. This growth trajectory indicates overall positive operational performance, largely driven by increases in the Pharmaceutical and Animal Health segments.
- Summary
- The sales data demonstrate a rebound and expansion in the Pharmaceutical segment following a slight decline in 2021. The Animal Health segment maintains steady growth, particularly notable in the early part of the period. The negligible contribution from Other segments after 2020 implies focus on the main business divisions. Total segment sales reflect a healthy upward trend, confirming successful growth initiatives and market performance over these financial years.
Segment profits
Merck & Co. Inc., segment profits by reportable segment
US$ in millions
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Pharmaceutical | |||||
| Animal Health | |||||
| Other segments | |||||
| Total segment |
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).
- Pharmaceutical Segment
- The pharmaceutical segment exhibits a consistent upward trend over the five-year period. Beginning at US$29,722 million in 2020, the segment's profits steadily increased each year, reaching US$44,533 million by the end of 2024. This represents a significant growth trajectory, with the most substantial year-over-year increases occurring between 2021 to 2022 and 2023 to 2024.
- Animal Health Segment
- The animal health segment shows variability in profits across the observed periods. The value started at US$1,650 million in 2020, rose to US$1,950 million in 2021, and slightly increased to US$1,963 million in 2022. However, it declined to US$1,737 million in 2023, before recovering somewhat to US$1,938 million in 2024. The fluctuations suggest some volatility or challenges in this segment, though the segment’s profit at the end of the period closely approximates its earlier peak.
- Other Segments
- The data for other segments indicates a very minimal reported profit, with only a single value of US$1 million recorded in 2020, and no available data for subsequent years. This lack of information may imply either negligible contribution or potential restructuring within these segments.
- Total Segment
- The total segment profits reflect the combined effect of the trends in the pharmaceutical and animal health segments. The total profits increased steadily from US$31,373 million in 2020 to US$46,471 million in 2024. The steady growth in the pharmaceutical segment predominantly drives this positive trend, while the fluctuations in animal health have a comparatively minor impact. Notably, the total segment growth closely aligns with the upward trend observed in the pharmaceutical business, signaling its dominant role in the overall profitability landscape.