strategic-management

EXHIBIT 3 Merck’s Sales by Product Categories—continued
CASE 26 • MERCK & COMPANY INC. — 2009 255
($ in millions) 2008 2007 2006
Vaccines and Infectious
Diseases segment revenues $ 4,237.0 $ 4,321.5 $ 2,244.7
Other segment revenues 81.8 162.0 162.1
Total segment revenues 23,701.7 24,101.1 22,242.4
Other 148.6 96.6 393.6
$23,850.3 $24,197.7 $22,636.0
Source: Merck & Co. Inc., Form 10K (2008).
Financials
Merck’s revenue dropped by approximately $347 million from 2007 to 2008, although it
increased from 2006 to 2007 by $1.56 billion (Exhibit 4). As shown in Exhibit 4, Merck’s
net income more than doubled in 2008. As shown in Exhibit 5, Merck carries more than
$1.4 billion in goodwill on its balance sheet and close to $4 billion long-term debt. It is alarming
to notice that this increase is mostly attributed from net receivable and inventory (Exhibit 5).
EXHIBIT 4 Merck & Company Income Statement
Annual Data (all numbers in thousands)
PERIOD ENDING 31-Dec-08 31-Dec-07 31-Dec-06
Total Revenue $23,850,300 24,197,700 22,636,000
Cost of Revenue 5,582,500 6,140,700 6,001,100
Gross Profit 18,267,800 18,057,000 16,634,900
Operating Expenses:
Research Development 4,805,300 4,882,800 4,782,900
Selling General and Administrative 7,377,000 7,556,700 8,165,400
Non Recurring 1,032,500 5,177,100 142,300
Others — — —
Total Operating Expenses — — —
Operating Income or Loss 5,053,000 440,400 3,544,300
Income from Continuing Operations
Total Other Income/Expenses Net 2,445,500 459,500 878,300
Earnings Before Interest And Taxes 10,059,100 3,755,000 6,596,500
Interest Expense 251,300 384,300 375,100
Income Before Tax 9,807,800 3,370,700 6,221,400
Income Tax Expense 1,999,400 95,300 1,787,600
Minority Interest — (121,400) (120,500)
Net Income from Continuing Ops 7,808,400 3,275,400 4,433,800
Non-recurring Events
Discontinued Operations — — —
Extraordinary Items — — —
Effect of Accounting Changes — — —
Other Items — — —
Net Income $7,808,400 3,275,400 4,433,800
Preferred Stock and Other Adjustments — — —
Net Income Applicable to Common Shares $7,808,400 $3,275,400 $4,433,800
Source: http://finance.yahoo.com.