Merck (MRK) Risk Factor Changes

The Company’s business in China experienced significantly lower sales of Gardasil/Gardasil 9 in 2025.

•Pricing pressures in the public and private sectors, both in the U.S.

The Company’s growing use of artificial intelligence (AI) systems to automate processes, analyze data, and support decision-making poses inherent risks.

Adverse outcomes in current or future legal matters could negatively affect the Company’s business.

routinely examined by various tax authorities.

If previously unknown side effects are discovered or if there is an increase in negative publicity regarding known side effects of any of the Company’s products, it could significantly reduce demand for the product or…

•the re-review of products or indications that are already marketed;

Developments following regulatory approval or authorization may adversely affect sales of the Company’s products.

Even if the Company is successful in developing new products, it will not be able to market any of those products unless and until it has obtained all required regulatory approvals (which in limited circumstances may…

The Company’s products, including products in development, cannot be marketed unless the Company obtains and maintains regulatory approval or authorization.

In the U.S., members of the government have made public statements in favor of, and may take steps to implement, various regulatory or policy changes that could negatively impact the pharmaceutical industry, including…

starting in 2026, and Medicare Part B drugs starting in 2028.

Biologics and vaccines carry unique risks and uncertainties, which could have a material adverse effect on the Company’s future results of operations, cash flows, financial condition, and prospects.

Future sales of key animal health products could be adversely affected by a number of risk factors including certain risks that are specific to the animal health business.

Also, 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 currently market…

Furthermore, the government's anti-corruption campaign, particularly the increased number of inspections and audits, could substantially increase the administrative burden on health care institutions and health care p…

Merck from time to time experiences difficulties in manufacturing certain of its products, including vaccines.

Governmental authorities, non-governmental organizations, customers, investors, external stakeholders and employees are sensitive to environmental, social and governance concerns, such as human capital, climate change…

In addition, there may be changes to the Company’s business if there is instability, disruption or destruction in a significant geographic region, regardless of cause, including war, terrorism, riot, civil insurrectio…

The Company has significant global operations, which expose it to additional risks, and any adverse event could have a material adverse effect on the Company’s results of operations, cash flows, financial condition, a…

Unfavorable or uncertain economic conditions, together with cost-reduction measures being taken by the U.S.

and profit margins.

The Company faces continued pricing pressure with respect to its products in the public and private sectors.

Product candidates or uses that appear promising in development may fail to reach the market or fail to succeed for numerous reasons, including the following:

through collaborations and joint ventures and products that it is able to obtain through license or acquisition.

The Company’s ability to generate profits and operating cash flows depends largely upon the continued profitability of the Company’s key products, such as Keytruda, Gardasil/Gardasil 9, Lynparza, Winrevair, and Bravecto.

The Company depends upon patents to provide it with exclusive marketing rights for its products for some period of time.

Additionally, certain foreign governments have indicated that compulsory licenses to patents may be granted in the case of national emergencies or in other circumstances, which could diminish or eliminate sales and pr…

•Adverse outcomes in current or future legal matters could negatively affect the Company’s business.

•Developments following regulatory approval or authorization may adversely affect sales of the Company’s products.

•The Company’s products, including products in development, cannot be marketed unless the Company obtains and maintains regulatory approval or authorization.

•Biologics and vaccines carry unique risks and uncertainties, which could have a material adverse effect on the Company’s future results of operations, cash flows, financial condition, and prospects.

•The Company has significant global operations, which expose it to additional risks, and any adverse event could have a material adverse effect on the Company’s results of operations, cash flows, financial condition,…

•Unfavorable or uncertain economic conditions, together with cost-reduction measures being taken by the U.S.

•The Company faces continued pricing pressure with respect to its products in the public and private sectors.

new NRDL was recently completed in which new entries averaged 63% price reductions.

The Company’s business in China has grown in the past few years, and the importance of China to the Company’s overall pharmaceutical and vaccines business has increased accordingly.

Sustainability Reporting Directive (CSRD) and potentially the SEC’s climate-related reporting requirements (which are currently stayed), the legislation in California requiring reporting of GHG emissions and climate r…

New legal and regulatory requirements are being enacted to prevent, mitigate, or adapt to the implications of a changing climate and its effects on the environment.

The U.S.

•The Company’s business in China has grown in the past few years, and the importance of China to the Company’s overall pharmaceutical and vaccines business has increased accordingly.

Furthermore, the deployment of AI systems could expose the Company to increased cybersecurity threats, such as data breaches and unauthorized access leading to financial losses, legal liabilities, and reputational dam…

The Company is subject to evolving and complex tax laws in the jurisdictions in which it operates.

failure to maintain approval in any jurisdiction will prevent it from selling the products in that jurisdiction and realizing sales.

In 2022, Congress passed the IRA, which made significant changes to how drugs are covered and paid for under the Medicare program, including the creation of financial penalties for drugs whose prices rise faster than…

•Biologics and vaccines require long manufacturing lead times, sometimes requiring planning years in advance of demand, which could increase the risk of inventory write-downs if that demand does not materialize.

$1.1 billion, which represented 18% of the Company’s Animal Health segment sales.

The Company’s business in China experienced significantly lower sales of Gardasil/Gardasil 9 in 2025 and the Company expects that sales of Gardasil/Gardasil 9 in China will not materially increase in 2026.

New legal and regulatory requirements with respect to climate-related matters, which may differ across jurisdictions, could result in the Company being subject to increased compliance burdens and costs to meet these o…

macroeconomic conditions, currency exchange rates and financial markets, and may adversely affect the Company’s business, results of operations, cash flows, financial condition, and prospects.

•the imposition of tariffs by the U.S.

In addition, it is possible that as a consequence of the MFN Agreement, certain of the Company’s products may not be launched in the MFN Countries or their launch may be delayed and as a result, the MFN Countries may…

In addition, in the U.S., larger customers have received higher rebates on drugs in certain highly competitive categories.

Also, as noted above, in December 2025, the Company entered into the MFN Agreement with the U.S.

The Company faces continued pricing pressure globally and, particularly in mature markets, from managed care organizations, government agencies and programs that could negatively affect the Company’s sales

•changes in clinical preferences or standards of care, including competitor innovations, that diminish the value of the product;

In order to remain competitive, the Company, like other major pharmaceutical companies, must continue to launch new products.

certain foreign markets relating to patents, as well as regulatory initiatives may result in a more general weakening of intellectual property protection.

•The Company’s business in China experienced significantly lower sales of Gardasil/Gardasil 9 in 2025 and the Company expects that sales of Gardasil/Gardasil 9 in China will not materially increase in 2026.