Merck Morgan Stanley 24th Annual Global Healthcare Conference

Really appreciate it. Great. Well, thank you for having us.

Yeah, no, appreciate it and happy to do it. Good afternoon, everyone. Obviously, already, 2026 has been a very eventful year for us. I would say, and I think it'll frame the discussion we'll get into, our transformation is underway. Whether it's the product launches we have going, which are all the first waves that are coming, all going well, but equally, if not more importantly, the fact that we're getting and seeing continued important data readouts that have all pretty much turned over positive and many at a pace much faster than we expected, just gives us a lot of confidence in where we are. We have more to come. Importantly, while those catalysts have been important, we have more catalysts yet to see this year, both in terms of other data readouts as well as potential filings.

As you look in the near term, a lot of continued excitement in what is ahead of us. On top of that, business development, what we've done recently with the Terns deal, we'll get into, I'm sure at some point. Merck Animal Health. Our Merck Animal Health business is performing at best in industry levels. We continue to have strong confidence that business can more than double in the next 10 years on the back of a product portfolio growth very much in line with what you're seeing on our human health business, and we have the capital, the resources, and the capability to add more. Whether you look at it as launches, as clinical readouts, as business development, I think we're really hitting on all cylinders. I feel very good about where we are. More to do. You never say you're done, but I feel very good about where we're standing at the moment.

Maybe with that, I'll turn over if you want to jump into any of those areas.

Yeah. Obviously, it is going to be interesting to see how this plays out and what happens in both the House and interestingly now, the Senate probably is going to be more interesting to watch than even the House. Whether it is Democratic or Republican, however you want to look at it, as an industry group and as Merck, where we are focused is continuing on what we see as the two biggest challenges we continue to have. How do we make drugs more affordable for patients at the pharmacy counter? How do we ensure access to all of these new meds in a world where we have an ecosystem that continues to reward for the innovation we are bringing?

If you look at those aspects of affordability and access, clearly, we continue to believe the challenge is the fact that the innovator, the manufacturer, still only gets $0.50 of every dollar. We have to address what happens with all of the $0.50 in the middle. That really is about PBM reform. That is about 340B reform, and I am happy to say that there is growing momentum. You have seen a lot of movement with legislation in the PBM front. We continue to think there is more to do there, but importantly, you are seeing movement on the 340B front as well. We are going to continue as an industry and as Merck to push that, but really with an added emphasis on this notion of access.

The fact that you are seeing insurers and PBMs use utilization management to either delay or deny access to new medicines, whether it is through formularies, how they do formulary management through step editing or through prior authorizations. We think that that is another element of this broader system that needs to be addressed, and we have spent a lot of time with the members of Congress and the administration trying to bring greater focus on that.

Yeah. If you look at 340B, we're very supportive. I think it's important, a couple of points. One, as Merck, we very much support the initial and original intentions of what 340B was about, which is how do you support the most vulnerable members of society to ensure they have access to good healthcare and good hospitals and clinics? The program has been perverted away from that and has grown and morphed in directions that were not in the initial intent, and we need to get back to that original intention. As we think about 2027, you are seeing momentum, as I mentioned. There is some bipartisan legislation now moving both in the House and the Senate. There's actually, I think, a bill in the House called the ACCESS Act.

But maybe also not only from what the legislation's happening from a Congressional perspective, you're seeing the administration themselves starting to make movements. I just highlight the fact that we have Health Resources and Services Administration running a demonstration project with the rebate model, which we think is very important. We're very supportive of all those moves. As we look at our own business, those will create potential tailwinds if they evolve, but they're not material to us, frankly. It's more of how do we set the right policy environment to get at some of these more fundamental issues that we have in our system.