Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 11, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-40235 | |
Entity Registrant Name | Organon & Co. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 46-4838035 | |
Entity Address, Address Line One | 30 Hudson Street, Floor 33 | |
Entity Address, City or Town | Jersey City | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 07302 | |
City Area Code | (551) | |
Local Phone Number | 430-6900 | |
Title of 12(b) Security | Common Stock ($0.01 par value) | |
Trading Symbol | OGN | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 253,545,051 | |
Entity Central Index Key | 0001821825 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Statement [Abstract] | ||||
Sales | $ 1,595 | $ 1,526 | $ 3,101 | $ 3,306 |
Costs, Expenses and Other | ||||
Cost of sales | 583 | 460 | 1,174 | 998 |
Selling, general and administrative | 416 | 284 | 798 | 601 |
Research and development | 76 | 51 | 143 | 96 |
Restructuring costs | 1 | 19 | 2 | 31 |
Other (income) expense, net | 82 | 10 | 80 | 34 |
Costs, Expenses And Other | 1,158 | 824 | 2,197 | 1,760 |
Income From Continuing Operations Before Income Taxes | 437 | 702 | 904 | 1,546 |
Taxes on Income | 6 | 116 | 78 | 226 |
Net Income From Continuing Operations | 431 | 586 | 826 | 1,320 |
Loss From Discontinued Operations - Net of Tax | (4) | (44) | 0 | (75) |
Net Income | $ 427 | $ 542 | $ 826 | $ 1,245 |
Earnings (Loss) per Share Attributable to Organon & Co. Stockholders - Basic: | ||||
Continuing operations (in dollars per share) | $ 1.70 | $ 2.31 | $ 3.26 | $ 5.21 |
Discontinued operations (in dollars per share) | (0.02) | (0.17) | 0 | (0.30) |
Net Earnings per Share Attributable to Organon & Co. Stockholders - Basic (in dollars per share) | 1.68 | 2.14 | 3.26 | 4.91 |
Earnings (Loss) per Share Attributable to Organon & Co. Stockholders - Diluted: | ||||
Continuing operations (in dollars per share) | 1.70 | 2.31 | 3.25 | 5.21 |
Discontinued operations (in dollars per share) | (0.02) | (0.17) | 0 | (0.30) |
Net Earnings per Share Attributable to Organon & Co. Stockholders - Diluted (in dollars per share) | $ 1.68 | $ 2.14 | $ 3.25 | $ 4.91 |
Weighted Average Shares Outstanding: | ||||
Basic | 253,516,000 | 253,516,000 | 253,516,000 | 253,516,000 |
Diluted | 253,828,232 | 253,516,000 | 253,828,232 | 253,516,000 |
Condensed Combined Statement of
Condensed Combined Statement of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 427 | $ 542 | $ 826 | $ 1,245 |
Other Comprehensive Income (Loss), Net of Taxes: | ||||
Benefit plan net gain and prior service credit, net of amortization | (6) | 3 | (8) | 11 |
Cumulative translation adjustment | 218 | 25 | 152 | (133) |
Other comprehensive income (loss) | 212 | 28 | 144 | (122) |
Comprehensive Income | $ 639 | $ 570 | $ 970 | $ 1,123 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Current Assets | ||
Cash and cash equivalents | $ 730 | $ 12 |
Accounts receivable (net of allowance for doubtful accounts of $8 in 2021 and $18 in 2020) | 1,507 | 1,038 |
Inventories (excludes inventories of $38 in 2021 and $127 in 2020 classified in Other Assets) | 871 | 913 |
Other current assets | 803 | 930 |
Current assets of discontinued operations | 0 | 674 |
Total current assets | 3,911 | 3,567 |
Property, plant and equipment, net | 976 | 984 |
Goodwill | 4,603 | 4,603 |
Other intangibles, net | 711 | 503 |
Other assets | 707 | 361 |
Noncurrent assets of discontinued operations | 0 | 91 |
Assets | 10,908 | 10,109 |
Current Liabilities | ||
Current portion of long-term debt | 39 | 0 |
Trade accounts payable | 1,812 | 259 |
Accrued and other current liabilities | 906 | 659 |
Due to related party | 0 | 1,339 |
Income taxes payable | 218 | 288 |
Current liabilities of discontinued operations | 0 | 128 |
Total current liabilities | 2,975 | 2,673 |
Long-term debt | 9,309 | 0 |
Deferred income taxes | 71 | 128 |
Other noncurrent liabilities | 487 | 1,739 |
Noncurrent liabilities of discontinued operations | 0 | 83 |
Commitments and Contingencies | ||
Organon & Co. Equity | ||
Common stock, $0.01 par value Authorized - 500,000,000 Issued and outstanding - 253,516,000 | 3 | 0 |
Additional paid-in capital | 0 | 0 |
Accumulated deficit | (1,473) | 0 |
Net investment from Merck & Co., Inc. | 0 | 6,108 |
Accumulated other comprehensive loss | (464) | (622) |
Total Equity | (1,934) | 5,486 |
Liabilities and Equity | $ 10,908 | $ 10,109 |
Condensed Combined Balance Shee
Condensed Combined Balance Sheet (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 8 | $ 18 |
Inventories classified in Other Assets | $ 38 | $ 127 |
Common stock, par value (in dollars per share) | $ 0.01 | |
Common stock, shares authorized | 500,000,000 | |
Common stock, shares issued | 253,516,000 | |
Common stock, shares outstanding | 253,516,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Equity - USD ($) $ in Millions | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Net Investment from Merck & Co., Inc.Merck and Co., Inc. | Accumulated Other Comprehensive (Loss) Income |
Beginning balance at Dec. 31, 2019 | $ 7,035 | $ 7,949 | $ (914) | |||
Stockholders' Equity [Roll Forward] | ||||||
Net income attributable to Organon & Co. | 1,245 | 1,245 | ||||
Other comprehensive loss, net of taxes | (122) | (122) | ||||
Net transfers to Merck & Co., Inc. | (1,153) | (1,153) | ||||
Ending balance at Jun. 30, 2020 | 7,005 | 8,041 | (1,036) | |||
Beginning balance at Mar. 31, 2020 | 7,029 | 8,093 | (1,064) | |||
Stockholders' Equity [Roll Forward] | ||||||
Net income attributable to Organon & Co. | 542 | 542 | ||||
Other comprehensive loss, net of taxes | 28 | 28 | ||||
Net transfers to Merck & Co., Inc. | (594) | (594) | ||||
Ending balance at Jun. 30, 2020 | 7,005 | 8,041 | (1,036) | |||
Beginning balance at Dec. 31, 2020 | 5,486 | $ 0 | $ 0 | $ 0 | 6,108 | (622) |
Beginning balance, shares at Dec. 31, 2020 | 0 | |||||
Stockholders' Equity [Roll Forward] | ||||||
Net income attributable to Organon & Co. | 826 | 96 | 730 | |||
Other comprehensive loss, net of taxes | 144 | 144 | ||||
APIC, Share-based Payment Arrangement, Increase for Cost Recognition | 8 | 8 | ||||
Net transfers to Merck & Co., Inc. | 588 | |||||
Net transfers from Merck & Co., Inc., including Separation Adjustments | 602 | 588 | 14 | |||
Net consideration paid to Merck & Co. Inc. in connection with Separation | (9,000) | (9,000) | ||||
Issuance of common stock in connection with the Separation and reclassification of Net investment from Merck & Co., inc. | $ 3 | (1,577) | 1,574 | |||
Issuance of common stock in connection with the Separation and reclassification of Net investment from Merck & Co., inc. (in shares) | 253,516,000 | |||||
Ending balance at Jun. 30, 2021 | (1,934) | $ 3 | 0 | (1,473) | 0 | (464) |
Ending balance, shares at Jun. 30, 2021 | 253,516,000 | |||||
Beginning balance at Mar. 31, 2021 | 4,722 | $ 0 | 0 | 0 | 5,411 | (689) |
Beginning balance, shares at Mar. 31, 2021 | 0 | |||||
Stockholders' Equity [Roll Forward] | ||||||
Net income attributable to Organon & Co. | 427 | 96 | 331 | |||
Other comprehensive loss, net of taxes | 212 | 212 | ||||
APIC, Share-based Payment Arrangement, Increase for Cost Recognition | 8 | 8 | ||||
Net transfers to Merck & Co., Inc. | 1,684 | |||||
Net transfers from Merck & Co., Inc., including Separation Adjustments | 1,697 | 1,684 | 13 | |||
Net consideration paid to Merck & Co. Inc. in connection with Separation | (9,000) | (9,000) | ||||
Issuance of common stock in connection with the Separation and reclassification of Net investment from Merck & Co., inc. | $ 3 | (1,577) | 1,574 | |||
Issuance of common stock in connection with the Separation and reclassification of Net investment from Merck & Co., inc. (in shares) | 253,516,000 | |||||
Ending balance at Jun. 30, 2021 | $ (1,934) | $ 3 | $ 0 | $ (1,473) | $ 0 | $ (464) |
Ending balance, shares at Jun. 30, 2021 | 253,516,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash Flows from Operating Activities | ||
Net income from continuing operations | $ 826 | $ 1,320 |
Adjustments to reconcile net income from continuing operations to net cash flows provided by operating activities: | ||
Depreciation | 39 | 25 |
Amortization | 42 | 42 |
Deferred income taxes | (171) | 10 |
Stock-based compensation | 29 | 21 |
Unrealized foreign exchange loss | 38 | 0 |
Other | 3 | 0 |
Net changes in assets and liabilities | ||
Accounts receivable | (372) | 20 |
Inventories | 2 | (30) |
Other current assets | 284 | 153 |
Trade accounts payable | 1,074 | (7) |
Accrued and other current liabilities | 210 | (87) |
Due from/due to related party | (164) | 0 |
Income taxes payable | (121) | 17 |
Other | 26 | (4) |
Net Cash Flows Provided by Operating Activities from Continuing Operations | 1,745 | 1,480 |
Cash Flows from Investing Activities | ||
Capital expenditures | (97) | (87) |
Proceeds from sale of property, plant and equipment | 2 | 1 |
Asset acquisition - Alydia Health, net of cash acquired | (192) | 0 |
Net Cash Flows Used in Investing Activities from Continuing Operations | (287) | (86) |
Cash Flows from Financing Activities | ||
Proceeds from issuance of long-term debt | 9,470 | 0 |
Payment of long-term debt issuance costs | (118) | 0 |
Repayments of short-term borrowings from Merck & Co., Inc., net | (1,512) | 0 |
Consideration Paid in Connection with Separation | (9,000) | 0 |
Net transfers from (to) Merck & Co., Inc. | 388 | (1,394) |
Net Cash Flows Used in Financing Activities from Continuing Operations | (772) | (1,394) |
Discontinued Operations | ||
Net Cash Provided by (Used in) Operating Activities | 298 | (11) |
Net Cash Used in Investing Activities | 0 | (4) |
Net Cash (Used in) Provided by Financing Activities | (356) | 199 |
Net Cash Flows (Used in) Provided by Discontinued Operations | (58) | 184 |
Effect of Exchange Rate Changes on Cash and Cash Equivalents from Continuing Operations | 32 | 0 |
Effect of Exchange Rate Changes on Cash and Cash Equivalents from Discontinued Operations | 0 | (59) |
Net Increase in Cash and Cash Equivalents | 660 | 125 |
Cash and Cash Equivalents, Beginning of Period | 12 | 0 |
Cash and Cash Equivalents of Discontinued Operations, Beginning of Period | 58 | 319 |
Total Cash and Cash Equivalents, End of Period | 730 | 444 |
Less: Cash and Cash Equivalents of Discontinued Operations, End of Period | 444 | |
Cash and Cash Equivalents, End of Period | $ 730 | $ 0 |
Background and Nature of Operat
Background and Nature of Operations | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background and Nature of Operations | Background and Nature of Operations Organon & Co. ("Organon" or the "Company") is a global healthcare company that develops and delivers innovative health solutions through a portfolio of prescription therapies within women's health, biosimilars and established brands (the "Organon Products"). The Company sells these products through various channels including drug wholesalers and retailers, hospitals, government agencies and managed health care providers such as health maintenance organizations, pharmacy benefit managers and other institutions. The Company operates six manufacturing facilities, which are located in Belgium, Brazil, Indonesia, Mexico, the Netherlands and the United Kingdom ("UK"). On June 2, 2021, Organon and Merck & Co., Inc. ("Merck") entered into a Separation and Distribution Agreement (the "Separation and Distribution Agreement"). Pursuant to the Separation and Distribution Agreement, Merck agreed to spin off its women’s health, biosimilars and established brands into Organon, a new, publicly traded company (the "Separation"). In connection with the Separation, on June 2, 2021, Merck distributed (the "Distribution"), on a pro rata basis, to holders of the outstanding shares of common stock of Merck, par value $0.50 per share (the "Merck Common Stock") on May 17, 2021 (the "Record Date"), all of the outstanding shares of common stock, par value $0.01 per share, of Organon (the "Common Stock"). Each Merck shareholder was entitled to receive one-tenth of a share of the Common Stock for each share of Merck Common Stock held on the Record Date. Organon is now a standalone publicly traded company and, on June 3, 2021, regular-way trading of the Common Stock commenced on the New York Stock Exchange under the ticker symbol "OGN." The Separation was completed pursuant to the Separation and Distribution Agreement and other agreements with Merck related to the Separation, including, but not limited to a tax matters agreement (the "Tax Matters Agreement" or "TMA"), an employee matters agreement (the "Employee Matters Agreement" or "EMA") and a transition services agreement (the "Transition Service Agreement" or "TSA") (see Note 17 for additional details). The Company’s operations include the following product portfolios: • Women’s Health : the Company has a portfolio of contraception and fertility brands, such as Nexplanon/Implanon NXT (etonogestrel implant), a long-acting reversible contraceptive, which is a class of contraceptives that are recognized as the most effective type of hormonal contraception available to patients with a lower long-term average cost. • Biosimilars: the Company’s current portfolio spans across immunology and oncology treatments. All five of the biosimilars in Organon’s portfolio have launched in certain countries globally, including two biosimilars in the United States. • Established Brands : the Company has a portfolio of established brands, which generally are beyond market exclusivity, including leading brands in cardiovascular, respiratory, dermatology and non-opioid pain management. The historical results included certain Merck non-U.S. legal entities that were conveyed to Organon in connection with the Separation (collectively, the "Transferred Entities" and each, a "Transferred Entity") included operations related to other Merck products that were retained by Merck ("Merck Retained Products"). Substantially all of the Merck Retained Products business of the Transferred Entities was contributed by the Company to Merck and its affiliates and any remaining assets and liabilities were transferred as of June 2, 2021. Accordingly, the historical results of operations of the Merck Retained Products have been reflected as discontinued operations in these Condensed Consolidated Financial Statements (see Note 2). |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation On June 2, 2021, the Company became a standalone publicly traded company, and its financial statements are now presented on a consolidated basis. Prior to the Separation on June 2, 2021, the Company’s historical combined financial statements were prepared on a standalone basis and were derived from Merck’s consolidated financial statements and accounting records. The unaudited financial statements for all periods presented, including the historical results of the Company prior to June 2, 2021, are now referred to as "Condensed Consolidated Financial Statements", and have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by U.S. generally accepted accounting principles ("GAAP") for complete consolidated financial statements are not included herein. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. In the Company’s opinion, all adjustments necessary for a fair statement of these interim statements have been included and are of a normal and recurring nature. These interim statements should be read in conjunction with the audited financial statements and notes thereto included in Organon’s Registration Statement on Form 10, as amended, filed on April 29, 2021 (the "Form 10"). Periods Prior to Separation The assets, liabilities, revenue and expenses of the Company were reflected in the condensed combined financial statements on a historical cost basis, as included in the consolidated financial statements of Merck, using the historical accounting policies applied by Merck. The condensed combined financial statements did not purport to reflect what the Company’s results of operations, comprehensive income, financial position, equity or cash flows would have been had the Company operated as a standalone public company during the periods presented. The condensed combined financial statements were prepared following a legal entity approach, which resulted in the inclusion of the following: • Certain assets and liabilities, results of operations and cash flows attributable to the sales of Organon Products that have been or were contributed to Organon prior to the consummation of the Separation. • The Transferred Entities, which have historically included the results from the sales of both Organon Products and the Merck Retained Products. Each Transferred Entity’s historical operations, including its results of operations, assets and liabilities, and cash flows have been fully reflected in the condensed combined financial statements. • In contemplation of the Separation the Merck Retained Products business of the Transferred Entities was distributed to Merck and its affiliates ("MRP Distribution") and, accordingly, the historical results of operations, assets and liabilities, and the cash flows of the Merck Retained Products for such Transferred Entities are reflected as discontinued operations. The Company’s businesses have historically functioned together with the other businesses controlled by Merck. Accordingly, the Company relied on Merck’s corporate and other support functions for its business. Therefore, for the period prior to the Separation, certain corporate and shared costs were allocated to the Company based on a specific identification basis or, when specific identification was not practicable, a proportional cost allocation method, including: (i) expenses related to Merck support functions, including expenses for facilities, executive oversight, treasury, finance, legal, human resources, shared services, compliance, procurement, information technology and other corporate functions. (ii) certain manufacturing and supply costs incurred by Merck’s manufacturing division, including facility management, distribution, logistics, planning and global quality. (iii) certain costs incurred by Merck’s human health division in relation to selling and marketing activities, and related administrative support functions, that are not routinely allocated to therapeutic areas. (iv) certain costs incurred by Merck’s research laboratories for activities related to drug discovery and development, as well as medical and regulatory affairs. (v) restructuring costs (see Note 5) and stock-based compensation expenses (see Note 11); and (vi) certain compensation expenses maintained on a centralized basis such as certain employee benefit expenses. Management believes these cost allocations were a reasonable reflection of the utilization of services provided to, or the benefit derived by, the Company during the period prior to the Separation, though the allocations may not be indicative of the actual costs that would have been incurred had the Company operated as a standalone public company. Actual costs that may have been incurred if the Company had been a standalone company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by Company’s employees, and strategic decisions made in areas such as manufacturing, selling and marketing, research and development, information technology and infrastructure. Merck maintains various employee benefit plans in which the Company’s employees participated during periods prior to the Separation, and a portion of the costs associated with these plans was included in the Company’s Condensed Consolidated Financial Statements. The Condensed Consolidated Balance Sheet at December 31, 2020 only includes assets and liabilities relating to plans for which the entity being transferred is the plan sponsor. During the first quarter of 2021, certain pension assets and obligations were transferred by Merck into legal entities established to operate the Organon Products business (the "Organon Entities") that are the plan sponsor and, accordingly, the Condensed Consolidated Balance Sheet at June 30, 2021 includes assets and liabilities of the newly established plans of Organon. Merck utilized a centralized approach to cash management and the financing of its operations. Cash generated by the Company was routinely transferred into accounts managed by Merck’s centralized treasury function and cash disbursements for the Company’s operations prior to the Separation were funded as needed by Merck. Cash and cash equivalents of the Organon Entities and the Transferred Entities were reflected in the Company’s Condensed Consolidated Balance Sheet. Balances held by the Organon Entities and the Transferred Entities with Merck for cash transfers and loans were reflected as Due to related party prior to Separation. All other cash, cash equivalents, short-term investments and related transfers between Merck and the Company were generally held centrally through accounts controlled and maintained by Merck and were not specifically identifiable to the Company. Accordingly, such balances were accounted for through Net investment from Merck & Co., Inc . Merck’s third-party debt and related interest expense were not attributed to the Company because the Company was not the legal obligor of the debt and the borrowings were not specifically identifiable to the Company. For the Organon Entities and the Transferred Entities, transactions with Merck affiliates were included in the Condensed Consolidated Statement of Income and related balances were reflected as Due to related party, Due from related party or Related Party Loans Payable in the continuing operations and discontinued operations, as applicable. Other balances between the Company and Merck were considered to be effectively settled in the Condensed Consolidated Financial Statements at the time the transactions were recorded. See Note 17 for additional details. As the separate legal entities that made up the Company’s business were not historically held by a single legal entity, Net investment from Merck & Co., Inc. was shown in lieu of stockholders’ equity in these Condensed Consolidated Financial Statements. Net investment from Merck & Co., Inc. represented Merck’s interest in the recorded assets of the Company and the cumulative investment by Merck in the Company through the date of Separation, inclusive of operating results. Income tax expense and tax balances in the Condensed Consolidated Financial Statements have been calculated on a separate tax return basis. The Company’s operations are included in the tax returns of certain Organon Entities, Transferred Entities or the respective Merck entities of which the Company’s business was a part. As of Separation Date Certain assets and liabilities, including accounts receivables, inventories and trade payables included on the condensed combined balance sheets prior to the Separation, have been retained by Merck post-Separation and therefore have been adjusted through Net investment from Merck & Co., Inc. in the Company’s Condensed Consolidated Financial Statements. Additionally, certain amounts previously included in Due to related party or Due from related party are reflected in accounts receivable and trade accounts payable on June 30, 2021. As part of the Separation, Net investment from Merck & Co., Inc. was reclassified to Common Stock and Accumulated Deficit . In connection with the Separation, additional pension assets and obligations were transferred to Organon, and the Company recorded these in the Condensed Consolidated Balance Sheet. See Note 12 for details. Additionally, stock-based awards were converted in accordance with the Employee Matters Agreement, ("EMA"). See Note 11 for details. During the second quarter of 2021, an aggregate of $9.5 billion of debt was issued in connection with the Separation. Such indebtedness resulted in the recording of interest expense in the month of June 2021 (see Note 9 for additional details). Periods Post Separation Following the Separation, certain functions continue to be provided by Merck under the Transition Services Agreement or are being performed using the Company’s own resources or third-party service providers. Additionally, under manufacturing and supply agreements, the Company manufactures certain products for Merck, or its applicable affiliate and Merck manufactures certain products for the Company or its applicable affiliate. The Company incurred certain costs in its establishment as a standalone public company and expects to incur ongoing additional costs associated with operating as an independent, publicly traded company. Property, plant and equipment reflected in the Condensed Consolidated Balance Sheet is primarily attributable to the six manufacturing facilities the Company operates and certain information technology assets. In June 2021, the Company established a balance sheet risk management and a net investment hedging program to mitigate against volatility of changes in foreign exchange rates. As a standalone entity, the Company will file tax returns on its own behalf, and tax balances and effective income tax rate may differ from the amounts reported in the historical periods. As of June 2, 2021 and in connection with the Separation, the Company has adjusted its deferred tax balances and computed its related tax provision to reflect operations as a standalone entity. All intercompany transactions and accounts within Organon have been eliminated. Certain amounts presented in the prior period have been reclassified to conform to the current period presentation. Use of Estimates The presentation of these Condensed Consolidated Financial Statements and accompanying notes in conformity with U.S. GAAP require management to make estimates and assumptions that affect the amounts reported. Accordingly, actual results could differ materially from management's estimates and assumptions. The COVID-19 pandemic continued to negatively affect the Company's results during the second quarter of 2021. While the Company experienced recoveries during the second quarter of 2021 as compared to the comparable period in 2020, the Company continued to experience declines in sales attributable to the COVID-19 pandemic during the second quarter of 2021. The assessment of certain accounting matters and specifically its effect on the Company's results require consideration of forecasted financial information in the context of the information reasonably available to the Company and the unknown future impacts of the COVID-19 pandemic at June 30, 2021 and through the date of this report. Recently Adopted Accounting Standards In December 2019, the Financial Accounting Standards Board ("FASB") issued amended guidance on the accounting and reporting of income taxes. The guidance is intended to simplify the accounting for income taxes by removing exceptions related to certain intraperiod tax allocations and deferred tax liabilities; clarifying guidance primarily related to evaluating the step-up tax basis for goodwill in a business combination; and reflecting enacted changes in tax laws or rates in the annual effective tax rate. The Company adopted the new guidance effective January 1, 2021. There was no impact to the Company’s Condensed Consolidated Financial Statements upon adoption. In January 2020, the FASB issued new guidance intended to clarify certain interactions between accounting standards related to equity securities, equity method investments and certain derivatives. The guidance addresses accounting for the transition into and out of the equity method of accounting and measuring certain purchased options and forward contracts to acquire investments. The Company adopted the new guidance effective January 1, 2021. There was no impact to the Company’s Condensed Consolidated Financial Statements upon adoption. Recently Issued Accounting Standard Not Yet Adopted In March 2020, the FASB issued optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting and subsequently issued clarifying amendments. The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. The optional guidance is effective upon issuance and can be applied on a prospective basis at any time between January 1, 2020 through December 31, 2022. The Company is currently evaluating the impact of adoption on its Condensed Consolidated financial statements. |
Samsung Collaboration
Samsung Collaboration | 6 Months Ended |
Jun. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Samsung Collaboration | Samsung Collaboration The Company has an agreement with Samsung Bioepis Co., Ltd. ("Samsung Bioepis") to develop and commercialize multiple pre-specified biosimilar candidates, which have since launched and are part of the Company’s product portfolio. Under the agreement, Samsung Bioepis is responsible for preclinical and clinical development, process development and manufacturing, clinical trials and registration of product candidates, and the Company has an exclusive license for worldwide commercialization with certain geographic exceptions specified on a product-by-product basis. The Company’s access rights to each product under the agreement last for 10 years from each product’s launch date on a market-by-market basis. Gross profits are shared equally in all markets with the exception of Brazil where gross profits are shared 65% to Samsung Bioepis and 35% to the Company. Since the Company is the principal on sales transactions with third parties, the Company recognizes sales, cost of sales and selling, general and administrative expenses on a gross basis. Generally, profit sharing adjustments are recorded either to Cost of sales (after commercialization) or Selling, general and administrative expenses (prior to commercialization). Samsung Bioepis is eligible for additional payments associated with pre-specified clinical and regulatory milestones. At June 30, 2021, potential future regulatory milestone payments of $25 million remain under the agreement. Summarized information related to this collaboration is as follows: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Sales $ 85 $ 60 $ 166 $ 128 Cost of sales 47 39 100 79 Selling, general and administrative 17 18 32 37 ($ in millions) June 30, 2021 December 31, 2020 Receivables from Samsung included in Other current assets $ 21 $ 52 Payables to Samsung included in Trade accounts payable 28 13 |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | AcquisitionsIn March 2021, Merck and Alydia Health, Inc. ("Alydia Health") entered into a definitive agreement pursuant to which, after the Separation, Organon acquired Alydia Health. Alydia Health is a commercial-stage medical device company Alydia’s device, the Jada System, is intended to provide control and treatment of abnormal postpartum uterine bleeding or hemorrhage when conservative management is warranted. Organon’s acquisition of Alydia Health expands its portfolio into the medical device category and underscores its commitment to identify options for women’s unmet medical needs. Total consideration included a $219 million upfront payment plus a $25 million contingent sales-based milestone payment. Of the $219 million upfront payment, $50 million was paid in April 2021 and the remaining $169 million was paid by Organon upon the close of the acquisition, on June 16, 2021. The $25 million sales-based contingent milestone payment will be paid by Organon upon achievement. The contingent milestone payment was not probable as of June 30, 2021. The transaction was accounted for in the second quarter of 2021 as an asset acquisition, as substantially all of the value was concentrated in a single identifiable asset. This resulted in an intangible of $247 million attributed to the Jada System device, which was recorded to Other Intangibles . This asset is subject to amortization on a straight-line basis over its expected useful life of 11 years. In addition to the intangible asset, the Company also recorded other net liabilities of $7 million, a deferred tax liability of $44 million related to the intangible asset, and compensation expenses of $23 million, which were recorded in Selling General and Administrative Expense s. Of the $23 million of compensation expense, $19 million were related to accelerated vesting of Alydia stock-based compensation awards. |
Restructuring
Restructuring | 6 Months Ended |
Jun. 30, 2021 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring Currently, Organon does not have an established restructuring program. Restructuring costs for the three and six months ended June 30, 2021 were $1 million and $2 million, respectively, and reflect charges directly attributable to the Company as well as charges allocated to Organon for Merck related restructuring programs. Restructuring costs for the three and six months ended June 30, 2020 were $19 million and $31 million, respectively, and reflect only charges allocated to Organon. The restructuring costs for the three months ended June 30, 2020 were comprised of $9 million of separation costs and $10 million related to other restructuring activities, The restructuring costs for the six months ended June 30, 2020 were comprised of $14 million of separation costs and $17 million related to other restructuring activities. Liabilities for costs associated with restructuring activities related to the Organon Entities and the Transferred Entities included primarily in Accrued and other current liabilities were $6 million and $17 million at June 30, 2021 and December 31, 2020, respectively. The amount accrued as of June 30, 2021 primarily reflects the future planned exit of a long-term contract. |
Financial Instruments
Financial Instruments | 6 Months Ended |
Jun. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Financial Instruments | Financial Instruments Prior to the Separation, Merck managed the impact of foreign exchange rate movements on its affiliates’ earnings, cash flows and fair values of assets and liabilities through operational means and through the use of various financial instruments, including derivative instruments. Merck established revenue hedging and balance sheet risk management programs that the Company participated in to protect against the volatility of future foreign currency cash flows and changes in fair value caused by volatility in exchange rates. Accordingly, the Condensed Consolidated Statement of Income includes the impact of Merck’s derivative financial instruments prior to the Separation that is deemed to be associated with the Company’s operations and has been allocated to the Company utilizing a proportional allocation method: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Allocated net (gains) loss in Sales $ 23 $ (7) $ 55 $ (18) Allocated net (gains) loss in Other (income) expense, net 30 63 33 15 Foreign exchange transaction (gains) loss in Other (income) expense, net (1) (21) (42) (28) 19 (1) Includes foreign exchange transaction gains and losses allocated for the period prior to the Separation, as well as actual foreign exchange transaction gains and losses post-Separation. Foreign Currency Risk Management Periods Post Separation In June 2021, the Company established a balance sheet risk management and a net investment hedging program to mitigate against volatility of changes in foreign exchange rates. The Company uses a balance sheet risk management program to mitigate the exposure of net monetary assets of its subsidiaries that are denominated in a currency other than a subsidiary’s functional currency from the effects of volatility in foreign exchange. In these instances, Organon principally utilizes forward exchange contracts to offset the effects of exchange on exposures denominated in developed country currencies, primarily the euro, Swiss franc and Japanese yen. For exposures in developing country currencies, the Company enters into forward contracts to partially offset the effects of exchange on exposures when it is deemed economical to do so based on a cost-benefit analysis that considers the magnitude of the exposure, the volatility of the exchange rate and the cost of the hedging instrument. Monetary assets and liabilities denominated in a currency other than the functional currency of a given subsidiary are remeasured at spot rates in effect on the balance sheet date with the effects of changes in spot rates reported in Other (income) expense, net . The forward contracts are not designated as hedges and are marked to market through Other (income) expense, net. Accordingly, fair value changes in the forward contracts help mitigate the changes in the value of the remeasured assets and liabilities attributable to changes in foreign currency exchange rates, except to the extent of the spot-forward differences. These differences are not significant due to the short-term nature of the contracts, which typically have average maturities at inception of less than one year. As of June 30, 2021, the fair value of these contracts was recorded as an asset of $5 million and a liability of $12 million, respectively. Notional amounts of the forward contracts and spot trades were $881 million and $416 million, respectively as of June 30, 2021. The cash flows from these contracts are reported as operating activities in the Condensed Consolidated Statement of Cash Flows. Foreign exchange risk is also managed through the use of economic hedges on foreign currency debt (see Note 9). In June 2021, €1.75 billion in the aggregate of both the euro-denominated term loan (€750 million) and of the 2.875% euro-denominated secured notes (€1.25 billion) have been designated, and effective as, economic hedges of the net investment in euro-denominated subsidiaries As a result, $56 million of foreign currency gains due to spot rate fluctuations on the euro-denominated debt instruments are included in foreign currency translation adjustment in Other Comprehensive Income for the three and six months ended June 30, 2021. Concentrations of Credit Risk Historically, the Company’s operations formed part of Merck’s monitoring of concentrations of credit risk associated with corporate and government issuers of securities and financial institutions with which Merck conducted business. Credit exposure limits were established to limit a concentration with any single issuer or institution. The majority of the Company’s accounts receivable arise from product sales in the United States, Europe and China and are primarily due from drug wholesalers and retailers, hospitals, government agencies, managed health care providers and pharmacy benefit managers. The Company’s customers with the largest accounts receivable balances are McKesson Corporation, Cardinal Health, Inc. and Amerisource Bergen Corporation. Bad debts have been minimal. The Company does not normally require collateral or other security to support credit sales. Merck had established accounts receivable factoring agreements with financial institutions in certain countries to sell accounts receivable. In connection with the Separation, Merck conveyed these agreements to Organon. Under these agreements, Organon factored $8 million and Merck factored $227 million of accounts receivable related to the Company in the second quarter of 2021 and the fourth quarter of 2020, respectively, which reduced outstanding accounts receivable. The cash received from the financial institutions is reported within operating activities in the Condensed Consolidated Statement of Cash Flows. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of: ($ in millions) June 30, 2021 December 31, 2020 Finished goods $ 327 $ 351 Raw materials 113 35 Work in process 433 595 Supplies 38 60 Total (approximates current cost) $ 911 $ 1,041 Decrease to LIFO costs (2) (1) $ 909 $ 1,040 Recognized as: Inventories $ 871 $ 913 Other assets 38 127 Inventories valued under the LIFO method comprised $91 million and $48 million at June 30, 2021 and December 31, 2020, respectively. Amounts recognized as Other assets are comprised almost entirely of raw materials and work in process inventories and are not expected to be converted to finished goods that will be sold within one year. |
Property, Plant, and Equipment
Property, Plant, and Equipment | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment ($ in millions) June 30, 2021 December 31, 2020 Land $ 14 $ 14 Building 608 647 Machinery, equipment and office furnishings 914 787 Construction in progress 313 356 Less: accumulated depreciation (873) (820) Property, Plant and Equipment, net $ 976 $ 984 |
Long-Term Debt and Leases
Long-Term Debt and Leases | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Long-Term Debt and Leases | Long-Term Debt and Leases Long-Term Debt In April 2021, in connection with the Separation, Organon Finance 1 LLC ("Organon Finance 1"), a subsidiary of Merck, issued €1.25 billion aggregate principal amount of 2.875% senior secured notes due 2028, $2.1 billion aggregate principal amount of 4.125% senior secured notes due 2028 and $2.0 billion aggregate principal amount of 5.125% senior unsecured notes due 2031 (collectively, the “notes”). Interest payments are due semiannually on October 30 and April 30. As part of the Separation, on June 2, 2021, Organon and a wholly-owned Dutch subsidiary of Organon, (the "Dutch Co-Issuer") assumed the obligations under the notes as co-issuers, Organon Finance 1 was released as an obligor under the notes, and certain subsidiaries of Organon agreed to guarantee the notes. Each series of notes was issued pursuant to an indenture dated April 22, 2021, between Organon and U.S. Bank National Association. Organon and the Dutch Co-Issuer assumed the obligations under the notes pursuant to a first supplemental indenture to the relevant indenture, and the guarantors agreed to guarantee the notes pursuant to a second supplemental indenture to the relevant indenture. On June 2, 2021, Organon entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (the “Senior Credit Agreement”), providing for: • a Term Loan B Facility (“Term Loan B Facility”), consisting of (i) a U.S. dollar denominated senior secured “tranche B” term loan in the amount of $3.0 billion, and (ii) a euro denominated senior secured “tranche B” term loan in the amount of €750 million, in each case with a seven-year term that matures in 2028; and • a Revolving Credit Facility (“Revolving Credit Facility” and, together with the Term Loan B Facility, the “Senior Credit Facilities”), in an aggregate principal amount of up to $1 billion, with a five-year term that matures in 2026. Borrowings made under the Senior Credit Agreement initially bear interest, in the case of: • term loans under the Term Loan B Facility (i) denominated in U.S. Dollars, at 3.00% in excess of Adjusted LIBOR (subject to a floor of 0.50%) or 2.00% in excess of an alternate base rate ("ABR"), at our option and (ii) denominated in euros, at 3.00% in excess of an adjusted Euro Interbank Offer Rate (“Adjusted EURIBOR”) (subject to a floor of 0.00%); and • revolving loans under the Revolving Credit Facility (i) in U.S. Dollars, at 2.00% in excess of an Adjusted LIBOR (subject to a floor of 0.00%) or 1.00% in excess of ABR, at our option and (ii) in euros, at 2.00% in excess of an Adjusted EURIBOR. The interest rate on revolving loans under the Revolving Credit Facility is subject to a step-down based on meeting a leverage ratio target. A commitment fee applies to the unused portion of the Revolving Credit Facility, initially equal to 0.50% and subject to a step-down to 0.375% based on meeting a leverage ratio target. There were no outstanding balances under the Revolving Credit Facility as of June 30, 2021. Interest payments on the term loans are due quarterly on March, June, September and December. Principal payments on the term loans are based on 0.25% of the principal amount outstanding on the Closing Date and due on the last business day of each March, June, September and December, commencing with the last business day of September 2021. Organon used the net proceeds from the notes offering, together with available cash on its balance sheet and borrowings under senior secured credit facilities, to distribute $9.0 billion to Merck and to pay fees and expenses related to the Separation. The Senior Credit Agreement contains customary financial covenants, including a total leverage ratio covenant, which measures the ratio of (i) consolidated total debt to (ii) consolidated earnings before interest, taxes, depreciation and amortization, and subject to other adjustments, that must meet certain defined limits which are tested on a quarterly basis beginning September 30, 2021. In addition, the Senior Credit Agreement contains covenants that limit, among other things, Organon’s ability to prepay, redeem or repurchase its subordinated and junior lien debt, incur additional debt, make acquisitions, merge with other entities, pay dividends or distributions, redeem or repurchase equity interests, and create or become subject to liens. As of the second quarter of 2021, no default or event of default has occurred. The following is a summary of Organon's total debt as described above: ($ in millions) June 30, 2021 Term Loan B Facility: LIBOR plus 300 bps term loan due 2028 $ 3,000 LIBOR plus 300 bps euro-denominated term loan due 2028 (€750 million) 893 4.125% secured notes due 2028 2,100 2.875% euro-denominated secured notes due 2028 (€1.25 billion) 1,490 5.125% notes due 2031 2,000 Other (discounts and debt issuance costs) (135) Total principal long-term debt $ 9,348 Less: Current portion of long-term debt 39 Total Long-term debt, net of current portion $ 9,309 The Company recorded approximately $118 million of debt issuance costs related to the long-term debt and $19 million of discounts on the term loans. Debt issuance costs and discounts are presented as a reduction of debt on the Condensed Consolidated Balance Sheets and are amortized as a component of interest expense over the term on the related debt using the effective interest method. The unamortized debt issuance costs related to the long-term debt and discounts on the term loans at June 30, 2021 are approximately $135 million. The estimated fair value of long-term debt (including current portion) at June 30, 2021, was $9.6 billion compared with a carrying value (which includes a reduction for amortized debt issuance costs) of $9.3 billion. Fair value was estimated using inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability and would be considered Level 2 in the fair value hierarchy. The Company had no debt payments during the quarter ended June 30, 2021. Payments on the Term Loan B Facility commence in September 2021 and payments on the notes commence in October 2021. The average maturity of the Company's long-term debt at June 30, 2021 is approximately 7.6 years and the weighted-average interest rate on total borrowings for the three months ended June 30, 2021 is 3.0%. The schedule of principal payments required on long-term debt for the next five years and thereafter is as follows: ($ in millions) 2021 $ 19 2022 39 2023 39 2024 39 2025 39 Thereafter 9,308 Leases The Company has operating leases primarily for real estate. The Company determines if an arrangement is a lease at inception. When evaluating contracts for embedded leases, the Company exercises judgment to determine if there is an explicit or implicit identified asset in the contract and if the Company controls the use of that asset. Embedded leases are immaterial. The lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Real estate leases for facilities have a weighted average remaining lease term of 6.2 years and include two leases with an option to extend for 5 years and 1 year, respectively. The Company has made an accounting policy election not to record short-term leases (leases with an initial term of 12 months or less) on the balance sheet. Lease expense associated with short term leases was not material for all periods presented. Lease expense for operating lease payments is recognized on a straight-line basis over the term of the lease. Operating lease assets and liabilities are recognized based on the present value of lease payments over the lease term. Since most of the Company’s leases do not have a readily determinable implicit discount rate, the Company uses its incremental borrowing rate to calculate the present value of lease payments. On a quarterly basis, an updated incremental borrowing rate is determined based on the weighted average remaining lease term of each asset class and the Company's pretax cost of debt for that same term. The updated rates for each asset class are applied prospectively to new leases. The Company does not separate lease components (e.g. payments for rent, real estate taxes and insurance costs) from non-lease components (e.g. common-area maintenance costs) in the event that the agreement contains both. The Company includes both the lease and non-lease components for purposes of calculating the right-of-use asset and related lease liability (if the non-lease components are fixed). Allocated and actual operating lease cost was $20 million and $11 million for the three months ended June 30, 2021 and 2020, respectively, and $37 million and $22 million for the first six months of June 30, 2021 and 2020, respectively. None of the Company’s lease agreements contain variable lease payments. Sublease income is immaterial and there are no sale-leaseback transactions. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Cash paid for amounts included in the measurement of operating lease liabilities was $10 million for the six months ended June 30, 2021. Operating lease assets obtained in exchange for new operating lease liabilities were $282 million, and primarily consists of real estate operating leases entered into in connection with establishing Organon as a standalone Company. Supplemental balance sheet information related to operating leases is as follows: ($ in millions) June 30, 2021 December 31, 2020 Assets Other Assets $ 293 $ 31 Liabilities Accrued and other current liabilities 66 8 Other Noncurrent Liabilities 227 23 $ 293 $ 31 Weighted-average remaining lease term (years) 5.4 4.0 Weighted-average discount rate 3.2% 1.9% Maturities of operating leases liabilities as of June 30, 2021 are as follows: 2021 (excluding the first six months of 2021) $ 37 2022 73 2023 65 2024 49 2025 35 Thereafter 60 Total lease payments $ 319 Less: Imputed interest 26 $ 293 At June 30, 2021, the Company had entered into real estate operating leases that had not yet commenced. The obligations associated with these leases total $13.3 million. |
Contingencies
Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies The Company is involved in various claims and legal proceedings of a nature considered normal to its business, including product liability, intellectual property, and commercial litigation, as well as certain additional matters including governmental and environmental matters. In the opinion of the Company, it is unlikely that the resolution of these matters will be material to the Company’s financial condition, results of operations or cash flows. Given the nature of the litigation discussed in this note and the complexities involved in these matters, the Company is unable to reasonably estimate a possible loss or range of possible loss for such matters until the Company knows, among other factors, (i) what claims, if any, will survive dispositive motion practice, (ii) the extent of the claims, including the size of any potential class, particularly when damages are not specified or are indeterminate, (iii) how the discovery process will affect the litigation, (iv) the settlement posture of the other parties to the litigation and (v) any other factors that may have a material effect on the litigation. The Company records accruals for contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available. Individually significant contingent losses are accrued when probable and reasonably estimable. Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable. The Company’s decision to obtain insurance coverage is dependent on market conditions, including cost and availability, existing at the time such decisions are made. The Company has evaluated its risks and has determined that the cost of obtaining product liability insurance outweighs the likely benefits of the coverage that is available and, as such, has no insurance for most product liabilities. Reference is made below to certain litigation in which Merck, but not the Company, is named as a defendant. Pursuant to the Separation and Distribution Agreement, the Company is required to indemnify Merck for liabilities relating to, arising from, or resulting from such litigation. Product Liability Litigation Fosamax Merck is a defendant in product liability lawsuits in the United States involving Fosamax (alendronate sodium) (the "Fosamax Litigation"). As of June 30, 2021, approximately 3,475 cases comprising the Fosamax Litigation are pending against Merck in either federal or state court. Plaintiffs in the vast majority of these cases generally allege that they sustained femur fractures and/or other bone injuries ("Femur Fractures") in association with the use of Fosamax. All federal cases involving allegations of Femur Fractures have been or will be transferred to a multidistrict litigation in the District of New Jersey ("Femur Fracture MDL"). In the only bellwether case tried to date in the Femur Fracture MDL, Glynn v. Merck , the jury returned a verdict in Merck’s favor. In addition, in June 2013, the Femur Fracture MDL court granted Merck’s motion for judgment as a matter of law in the Glynn case and held that the plaintiff’s failure to warn claim was preempted by federal law. In August 2013, the Femur Fracture MDL court entered an order requiring plaintiffs in the Femur Fracture MDL to show cause why those cases asserting claims for a femur fracture injury that took place prior to September 14, 2010, should not be dismissed based on the court’s preemption decision in the Glynn case. Pursuant to the show cause order, in March 2014, the Femur Fracture MDL court dismissed with prejudice approximately 650 cases on preemption grounds. Plaintiffs in approximately 515 of those cases appealed that decision to the U.S. Court of Appeals for the Third Circuit ("Third Circuit"). In March 2017, the Third Circuit issued a decision reversing the Femur Fracture MDL court’s preemption ruling and remanding the appealed cases back to the Femur Fracture MDL court. In May 2019, the U.S. Supreme Court decided that the Third Circuit had incorrectly concluded that the issue of preemption should be resolved by a jury, and accordingly vacated the judgment of the Third Circuit and remanded the proceedings back to the Third Circuit to address the issue in a manner consistent with the Supreme Court’s opinion. In November 2019, the Third Circuit remanded the cases back to the District Court in order to allow that court to determine in the first instance whether the plaintiffs’ state law claims are preempted by federal law under the standards described by the Supreme Court in its opinion. Briefing on the issue is closed, and the parties await the decision of the District Court. Accordingly, as of June 30, 2021, approximately 980 cases were actively pending in the Femur Fracture MDL. As of June 30, 2021, approximately 2,215 cases alleging Femur Fractures have been filed in New Jersey state court and are pending before Judge James Hyland in Middlesex County. The parties selected an initial group of cases to be reviewed through fact discovery, and Merck has continued to select additional cases to be reviewed. As of June 30, 2021, approximately 275 cases alleging Femur Fractures have been filed and are pending in California state court. All of the Femur Fracture cases filed in California state court have been coordinated before a single judge in Orange County, California. Additionally, there are five Femur Fracture cases pending in other state courts. Discovery is presently stayed in the Femur Fracture MDL and in the state court in California. Nexplanon/Implanon Merck is a defendant in lawsuits brought by individuals relating to the use of Implanon and Nexplanon. In the United States, as of June 30, 2021, there were two filed product liability actions involving Implanon, both of which are pending in the Northern District of Ohio. In addition, there are 56 unfiled cases alleging similar injuries, which have been tolled under a written tolling agreement. As of June 30, 2021, Merck had 25 cases pending outside the United States, of which 20 relate to Implanon and five relate to Nexplanon. Propecia/Proscar Merck is a defendant in product liability lawsuits in the United States involving Propecia (finasteride) and/or Proscar (finasteride). The federal lawsuits were consolidated for pretrial purposes in federal multidistrict litigation in the Eastern District of New York (the "MDL"), and the matters in state court in New Jersey were consolidated in Middlesex County ("N.J. Coordinated Proceedings"). In 2018, Merck and the Plaintiffs’ Executive Committee in the MDL and the Plaintiffs’ Liaison Counsel in the N.J. Coordinated Proceedings entered into an agreement to resolve the lawsuits for an aggregate amount of $4.3 million. The settlement was subject to certain contingencies, including 95% plaintiff participation and a per plaintiff clawback if the participation rate was less than 100%. The contingencies were satisfied and the settlement agreement has been finalized. At June 30, 2021, only three cases remain pending in the United States, including a case currently pending in the MDL, a Propecia matter in state court in Los Angeles, California and a Proscar matter in the United States District Court for the Eastern District of California. The Company is also defending 16 product liability cases outside the United States four of which are class actions. Governmental Proceedings From time to time, the Company’s subsidiaries may receive inquiries and may be the subject of preliminary investigation activities from competition and other governmental authorities in markets outside the United States. These authorities may include regulators, administrative authorities, and law enforcement and other similar officials, and these preliminary investigation activities may include site visits, formal or informal requests or demands for documents or materials, inquiries or interviews and similar matters. Certain of these preliminary inquiries or activities may lead to the commencement of formal proceedings. Should those proceedings be determined adversely to the Company, monetary fines and/or remedial undertakings may be required. Hadlima (adalimumab-bwwd) In July 2021, the Company received a Civil Investigation Demand (“CID”) from the Office of the Attorney General for the State of Washington. The CID requests answers to interrogatories, as well as various documents, regarding certain activities related to adalimumab and adalimumab biosimilars. The Company is cooperating with the government’s investigation and intends to produce information and/or documents as necessary in response to the CID. Patent Litigation From time to time, generic manufacturers of pharmaceutical products file abbreviated New Drug Applications ("ANDAs") with the U.S. Food and Drug Administration ("FDA") seeking to market generic forms of the Company’s products prior to the expiration of relevant patents owned by the Company. To protect its patent rights, the Company may file patent infringement lawsuits against such generic companies. Similar lawsuits defending the Company’s patent rights may exist in other countries. The Company intends to vigorously defend its patents, which it believes are valid, against infringement by companies attempting to market products prior to the expiration of such patents. As with any litigation, there can be no assurance of the outcomes, which, if adverse, could result in significantly shortened periods of exclusivity for these products, potential payment of damages and legal fees, and, with respect to products acquired through acquisitions, potentially significant intangible asset impairment charges. Nexplanon — In June 2017, Microspherix LLC ("Microspherix") sued the Company in the U.S. District Court for the District of New Jersey asserting that the manufacturing, use, sale and importation of Nexplanon infringed several of Microspherix’s patents that claim radio-opaque, implantable drug delivery devices. Microspherix is claiming damages from September 2014 until the patents expired in May 2021. The Company brought Inter Partes Review ("IPR") proceedings in the United States Patent and Trademark Office ("USPTO") and successfully stayed the district court action. The USPTO invalidated some, but not all, of the claims asserted against the Company. The Company appealed the decisions that found claims valid, and the Court of Appeals for the Federal Circuit affirmed the USPTO’s decisions. The matter is no longer stayed in the district court, and the Company is currently litigating the invalidity and non-infringement of the remaining asserted claims. Other Litigation There are various other pending legal proceedings involving the Company, principally product liability and intellectual property lawsuits. While it is not feasible to predict the outcome of such proceedings, in the opinion of the Company, either the likelihood of loss is remote or any reasonably possible loss associated with the resolution of such proceedings is not expected to be material to the Company’s financial condition, results of operations or cash flows either individually or in the aggregate. Legal Defense Reserves Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable. Some of the significant factors considered in the review of these legal defense reserves are as follows: the actual costs incurred by the Company; the development of the Company’s legal defense strategy and structure in light of the scope of its litigation; the number of cases being brought against the Company; the costs and outcomes of completed trials and the most current information regarding anticipated timing, progression, and related costs of pre-trial activities and trials in the associated litigation. The amount of legal defense reserves as of June 30, 2021 and December 31, 2020 of approximately $9 million and $35 million, respectively, represents the Company’s best estimate of the minimum amount of defense costs to be incurred in connection with its outstanding litigation; however, events such as additional trials and other events that could arise in the course of its litigation could affect the ultimate amount of legal defense costs to be incurred by the Company. The decrease in the legal defense reserves in the second quarter of 2021, as compared to December 31, 2020, is primarily attributable to reserves related to certain litigation that was retained by Merck under the Separation and Distribution Agreement. Accordingly, and in connection with the Separation adjustments, the reserve was adjusted to Net Investment from Merck & Co., Inc. in the Condensed Consolidated Financial Statements to reflect the Company's best estimate of its legal defense reserves as of June 30, 2021. The Company will continue to monitor its legal defense costs and review the adequacy of the associated reserves and may determine to increase the reserves at any time in the future if, based upon the factors set forth, it believes it would be appropriate to do so. |
Stock-based Compensation Plans
Stock-based Compensation Plans | 6 Months Ended |
Jun. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation Plans | Stock-Based Compensation Plans Periods Prior to Separation Prior to the Separation, certain of the Company's employees participated in stock-based compensation plans sponsored by Merck. Under these plans Merck granted restricted stock units ("RSUs") and performance share units ("PSUs") to certain management level employees. In addition, employees and non-employee directors of Merck were granted options to purchase shares of Merck’s common stock at the fair market value at the time of grant. Prior to the Separation, for the three and six months ended June 30, 2021, Merck's stock-based compensation expense related to the Company’s employees has been recognized on a specific identification basis for employees transferred from Merck. Additionally, Merck’s corporate employee stock-based compensation expense was allocated to the Company on a proportional cost allocation method based on revenue and recognized in the Condensed Consolidated Statement of Income. For the three and six months ended June 30, 2020, since the Company operated together with other Merck businesses, Merck’s stock-based compensation expense for the Company’s employees, as well as Merck’s corporate and shared functional employees has been allocated to the Company on a proportional cost allocation method based on revenue or directly identifiable costs, depending on the employee’s function. The amounts presented for the periods prior to the Separation are not necessarily indicative of future awards and do not necessarily reflect the costs that the Company would have incurred as an independent company. As of Separation Date and Periods Post Separation In connection with the Separation, and in accordance with the EMA, Organon's employees with outstanding former Merck stock-based awards received replacement stock-based awards under the 2021 Incentive Stock Plan at Separation. The ratio used to convert the Merck stock-based awards was designed to preserve the aggregate intrinsic value of the award immediately after the Separation when compared to the aggregate intrinsic value of the award immediately prior to Separation. Due to the conversion, Organon incurred $17 million of incremental stock-based compensation expense. Of this amount, $4 million was related to vested option awards and was recognized during the second quarter of 2021 and $13 million to be recognized ratably over the option awards' remaining weighted average vesting period of 2.66 years. Effective June 3, 2021, Organon established the 2021 Incentive Stock Plan (the "Plan"). A total of 35,000,000 shares of common stock are authorized under the Plan. The plan provides for the grant of various types of awards including restricted stock unit awards, stock appreciation rights, stock options, performance-based awards and cash awards. Under the Plan, the exercise price of awards, if any, is set on the grant date and may not be less than the fair market value per share on that date. Generally, stock options have a term of ten years and a three-year vesting period, subject to limited exceptions. The Company measures stock-based compensation for equity awards at fair value on the date of grant and records stock-based compensation as a charge to earnings net of the estimated impact of forfeited awards. Accordingly, the Company recognizes stock-based compensation cost only for those stock-based awards that are estimated to ultimately vest over their requisite service period, based on the vesting provisions of the individual grants. The cumulative effect on current and prior periods of a change in the estimated forfeiture rate is recognized as compensation cost in earnings in the period of the change. Under the Plan, PSUs are eligible to be granted; however, none have been granted as of June 30, 2021. Total direct and allocated stock-based compensation expense for the three and six months ended June 30, 2021, the allocated stock-based compensation expense for the three and six months ended June 30, 2020 and the respective income tax benefits recognized by the Company in the Condensed Consolidated Statement of Income are as follows: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Stock-based compensation expense $ 18 $ 11 $ 29 $ 21 Income tax benefits 4 2 6 4 As noted above, and in connection with the Separation, Merck's PSUs and RSUs were converted into 3.3 million Organon RSUs at a weighted average grant date fair value of $36.77 and Merck's stock options were converted into 4.1 million Organon stock options at a weighted average grant date fair value of $8.55. Stock options were valued using a combination of option models. The Company used the Black-Scholes model as the basis for the original fair value of the options, and the Hull-White I Lattice option pricing model calculated the incremental fair value. In applying these models, the Company used both historical data and current market data to estimate the fair value of its options. The Black-Scholes model assumptions include expected dividend yield, risk-free interest rate, volatility, and term of the options. The Hull-White I Lattice model requires several assumptions including expected exercise barrier, dividend yield, risk-free interest rate, remaining vesting life and remaining contractual life. These fair value assumptions were based on the awards and terms previously granted under the Merck incentive compensation plans to Organon employees. These assumptions and related compensation amounts are not necessarily indicative of future awards and do not necessarily reflect the results that Organon would have experienced as an independent publicly traded company. Following the Separation, the weighted average exercise price of options and the weighted average grant date fair value of options for future grants will reflect those of Organon as a standalone company. The following table summarizes information about equity awards outstanding that are vested and expected to vest and equity awards outstanding that are exercisable at June 30, 2021: Equity Awards Vested and Expected to Vest Equity Awards That are Exercisable (shares in thousands; aggregate intrinsic value in millions) Awards Weighted Average Exercise Price Aggregate Intrinsic Value Remaining Term Awards Weighted Average Exercise Price Aggregate Intrinsic Value Remaining Term Stock Options 3,810 $ 34.30 $ 2 8.39 1,454 $ 30.66 $ 2 6.15 Restricted Stock 2,991 — 100 2.37 — — — — The amount of unrecognized compensation costs as of June 30, 2021 was $128 million, which will be recognized in operating expense ratably over the weighted average vesting period of 2.4 years. |
Pension and Other Postretiremen
Pension and Other Postretirement Benefit Plans | 6 Months Ended |
Jun. 30, 2021 | |
Retirement Benefits [Abstract] | |
Pension and Other Postretirement Benefit Plans | Pension and Other Postretirement Benefit Plans Prior to the Separation on June 2, 2021, Organon participated in Merck's U.S. and non-U.S. plans. Merck has defined benefit pension plans covering eligible employees in the United States and in certain of its international subsidiaries. Merck also provides medical benefits, principally to its eligible U.S. retirees and their dependents, through its other postretirement benefit plans. The Company participated in Merck's benefit plans as though it was a participant in a multi-employer plan with the other businesses of Merck. The retirement benefits guidance provides that liabilities beyond any contributions currently due and unpaid are not required to be reported. Accordingly, no assets or liabilities associated with these plans have been reflected in the Company’s Condensed Consolidated Balance Sheet. The Condensed Consolidated Statement of Income includes expense allocations for these benefits, which were determined using a proportional allocation method. Total benefit plan expense allocated to the Company amounted to $11 million and $15 million for the three months ended June 30, 2021 and 2020, respectively, and $29 million and $28 million for the six months ended June 30, 2021 and 2020, respectively. The Company's participation in the defined pension and postretirement benefit plans sponsored by Merck concluded upon the completion of the Separation on June 2, 2021. In accordance with the terms of the EMA, prior to the Separation, Merck continued to provide service crediting to employees that transferred to Organon under Merck's U.S. defined benefit pension plan, supplemental executive retirement, and retiree medical plans for purposes of early retirement eligibility and subsidies, as well as for certain service crediting bridges. Although Merck is responsible for providing these benefits, Organon will record that portion of the aggregate incremental cost of providing early retirement subsidies, service crediting bridges, and retiree healthcare benefits under these programs that is attributable to future service. Accordingly, upon Separation, the Company recorded a "grow-in" provision granted to employees transferred to Organon of $50 million, which represented the future service earned with Organon for these transferred employees for the pension and other postretirement benefits. The "grow-in" provision was recorded as an asset and will be expensed over the estimated average service period of eight years in operating expenses. Of the $50 million, $44 million is non-current and reflected in Other Assets and the current portion of $6 million is reflected in Other current assets . As of June 2, 2021, the Organon Entities and the Transferred Entities became the plan sponsors for certain non-U.S. defined benefit pension plans and these Condensed Consolidated Financial Statements reflect the periodic benefit costs and funded status of such plans. Organon pension plans are primarily comprised of plans in Switzerland, Belgium, Korea, Germany and Italy. In connection with the Separation, Organon recognized a net liability of $109 million in June 2021, reflecting the unfunded projected benefit obligation as of June 30, 2021. This was comprised of $93 million of assets and $202 million of liabilities of certain Merck non-U.S. defined benefit pension plans attributable to Organon non-U.S. employees that were transferred to these non-U.S. Organon benefit plans. The Company uses December 31 as the year-end measurement date for these plans. The majority of the plan assets transferred are investment funds in developed market equities, or government agency obligations. The basis for the fair value measurement of these investments was derived from quoted prices in active markets for identical assets or liabilities and as such were classified as a Level 1 in the fair value hierarchy. There are no unfunded commitments or redemption restrictions related to these investments. The Company expects to contribute approximately $7 million to its pension plans in the second half of 2021. Net Periodic Benefit Cost The net periodic benefit cost for pension plans of the Organon Entities and the Transferred Entities consisted of $6 million and $1 million for the three months ended June 30, 2021 and 2020, respectively, and $7 million and $2 million for the six months ended June 30, 2021, and 2020, respectively. |
Other (Income) Expense, Net
Other (Income) Expense, Net | 6 Months Ended |
Jun. 30, 2021 | |
Other Income and Expenses [Abstract] | |
Other (Income) Expense, Net | Other (Income) Expense, Net Other (income) expense, net, consisted of: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Exchange (gains) losses $ 9 $ 21 $ 5 $ 34 Interest expense 62 — 62 — Other, net 11 (11) 13 — $ 82 $ 10 $ 80 $ 34 |
Taxes on Income
Taxes on Income | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Taxes on Income | Taxes on Income The effective income tax rates were 1.4% and 16.5% for the three months ended June 30, 2021 and 2020, respectively, and 8.6% and 14.6% for the six months ended June 30, 2021 and 2020, respectively. These effective income tax rates reflect the beneficial impact of foreign earnings. During the second quarter of 2021 the Company recorded a $70 million tax benefit relating to a portion of the non- U.S. step-up of tax basis associated with the Company's Separation from Merck. The effective income tax rate for the six months ended June 30, 2021, also reflects the Internal Revenue Service ("IRS") conclusion of its examinations of Merck’s 2015-2016 U.S. federal income tax returns. As a result, the Company reflected an allocation from Merck of $18 million representing the Company's portion of the payment made to the IRS in the Condensed Consolidated Financial Statements. The Company's portion of reserves for unrecognized tax benefits for the years under examination exceeded the allocated adjustments relating to this examination period and therefore the Company included a $29 million net tax benefit during the six months ended June 30, 2021. This net benefit reflects reductions in reserves for unrecognized tax benefits and other related liabilities for tax positions relating to the years that were under examination. The Company is subject to income tax in the United States (federal, state and local) as well as other jurisdictions outside of the United States in which we operate. As part of the Separation from Merck, $79.3 million of liabilities for unrecognized tax benefits associated with uncertain tax positions for jurisdictions outside of the United States were conveyed to Organon. |
Other Comprehensive Income (Los
Other Comprehensive Income (Loss) | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss) Changes in Accumulated other comprehensive loss by component are as follows: ($ in millions) Employee Cumulative Accumulated Other Balance at April 1, 2020, net of taxes $ (346) $ (718) $ (1,064) Other comprehensive income (loss), pretax 4 25 29 Tax (1) — (1) Other comprehensive income (loss), net of taxes 3 25 28 Balance at June 30, 2020, net of taxes $ (343) $ (693) $ (1,036) Balance at April 1, 2021, net of taxes $ (33) $ (656) $ (689) Other comprehensive income (loss), pretax — 218 218 Tax (6) — (6) Other comprehensive loss, net of taxes (6) 218 212 Transfer of benefit plans from Merck affiliates 13 — 13 Balance at June 30, 2021, net of taxes $ (26) $ (438) $ (464) ($ in millions) Employee Cumulative Accumulated Other Balance at January 1, 2020, net of taxes $ (354) $ (560) $ (914) Other comprehensive income (loss), pretax 14 (133) (119) Tax (3) — (3) Other comprehensive income (loss), net of taxes 11 (133) (122) Balance at June 30, 2020, net of taxes $ (343) $ (693) $ (1,036) Balance at January 1, 2021, net of taxes $ (32) $ (590) $ (622) Other comprehensive income (loss), pretax 2 152 154 Tax (10) — (10) Other comprehensive loss, net of taxes (8) 152 144 Transfer of benefit plans to Merck affiliates 14 — 14 Balance at June 30, 2021, net of taxes $ (26) $ (438) $ (464) |
Product and Geographic Informat
Product and Geographic Information | 6 Months Ended |
Jun. 30, 2021 | |
Segment Reporting [Abstract] | |
Product and Geographic Information | Product and Geographic InformationThe Company’s operations include the following product portfolios, which constitute one operating segment engaged in developing and delivering innovative health solutions through its portfolio of prescription therapies within women’s health, biosimilars and established brands. Sales of the Company’s products were as follows: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 ($ in millions) U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total Women’s Health Nexplanon/Implanon NXT $ 129 $ 56 $ 184 $ 87 $ 44 $ 132 $ 269 $ 98 $ 368 $ 237 $ 90 $ 326 Follistim AQ 27 38 65 20 24 44 52 65 117 40 44 85 NuvaRing 26 28 53 35 28 63 47 52 98 61 64 126 Ganirelix Acetate Injection 5 25 31 3 11 14 14 46 60 3 27 30 Cerazette — 18 18 — 15 15 — 34 34 — 33 33 Other Women's Health (1) 23 43 66 54 28 82 63 76 139 75 65 141 Biosimilars Renflexis 36 7 43 28 3 30 70 11 81 54 5 59 Ontruzant 7 15 22 — 18 19 11 34 45 — 40 40 Brenzys — 11 11 — 11 11 — 21 21 — 29 29 Other Biosimilars (1) — 10 10 — — — — 19 19 — — — Established Brands Cardiovascular Zetia 2 97 99 (1) 138 137 4 186 190 (4) 285 282 Vytorin 2 42 45 2 37 39 5 81 86 6 87 92 Atozet — 121 121 — 115 115 — 233 233 — 238 238 Rosuzet — 18 18 — 31 31 — 33 33 — 63 63 Cozaar/Hyzaar 2 84 86 5 94 98 6 171 177 12 188 200 Zocor 1 15 16 1 14 16 2 29 31 — 39 39 Other Cardiovascular (1) — 45 45 — 54 54 — 69 69 — 87 87 Respiratory Singulair 3 89 92 4 95 100 8 191 199 9 246 255 Nasonex 1 51 52 4 45 49 3 92 95 10 110 120 Dulera 42 10 52 32 7 39 73 18 91 105 18 122 Clarinex 2 29 30 2 32 33 3 52 55 3 81 84 Asmanex 13 1 14 12 2 14 29 3 32 38 4 42 Other Respiratory (1) — 8 8 — 5 5 — 12 12 1 14 15 Non-Opioid Pain, Bone and Dermatology Arcoxia — 62 62 — 65 65 — 119 119 — 135 135 Fosamax 1 48 49 1 52 52 2 85 86 2 92 93 Diprospan — 32 32 — 24 24 — 57 57 — 53 53 Diprosone 1 23 23 — 16 17 1 42 43 1 36 37 Other Non-Opioid Pain, Bone and Dermatology (1) 3 49 52 1 43 44 2 91 93 2 91 93 Other Proscar — 31 32 — 51 51 1 63 64 1 93 94 Propecia 2 34 36 2 26 28 4 63 67 5 53 58 Sinemet — 18 18 — 19 19 — 36 36 — 40 40 Remeron 1 15 15 1 16 16 1 31 32 1 30 31 Other (1) 12 35 48 6 41 46 23 80 102 29 87 116 Other (2) (2) 49 47 4 20 24 (3) 119 117 6 41 48 Total sales $ 339 $ 1,257 $ 1,595 $ 303 $ 1,224 $ 1,526 $ 690 $ 2,412 $ 3,101 $ 697 $ 2,608 $ 3,306 U.S. plus international may not equal total due to rounding . (1) Includes sales of products not listed separately. Revenue from an arrangement for the sale of generic etonogestrel/ethinyl estradiol vaginal ring is included in Other Women's Health. (2) Includes allocated amounts from revenue hedging activities and manufacturing sales to Merck and third parties. Combined sales by geographic area where derived are as follows: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Europe and Canada $ 470 $ 378 $ 904 $ 859 United States 339 303 690 697 Asia Pacific and Japan 309 419 587 836 China 236 211 442 429 Latin America, Middle East, Russia and Africa 190 187 357 421 Other (1) 51 28 121 64 $ 1,595 $ 1,526 $ 3,101 $ 3,306 (1) Primarily reflects allocated amounts from revenue hedging activities and manufacturing sales to Merck and third parties. |
Related Party Disclosures
Related Party Disclosures | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Disclosures | Related Party Disclosures Prior to the Separation, the Company did not operate as a standalone business and the Condensed Consolidated Financial Statements were derived from the consolidated financial statements and accounting records of Merck. The following disclosure summarizes activity between the Company and Merck up to the Separation, including the affiliates of Merck that were not part of the Separation. Cost allocations from Merck Merck provided significant corporate, manufacturing, selling, marketing, administrative, research services and resources to the Company. Some of these services continue to be provided by Merck to the Company on a temporary basis under the Transition Services Agreement. The Condensed Consolidated Financial Statements reflect an allocation of these costs. See Note 2 for a discussion of these costs and the methodology used to allocate them. The allocations reflected in the Condensed Consolidated Statement of Income for continuing operations are as follows: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Cost of sales $ 13 $ 122 $ 69 $ 253 Selling, general and administrative 46 151 134 328 Research and development 10 39 35 78 $ 69 $ 312 $ 238 $ 659 Management believes these cost allocations are a reasonable reflection of the utilization of services provided to, or the benefit derived by, the Company during the periods presented. The allocations may not, however, be indicative of the actual expenses that would have been incurred had the Company operated as a standalone public company at the time. Actual costs that may have been incurred if the Company had been a standalone public company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by Company’s employees and strategic decisions made in areas such as manufacturing, selling, information technology and infrastructure. Related party transactions The following transactions represent activity between Organon Entities and Transferred Entities with other Merck affiliates prior to the Separation: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Included in continuing operations Supply sales to Merck affiliates $ 58 $ — $ 143 $ — Purchases from Merck affiliates 28 — 65 — Cost reimbursements and fees from Merck affiliates — — 1 — Included in discontinued operations Supply sales to Merck affiliates $ — $ 154 $ 12 $ 298 Purchases from Merck affiliates 3 317 53 630 The Company had the following balances with Merck affiliates: ($ in millions) December 31, 2020 Included in continuing operations Short term borrowings, net $ 1,512 Short term loans and notes payable, net — Trade payables (receivables), net (173) Due to related party $ 1,339 Included in discontinued operations Short term loans receivables, net $ 247 Short term notes payable, net (25) Trade payables, net (33) Due from related party $ 189 Net transfers to Merck & Co., Inc. Prior to the Separation, net transfers to Merck were included within Net investment from Merck & Co., Inc. on the Condensed Consolidated Statement of Equity and represent the net effect of transactions between the Company and Merck. The components of Net transfers to Merck & Co., Inc. for the six months ended June 30, 2021 were as follows: Six Months Ended June 30, ($ in millions) 2021 2020 Cash pooling and general financing activities $ 168 $ 2,129 Cost allocations, excluding non-cash stock-based compensation (209) (638) Taxes deemed settled with Merck (259) (100) Allocated derivative and hedging (losses) gains (88) 3 Net transfers (from) to Merck & Co., Inc. as reflected in the Condensed Consolidated Statement of Cash Flows for Continuing Operations $ (388) $ 1,394 Net transfers to (from) Merck included in Net Cash Provided by (Used in) Discontinued Operations 597 (203) Total net transfers to Merck as included in the Condensed Consolidated Statement of Cash Flows $ 209 $ 1,191 Stock-based compensation expense (includes $3 and $7 of discontinued operations for the six months ended June 30, 2021 and 2020, respectively) (32) (28) Net assets contributed by Merck affiliates (778) (10) Recognition of amounts in Accumulated other comprehensive loss related to employee benefit plan transfers to Merck affiliates 13 — Net transfers (from) to Merck & Co., Inc. as reflected in the Condensed Consolidated Statement of Equity $ (588) $ 1,153 The components of Net transfers to Merck & Co., Inc. for the three months ended June 30, 2021 were as follows: Three Months Ended June 30, ($ in millions) 2021 2020 Cash pooling and general financing activities $ (585) $ 1,024 Net assets distributed to (contributed by) Merck Affiliates (838) — Cost allocations (72) (316) Income taxes deemed settled with Parent (136) (58) Allocated derivative and hedging gains (losses) (53) (56) Net transfers to Parent as reflected in the Condensed Consolidated Statement of Equity $ (1,684) $ 594 During the first six months of 2021, prior to the Separation, transfers between the Organon Entities, the Transferring Entities and Merck affiliates were recognized in Net transfers to Merck & Co., Inc. in the combined statement of equity at Merck’s historical cost (see Note 2). Additionally, during the three and six months ended June 30, 2021, in connection with the Separation, certain assets and liabilities included in the pre-Separation balance sheet were retained by Merck and certain assets and liabilities not included in the pre-Separation balance sheet were transferred to Organon. Separation-related adjustments were also recognized in Net transfers to Merck & Co., Inc. Adjustments for transfers and separations during the three and six months ended June 30, 2021 were comprised of (i) the retention of assets and liabilities by Merck affiliates including accounts receivable, net of $751 million, inventories of $225 million and $265 million for the three and six months ended June 30, 2021, respectively, transition tax liabilities of $1.4 billion and certain liabilities net of other assets of $222 million and $210 million for the three and six months of 2021, respectively, partially offset by (ii) the contribution of assets and liabilities to Organon Entities from Merck affiliates, including assets of $59 million and liabilities of $7 million and $35 million for the three and six months ended June 30, 2021, respectively. Additionally, during the second quarter of 2021, the Company recorded an out-of-period adjustment of approximately $145 million to establish a prepaid tax asset with an offsetting increase to Net Investment from Merck & Co., Inc. The adjustment did not have any impact on the Company's statement of income or cash flows. The Company concluded that the adjustment was not material to the Condensed Consolidated Financial Statements for either the current period or prior periods. In connection with the Separation, the Company entered into various agreements, including, but not limited to, the Tax Matters Agreement, the EMA and the Transition Services Agreement. The Separation and Distribution Agreement contains provisions that, among other things, relate to (i) assets, liabilities and contracts to be transferred, assumed and assigned to each of Organon and Merck as part of the Separation, (ii) cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of Organon business with Organon and financial responsibility for the obligations and liabilities of Merck’s remaining business with Merck, (iii) procedures with respect to claims subject to indemnification and related matters, (iv) the allocation among Organon and Merck of rights and obligations under existing insurance policies with respect to occurrences prior to completion of the Distribution, as well as the right to proceeds and the obligation to incur certain deductibles under certain insurance policies, and (v) procedures governing Organon’s and Merck’s obligations and allocations of liabilities with respect to ongoing litigation matters that may implicate each of Merck’s business and Organon’s business. Agreements that Organon entered into with Merck that govern aspects of Organon’s relationship with Merck following the Separation include: • Transition Services Agreements - Under the TSA, (i) Merck and certain of its affiliates will provide Organon and certain of its affiliates, on an interim, transitional basis, various services and (ii) Organon and certain of its affiliates will provide Merck and certain of its affiliates, on an interim, transitional basis, various services. The services to be provided by Merck will include, among others, information technology, human resources, finance, quality, regulatory, supply chain management, promotional services, distribution services and certain other services, and will generally be provided on a cost or, where applicable, a cost-plus basis. The Merck services generally commenced on the date of the Separation and will generally terminate within 25 months following the date of Separation. Organon generally has the right to request the early termination of any or all services with advance notice. The services to be provided by Organon include quality, regulatory, supply chain management, promotional services, distribution services and certain other services and has provided on a cost or, where applicable, a cost-plus basis. The provisions of Organon services under the TSA generally commenced on the date of Separation and terminate within 25 months following the Separation. Merck will generally have the right to request the early termination of any or all services with advance notice. • Interim Operating Agreements - Merck and Organon entered into a series of interim operating model ("IOM") agreements pursuant to which Merck and certain of its affiliates that held licenses, permits and other rights in connection with marketing, import and/or distribution of Organon products in various jurisdictions prior to the Separation will continue to market, import and distribute such products until such time as the relevant licenses and permits are transferred to Organon or its affiliates, while permitting Organon (or Merck, as applicable) to recognize revenue relating to the sale of its respective products, to the extent practicable. Under such interim operating agreements and in accordance with the Separation and Distribution Agreement, the relevant Merck entity will continue operations in the affected market on behalf of Organon, with Organon receiving all of the economic benefits and burdens of such activities. Organon began receiving these economic benefits as of June 2, 2021. Based on the terms of the IOM agreement, the Company determined it is the Principal under this arrangement. Organon holds, all risks, and rewards of ownership inclusive of risk of loss, market risk and benefits related to the inventory. Additionally, Organon has latitude in pricing, has the ability to direct Merck regarding decisions over inventory, and is responsible for all credit and collections risks and losses associated with the related receivables. As such, Organon recognizes these sales on a gross basis. • Manufacturing and Supply Agreements - Merck and Organon and/or their applicable affiliates entered into a number of manufacturing and supply agreements pursuant to which the relevant Merck entity will (a) manufacture and supply certain active pharmaceutical ingredients for the relevant Organon entity, (b) toll manufacture and supply certain formulated pharmaceutical products for such Organon entity, and (c) package and label certain finished pharmaceutical products for such Organon entity. Similarly, the relevant Organon entity will (a) manufacture and supply certain formulated pharmaceutical products for the relevant Merck entity, and (b) package and label certain finished pharmaceutical products for such Merck entity. • Tax Matters Agreement - The TMA allocates responsibility for all U.S. federal income, state and foreign income, franchise, capital gain, withholding and similar taxes, as well as all non-income taxes. The TMA also provides for cooperation between Merck and Organon with respect to tax matters, the exchange of information and the retention of records that may affect the tax liabilities of the parties to the TMA. Merck generally is responsible for any income taxes reportable on an originally filed consolidated, combined or unitary return that includes Merck or any of its subsidiaries (and Organon and/or any of its subsidiaries) for any periods or portions thereof ending on or prior to the Distribution. Organon generally is responsible for any income taxes that are reportable on originally filed returns that include only Organon and/or any of its subsidiaries, for all tax periods. Additionally, as a general matter, Merck is responsible for certain income and non-income taxes imposed as the direct result of the Separation or of an internal separation transaction. Organon is responsible for certain taxes that exclusively relate to Organon’s business and for taxes resulting from any breach of certain representations or covenants that Organon made in the TMA. The TMA imposes restrictions on Organon and its subsidiaries during the two-year period following the Distribution. The restrictions are intended to prevent the Distribution and certain related transactions from failing to qualify as tax-free for U.S. federal income tax purposes. During such period, Organon and its subsidiaries generally are prohibited from, among other things, entering into transactions in which all or a portion of the shares of the Common Stock would be acquired or all or a portion of certain assets of Organon and its subsidiaries would be acquired. Organon and its subsidiaries also are prohibited, during such period, from merging or consolidating with any other person, issuing equity securities beyond certain thresholds, and repurchasing Common Stock other than in certain open-market transactions. • Employee Matters Agreement - The EMA allocates assets, liabilities and responsibilities relating to employee compensation and benefit plans and programs and other related matters in connection with the Separation. • Other agreements that Organon entered into with Merck include the Intellectual Property License Agreements and Regulatory Agreements. The amount due from Merck under the above agreements was $991 million at June 30, 2021 and is reflected in accounts receivable. The amount due to Merck under these agreements was $1.5 billion at June 30, 2021 and is included in accounts payable. For the period after June 2, 2021, sales and cost of sales resulting from the manufacturing and supply agreements with Merck were $13.5 million and $12.8 million, respectively. After the distribution to Merck of $9.0 billion net debt proceeds (See Note 9) and settlement of certain balances with Merck and its affiliates, we began operations as an independent company with approximately $900 million of cash and cash equivalents, which reflects approximately $400 million in cash, which the Company will use for the purchase of inventory from Merck upon exit of certain IOMs. As of June 30, 2021 Merck conveyed to Organon $79.3 million of reserves for unrecognized tax benefits associated with uncertain tax positions for jurisdictions outside of the United States. The Company also incurred costs related to employee matters in connection with the Separation, primarily related to stock-based and pension related compensation costs. See Notes 11 and 12 for further details. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations In contemplation of the Separation, the Merck Retained Products business in the Transferred Entities was distributed to Merck affiliates and, accordingly, the historical results of operations, assets and liabilities, and the cash flows of the Merck Retained Products for such Transferred Entities are reflected as discontinued operations. The components of Income (loss) from discontinued operations, net of tax for the Merck Retained Products business for the three months ended June 30, 2021 and 2020 and the first six months of 2021 and 2020 are as follows: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Sales $ 4 $ 418 $ 93 $ 883 Costs, Expenses and Other Cost of Sales 13 374 65 712 Selling, general and administrative 1 78 15 168 Research and development — 22 4 49 Restructuring costs — — — 5 Other (income) expense, net (6) (13) 4 12 Income (loss) from discontinued operations before taxes $ (4) $ (43) $ 5 $ (63) Taxes on income — 1 5 12 Income from discontinued operations, net of taxes $ (4) $ (44) $ — $ (75) Discontinued operations includes related party sales of $154 million for the three months ended June 30, 2020, and $12 million and $298 million for the six months ended June 30, 2021 and 2020, respectively. Costs for inventory purchases from related parties was $3 million and $317 million for the three months ended June 30, 2021 and 2020, respectively, and $53 million and $630 million for the six months ended June 30, 2021 and 2020, respectively. The components of assets and liabilities of discontinued operations that are stated separately as of December 31, 2020 in the Condensed Consolidated Balance Sheets are comprised of the following items: ($ in millions) December 31, 2020 Assets Cash and cash equivalents $ 58 Accounts receivable 322 Inventories 58 Due from related party 189 Other current assets 47 Total current assets of discontinued operations 674 Property, Plant and Equipment, net 14 Other Noncurrent Assets 77 Total Noncurrent Assets of Discontinued Operations 91 Total Assets of Discontinued Operations $ 765 Liabilities Trade accounts payable $ 35 Accrued and other current liabilities 93 Total current liabilities of discontinued operations 128 Deferred Income Taxes — Other Noncurrent Liabilities 83 Total Noncurrent Liabilities of Discontinued Operations 83 Total Liabilities of Discontinued Operations $ 211 |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share On June 2, 2021, the date of the Separation, 253,516,000 shares of the Common Stock were distributed to Merck stockholders of record as of the Record Date. This share amount is utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Separation. For the second quarter and year to date calculations, these shares are treated as issued and outstanding at January 1, 2020 for purposes of calculating historical basic and diluted earnings per share. Prior to the Separation, certain of the Company's employees participated in stock-based compensation plans sponsored by Merck. Under these plans employees were granted stock options, performance share units, ("PSUs"), and restricted stock units ("RSUs"). On June 2, 2021, and in accordance with the EMA, all Merck stock options, PSUs and RSUs were converted using the conversion ratios set forth in the EMA. Merck stock options, PSUs and RSUs were converted into Organon RSUs and option awards. Awards were equitably adjusted to reflect the spin-off and to preserve the same intrinsic value and general terms and conditions (including vesting) as were in place immediately prior to the adjustments (see Note 11 for additional details). The calculation of basic and diluted earnings per common share for the three and six months ended June 30, 2021 and 2020 was as follows: Three Months Ended June 30, Six Months Ended June 30, ($ in millions and shares in thousands, except per share amounts) 2021 2020 2021 2020 Net income attributable to Organon: Income from continuing operations $ 431 $ 586 $ 826 $ 1,320 Income from discontinued operations (4) (44) — (75) Net income attributable to Organon $ 427 $ 542 $ 826 $ 1,245 Basic weighted average number of shares outstanding 253,516 253,516 253,516 253,516 Stock awards and equity units (share equivalent) 312 — 312 — Diluted weighted average common shares outstanding 253,828 253,516 253,828 253,516 Earnings (Loss) Per Share Attributable to Organon common stockholders - Basic Income from continuing operations $ 1.70 $ 2.31 $ 3.26 $ 5.21 Income from discontinued operations (0.02) (0.17) — (0.30) Basic earnings per common share attributable to Organon common stockholders $ 1.68 $ 2.14 $ 3.26 $ 4.91 Earnings (Loss) Per Share Attributable to Organon common stockholders - Diluted Income from continuing operations 1.70 2.31 3.25 5.21 Income from discontinued operations (0.02) (0.17) — (0.30) Diluted earnings per common share attributable to Organon common stockholders $ 1.68 $ 2.14 $ 3.25 $ 4.91 For periods prior to the Separation, it is assumed that there were no dilutive equity instruments as there were no equity awards of Organon outstanding prior to the Separation. For periods subsequent to the Separation and the Distribution, diluted earnings per share is computed by giving effect to all potentially dilutive stock awards that are outstanding. The computation of diluted earnings per share excludes the effect of the potential exercise of stock-based awards, when the effect of the potential exercise would be anti-dilutive. The weighted-average number of common shares outstanding for basic and diluted earnings per share for the three and six months ended June 30, 2021 was based on the weighted-average number of common shares outstanding for the period beginning after the Distribution date. For both the second quarter of 2021 and the first six months of 2021, 5.2 million common shares issuable under stock-based compensation plans were excluded from the computation of earnings per common share assuming dilution because the effect would have been antidilutive. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsIn July 2021, Organon and ObsEva entered into a license agreement whereby Organon will license the global development, manufacturing and commercial rights to ebopiprant (OBE022). Ebopiprant is an investigational, orally active, selective prostaglandin F2α (PGF2α) receptor antagonist being evaluated as a potential treatment for preterm labor by reducing inflammation and uterine contractions. Under the terms of the license agreement, Organon will gain exclusive worldwide rights to develop and commercialize ebopiprant. ObsEva is entitled to receive tiered double-digit royalties on commercial sales, up to $90 million in development and regulatory milestone payments, and up to $385 million in sales-based payments that will be paid by Organon upon achievement. Upon execution of the agreement, Organon paid a $25 million upfront payment. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting | On June 2, 2021, the Company became a standalone publicly traded company, and its financial statements are now presented on a consolidated basis. Prior to the Separation on June 2, 2021, the Company’s historical combined financial statements were prepared on a standalone basis and were derived from Merck’s consolidated financial statements and accounting records. The unaudited financial statements for all periods presented, including the historical results of the Company prior to June 2, 2021, are now referred to as "Condensed Consolidated Financial Statements", and have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by U.S. generally accepted accounting principles ("GAAP") for complete consolidated financial statements are not included herein. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. In the Company’s opinion, all adjustments necessary for a fair statement of these interim statements have been included and are of a normal and recurring nature. These interim statements should be read in conjunction with the audited financial statements and notes thereto included in Organon’s Registration Statement on Form 10, as amended, filed on April 29, 2021 (the "Form 10"). Periods Prior to Separation The assets, liabilities, revenue and expenses of the Company were reflected in the condensed combined financial statements on a historical cost basis, as included in the consolidated financial statements of Merck, using the historical accounting policies applied by Merck. The condensed combined financial statements did not purport to reflect what the Company’s results of operations, comprehensive income, financial position, equity or cash flows would have been had the Company operated as a standalone public company during the periods presented. The condensed combined financial statements were prepared following a legal entity approach, which resulted in the inclusion of the following: • Certain assets and liabilities, results of operations and cash flows attributable to the sales of Organon Products that have been or were contributed to Organon prior to the consummation of the Separation. • The Transferred Entities, which have historically included the results from the sales of both Organon Products and the Merck Retained Products. Each Transferred Entity’s historical operations, including its results of operations, assets and liabilities, and cash flows have been fully reflected in the condensed combined financial statements. • In contemplation of the Separation the Merck Retained Products business of the Transferred Entities was distributed to Merck and its affiliates ("MRP Distribution") and, accordingly, the historical results of operations, assets and liabilities, and the cash flows of the Merck Retained Products for such Transferred Entities are reflected as discontinued operations. The Company’s businesses have historically functioned together with the other businesses controlled by Merck. Accordingly, the Company relied on Merck’s corporate and other support functions for its business. Therefore, for the period prior to the Separation, certain corporate and shared costs were allocated to the Company based on a specific identification basis or, when specific identification was not practicable, a proportional cost allocation method, including: (i) expenses related to Merck support functions, including expenses for facilities, executive oversight, treasury, finance, legal, human resources, shared services, compliance, procurement, information technology and other corporate functions. (ii) certain manufacturing and supply costs incurred by Merck’s manufacturing division, including facility management, distribution, logistics, planning and global quality. (iii) certain costs incurred by Merck’s human health division in relation to selling and marketing activities, and related administrative support functions, that are not routinely allocated to therapeutic areas. (iv) certain costs incurred by Merck’s research laboratories for activities related to drug discovery and development, as well as medical and regulatory affairs. (v) restructuring costs (see Note 5) and stock-based compensation expenses (see Note 11); and (vi) certain compensation expenses maintained on a centralized basis such as certain employee benefit expenses. Management believes these cost allocations were a reasonable reflection of the utilization of services provided to, or the benefit derived by, the Company during the period prior to the Separation, though the allocations may not be indicative of the actual costs that would have been incurred had the Company operated as a standalone public company. Actual costs that may have been incurred if the Company had been a standalone company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by Company’s employees, and strategic decisions made in areas such as manufacturing, selling and marketing, research and development, information technology and infrastructure. Merck maintains various employee benefit plans in which the Company’s employees participated during periods prior to the Separation, and a portion of the costs associated with these plans was included in the Company’s Condensed Consolidated Financial Statements. The Condensed Consolidated Balance Sheet at December 31, 2020 only includes assets and liabilities relating to plans for which the entity being transferred is the plan sponsor. During the first quarter of 2021, certain pension assets and obligations were transferred by Merck into legal entities established to operate the Organon Products business (the "Organon Entities") that are the plan sponsor and, accordingly, the Condensed Consolidated Balance Sheet at June 30, 2021 includes assets and liabilities of the newly established plans of Organon. Merck utilized a centralized approach to cash management and the financing of its operations. Cash generated by the Company was routinely transferred into accounts managed by Merck’s centralized treasury function and cash disbursements for the Company’s operations prior to the Separation were funded as needed by Merck. Cash and cash equivalents of the Organon Entities and the Transferred Entities were reflected in the Company’s Condensed Consolidated Balance Sheet. Balances held by the Organon Entities and the Transferred Entities with Merck for cash transfers and loans were reflected as Due to related party prior to Separation. All other cash, cash equivalents, short-term investments and related transfers between Merck and the Company were generally held centrally through accounts controlled and maintained by Merck and were not specifically identifiable to the Company. Accordingly, such balances were accounted for through Net investment from Merck & Co., Inc . Merck’s third-party debt and related interest expense were not attributed to the Company because the Company was not the legal obligor of the debt and the borrowings were not specifically identifiable to the Company. For the Organon Entities and the Transferred Entities, transactions with Merck affiliates were included in the Condensed Consolidated Statement of Income and related balances were reflected as Due to related party, Due from related party or Related Party Loans Payable in the continuing operations and discontinued operations, as applicable. Other balances between the Company and Merck were considered to be effectively settled in the Condensed Consolidated Financial Statements at the time the transactions were recorded. See Note 17 for additional details. As the separate legal entities that made up the Company’s business were not historically held by a single legal entity, Net investment from Merck & Co., Inc. was shown in lieu of stockholders’ equity in these Condensed Consolidated Financial Statements. Net investment from Merck & Co., Inc. represented Merck’s interest in the recorded assets of the Company and the cumulative investment by Merck in the Company through the date of Separation, inclusive of operating results. Income tax expense and tax balances in the Condensed Consolidated Financial Statements have been calculated on a separate tax return basis. The Company’s operations are included in the tax returns of certain Organon Entities, Transferred Entities or the respective Merck entities of which the Company’s business was a part. As of Separation Date Certain assets and liabilities, including accounts receivables, inventories and trade payables included on the condensed combined balance sheets prior to the Separation, have been retained by Merck post-Separation and therefore have been adjusted through Net investment from Merck & Co., Inc. in the Company’s Condensed Consolidated Financial Statements. Additionally, certain amounts previously included in Due to related party or Due from related party are reflected in accounts receivable and trade accounts payable on June 30, 2021. As part of the Separation, Net investment from Merck & Co., Inc. was reclassified to Common Stock and Accumulated Deficit . In connection with the Separation, additional pension assets and obligations were transferred to Organon, and the Company recorded these in the Condensed Consolidated Balance Sheet. See Note 12 for details. Additionally, stock-based awards were converted in accordance with the Employee Matters Agreement, ("EMA"). See Note 11 for details. During the second quarter of 2021, an aggregate of $9.5 billion of debt was issued in connection with the Separation. Such indebtedness resulted in the recording of interest expense in the month of June 2021 (see Note 9 for additional details). Periods Post Separation Following the Separation, certain functions continue to be provided by Merck under the Transition Services Agreement or are being performed using the Company’s own resources or third-party service providers. Additionally, under manufacturing and supply agreements, the Company manufactures certain products for Merck, or its applicable affiliate and Merck manufactures certain products for the Company or its applicable affiliate. The Company incurred certain costs in its establishment as a standalone public company and expects to incur ongoing additional costs associated with operating as an independent, publicly traded company. Property, plant and equipment reflected in the Condensed Consolidated Balance Sheet is primarily attributable to the six manufacturing facilities the Company operates and certain information technology assets. In June 2021, the Company established a balance sheet risk management and a net investment hedging program to mitigate against volatility of changes in foreign exchange rates. As a standalone entity, the Company will file tax returns on its own behalf, and tax balances and effective income tax rate may differ from the amounts reported in the historical periods. As of June 2, 2021 and in connection with the Separation, the Company has adjusted its deferred tax balances and computed its related tax provision to reflect operations as a standalone entity. |
Reclassifications | Certain amounts presented in the prior period have been reclassified to conform to the current period presentation. |
Use of Estimates | Use of Estimates The presentation of these Condensed Consolidated Financial Statements and accompanying notes in conformity with U.S. GAAP require management to make estimates and assumptions that affect the amounts reported. Accordingly, actual results could differ materially from management's estimates and assumptions. The COVID-19 pandemic continued to negatively affect the Company's results during the second quarter of 2021. While the Company experienced recoveries during the second quarter of 2021 as compared to the comparable period in 2020, the Company continued to experience declines in sales attributable to the COVID-19 pandemic during the second quarter of 2021. The assessment of certain accounting matters and specifically its effect on the Company's results require consideration of forecasted financial information in the context of the information reasonably available to the Company and the unknown future impacts of the COVID-19 pandemic at June 30, 2021 and through the date of this report. |
Recently Adopted Accounting Standards and Recently Issued Accounting Standards Not Yet Adopted | Recently Adopted Accounting Standards In December 2019, the Financial Accounting Standards Board ("FASB") issued amended guidance on the accounting and reporting of income taxes. The guidance is intended to simplify the accounting for income taxes by removing exceptions related to certain intraperiod tax allocations and deferred tax liabilities; clarifying guidance primarily related to evaluating the step-up tax basis for goodwill in a business combination; and reflecting enacted changes in tax laws or rates in the annual effective tax rate. The Company adopted the new guidance effective January 1, 2021. There was no impact to the Company’s Condensed Consolidated Financial Statements upon adoption. In January 2020, the FASB issued new guidance intended to clarify certain interactions between accounting standards related to equity securities, equity method investments and certain derivatives. The guidance addresses accounting for the transition into and out of the equity method of accounting and measuring certain purchased options and forward contracts to acquire investments. The Company adopted the new guidance effective January 1, 2021. There was no impact to the Company’s Condensed Consolidated Financial Statements upon adoption. Recently Issued Accounting Standard Not Yet Adopted |
Share-Based Compensation Plans | The Company measures stock-based compensation for equity awards at fair value on the date of grant and records stock-based compensation as a charge to earnings net of the estimated impact of forfeited awards. Accordingly, the Company recognizes stock-based compensation cost only for those stock-based awards that are estimated to ultimately vest over their requisite service period, based on the vesting provisions of the individual grants. The cumulative effect on current and prior periods of a change in the estimated forfeiture rate is recognized as compensation cost in earnings in the period of the change. Under the Plan, PSUs are eligible to be granted; however, none have been granted as of June 30, 2021. |
Samsung Collaboration (Tables)
Samsung Collaboration (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Collaborative Arrangement and Arrangement Other than Collaborative | Summarized information related to this collaboration is as follows: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Sales $ 85 $ 60 $ 166 $ 128 Cost of sales 47 39 100 79 Selling, general and administrative 17 18 32 37 ($ in millions) June 30, 2021 December 31, 2020 Receivables from Samsung included in Other current assets $ 21 $ 52 Payables to Samsung included in Trade accounts payable 28 13 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Gain (Loss) Derivative Instruments | Accordingly, the Condensed Consolidated Statement of Income includes the impact of Merck’s derivative financial instruments prior to the Separation that is deemed to be associated with the Company’s operations and has been allocated to the Company utilizing a proportional allocation method: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Allocated net (gains) loss in Sales $ 23 $ (7) $ 55 $ (18) Allocated net (gains) loss in Other (income) expense, net 30 63 33 15 Foreign exchange transaction (gains) loss in Other (income) expense, net (1) (21) (42) (28) 19 (1) Includes foreign exchange transaction gains and losses allocated for the period prior to the Separation, as well as actual foreign exchange transaction gains and losses post-Separation. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventories consisted of: ($ in millions) June 30, 2021 December 31, 2020 Finished goods $ 327 $ 351 Raw materials 113 35 Work in process 433 595 Supplies 38 60 Total (approximates current cost) $ 911 $ 1,041 Decrease to LIFO costs (2) (1) $ 909 $ 1,040 Recognized as: Inventories $ 871 $ 913 Other assets 38 127 |
Schedule of Inventory, Noncurrent | Inventories consisted of: ($ in millions) June 30, 2021 December 31, 2020 Finished goods $ 327 $ 351 Raw materials 113 35 Work in process 433 595 Supplies 38 60 Total (approximates current cost) $ 911 $ 1,041 Decrease to LIFO costs (2) (1) $ 909 $ 1,040 Recognized as: Inventories $ 871 $ 913 Other assets 38 127 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | ($ in millions) June 30, 2021 December 31, 2020 Land $ 14 $ 14 Building 608 647 Machinery, equipment and office furnishings 914 787 Construction in progress 313 356 Less: accumulated depreciation (873) (820) Property, Plant and Equipment, net $ 976 $ 984 |
Long-Term Debt and Leases (Tabl
Long-Term Debt and Leases (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | The following is a summary of Organon's total debt as described above: ($ in millions) June 30, 2021 Term Loan B Facility: LIBOR plus 300 bps term loan due 2028 $ 3,000 LIBOR plus 300 bps euro-denominated term loan due 2028 (€750 million) 893 4.125% secured notes due 2028 2,100 2.875% euro-denominated secured notes due 2028 (€1.25 billion) 1,490 5.125% notes due 2031 2,000 Other (discounts and debt issuance costs) (135) Total principal long-term debt $ 9,348 Less: Current portion of long-term debt 39 Total Long-term debt, net of current portion $ 9,309 |
Schedule of Maturities of Long-term Debt | The schedule of principal payments required on long-term debt for the next five years and thereafter is as follows: ($ in millions) 2021 $ 19 2022 39 2023 39 2024 39 2025 39 Thereafter 9,308 |
Supplemental Balance Sheet | Supplemental balance sheet information related to operating leases is as follows: ($ in millions) June 30, 2021 December 31, 2020 Assets Other Assets $ 293 $ 31 Liabilities Accrued and other current liabilities 66 8 Other Noncurrent Liabilities 227 23 $ 293 $ 31 Weighted-average remaining lease term (years) 5.4 4.0 Weighted-average discount rate 3.2% 1.9% |
Maturities of Operating Lease Liabilities | Maturities of operating leases liabilities as of June 30, 2021 are as follows: 2021 (excluding the first six months of 2021) $ 37 2022 73 2023 65 2024 49 2025 35 Thereafter 60 Total lease payments $ 319 Less: Imputed interest 26 $ 293 |
Stock-based Compensation Plans
Stock-based Compensation Plans (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount | Total direct and allocated stock-based compensation expense for the three and six months ended June 30, 2021, the allocated stock-based compensation expense for the three and six months ended June 30, 2020 and the respective income tax benefits recognized by the Company in the Condensed Consolidated Statement of Income are as follows: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Stock-based compensation expense $ 18 $ 11 $ 29 $ 21 Income tax benefits 4 2 6 4 |
Share-based Payment Arrangement, Activity | The following table summarizes information about equity awards outstanding that are vested and expected to vest and equity awards outstanding that are exercisable at June 30, 2021: Equity Awards Vested and Expected to Vest Equity Awards That are Exercisable (shares in thousands; aggregate intrinsic value in millions) Awards Weighted Average Exercise Price Aggregate Intrinsic Value Remaining Term Awards Weighted Average Exercise Price Aggregate Intrinsic Value Remaining Term Stock Options 3,810 $ 34.30 $ 2 8.39 1,454 $ 30.66 $ 2 6.15 Restricted Stock 2,991 — 100 2.37 — — — — |
Other (Income) Expense, Net (Ta
Other (Income) Expense, Net (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Other Income and Expenses [Abstract] | |
Schedule of Other Operating and Nonoperating Income (Expense) | Other (income) expense, net, consisted of: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Exchange (gains) losses $ 9 $ 21 $ 5 $ 34 Interest expense 62 — 62 — Other, net 11 (11) 13 — $ 82 $ 10 $ 80 $ 34 |
Other Comprehensive Income (L_2
Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
Changes of AOCI by Component | Changes in Accumulated other comprehensive loss by component are as follows: ($ in millions) Employee Cumulative Accumulated Other Balance at April 1, 2020, net of taxes $ (346) $ (718) $ (1,064) Other comprehensive income (loss), pretax 4 25 29 Tax (1) — (1) Other comprehensive income (loss), net of taxes 3 25 28 Balance at June 30, 2020, net of taxes $ (343) $ (693) $ (1,036) Balance at April 1, 2021, net of taxes $ (33) $ (656) $ (689) Other comprehensive income (loss), pretax — 218 218 Tax (6) — (6) Other comprehensive loss, net of taxes (6) 218 212 Transfer of benefit plans from Merck affiliates 13 — 13 Balance at June 30, 2021, net of taxes $ (26) $ (438) $ (464) ($ in millions) Employee Cumulative Accumulated Other Balance at January 1, 2020, net of taxes $ (354) $ (560) $ (914) Other comprehensive income (loss), pretax 14 (133) (119) Tax (3) — (3) Other comprehensive income (loss), net of taxes 11 (133) (122) Balance at June 30, 2020, net of taxes $ (343) $ (693) $ (1,036) Balance at January 1, 2021, net of taxes $ (32) $ (590) $ (622) Other comprehensive income (loss), pretax 2 152 154 Tax (10) — (10) Other comprehensive loss, net of taxes (8) 152 144 Transfer of benefit plans to Merck affiliates 14 — 14 Balance at June 30, 2021, net of taxes $ (26) $ (438) $ (464) |
Product and Geographic Inform_2
Product and Geographic Information (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Segment Reporting [Abstract] | |
Sales of Company's products | Sales of the Company’s products were as follows: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 ($ in millions) U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total Women’s Health Nexplanon/Implanon NXT $ 129 $ 56 $ 184 $ 87 $ 44 $ 132 $ 269 $ 98 $ 368 $ 237 $ 90 $ 326 Follistim AQ 27 38 65 20 24 44 52 65 117 40 44 85 NuvaRing 26 28 53 35 28 63 47 52 98 61 64 126 Ganirelix Acetate Injection 5 25 31 3 11 14 14 46 60 3 27 30 Cerazette — 18 18 — 15 15 — 34 34 — 33 33 Other Women's Health (1) 23 43 66 54 28 82 63 76 139 75 65 141 Biosimilars Renflexis 36 7 43 28 3 30 70 11 81 54 5 59 Ontruzant 7 15 22 — 18 19 11 34 45 — 40 40 Brenzys — 11 11 — 11 11 — 21 21 — 29 29 Other Biosimilars (1) — 10 10 — — — — 19 19 — — — Established Brands Cardiovascular Zetia 2 97 99 (1) 138 137 4 186 190 (4) 285 282 Vytorin 2 42 45 2 37 39 5 81 86 6 87 92 Atozet — 121 121 — 115 115 — 233 233 — 238 238 Rosuzet — 18 18 — 31 31 — 33 33 — 63 63 Cozaar/Hyzaar 2 84 86 5 94 98 6 171 177 12 188 200 Zocor 1 15 16 1 14 16 2 29 31 — 39 39 Other Cardiovascular (1) — 45 45 — 54 54 — 69 69 — 87 87 Respiratory Singulair 3 89 92 4 95 100 8 191 199 9 246 255 Nasonex 1 51 52 4 45 49 3 92 95 10 110 120 Dulera 42 10 52 32 7 39 73 18 91 105 18 122 Clarinex 2 29 30 2 32 33 3 52 55 3 81 84 Asmanex 13 1 14 12 2 14 29 3 32 38 4 42 Other Respiratory (1) — 8 8 — 5 5 — 12 12 1 14 15 Non-Opioid Pain, Bone and Dermatology Arcoxia — 62 62 — 65 65 — 119 119 — 135 135 Fosamax 1 48 49 1 52 52 2 85 86 2 92 93 Diprospan — 32 32 — 24 24 — 57 57 — 53 53 Diprosone 1 23 23 — 16 17 1 42 43 1 36 37 Other Non-Opioid Pain, Bone and Dermatology (1) 3 49 52 1 43 44 2 91 93 2 91 93 Other Proscar — 31 32 — 51 51 1 63 64 1 93 94 Propecia 2 34 36 2 26 28 4 63 67 5 53 58 Sinemet — 18 18 — 19 19 — 36 36 — 40 40 Remeron 1 15 15 1 16 16 1 31 32 1 30 31 Other (1) 12 35 48 6 41 46 23 80 102 29 87 116 Other (2) (2) 49 47 4 20 24 (3) 119 117 6 41 48 Total sales $ 339 $ 1,257 $ 1,595 $ 303 $ 1,224 $ 1,526 $ 690 $ 2,412 $ 3,101 $ 697 $ 2,608 $ 3,306 U.S. plus international may not equal total due to rounding . (1) Includes sales of products not listed separately. Revenue from an arrangement for the sale of generic etonogestrel/ethinyl estradiol vaginal ring is included in Other Women's Health. (2) Includes allocated amounts from revenue hedging activities and manufacturing sales to Merck and third parties. |
Consolidated revenues by geographic area | Combined sales by geographic area where derived are as follows: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Europe and Canada $ 470 $ 378 $ 904 $ 859 United States 339 303 690 697 Asia Pacific and Japan 309 419 587 836 China 236 211 442 429 Latin America, Middle East, Russia and Africa 190 187 357 421 Other (1) 51 28 121 64 $ 1,595 $ 1,526 $ 3,101 $ 3,306 |
Related Party Disclosures (Tabl
Related Party Disclosures (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The allocations reflected in the Condensed Consolidated Statement of Income for continuing operations are as follows: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Cost of sales $ 13 $ 122 $ 69 $ 253 Selling, general and administrative 46 151 134 328 Research and development 10 39 35 78 $ 69 $ 312 $ 238 $ 659 Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Included in continuing operations Supply sales to Merck affiliates $ 58 $ — $ 143 $ — Purchases from Merck affiliates 28 — 65 — Cost reimbursements and fees from Merck affiliates — — 1 — Included in discontinued operations Supply sales to Merck affiliates $ — $ 154 $ 12 $ 298 Purchases from Merck affiliates 3 317 53 630 The Company had the following balances with Merck affiliates: ($ in millions) December 31, 2020 Included in continuing operations Short term borrowings, net $ 1,512 Short term loans and notes payable, net — Trade payables (receivables), net (173) Due to related party $ 1,339 Included in discontinued operations Short term loans receivables, net $ 247 Short term notes payable, net (25) Trade payables, net (33) Due from related party $ 189 Net transfers to Merck & Co., Inc. for the six months ended June 30, 2021 were as follows: Six Months Ended June 30, ($ in millions) 2021 2020 Cash pooling and general financing activities $ 168 $ 2,129 Cost allocations, excluding non-cash stock-based compensation (209) (638) Taxes deemed settled with Merck (259) (100) Allocated derivative and hedging (losses) gains (88) 3 Net transfers (from) to Merck & Co., Inc. as reflected in the Condensed Consolidated Statement of Cash Flows for Continuing Operations $ (388) $ 1,394 Net transfers to (from) Merck included in Net Cash Provided by (Used in) Discontinued Operations 597 (203) Total net transfers to Merck as included in the Condensed Consolidated Statement of Cash Flows $ 209 $ 1,191 Stock-based compensation expense (includes $3 and $7 of discontinued operations for the six months ended June 30, 2021 and 2020, respectively) (32) (28) Net assets contributed by Merck affiliates (778) (10) Recognition of amounts in Accumulated other comprehensive loss related to employee benefit plan transfers to Merck affiliates 13 — Net transfers (from) to Merck & Co., Inc. as reflected in the Condensed Consolidated Statement of Equity $ (588) $ 1,153 The components of Net transfers to Merck & Co., Inc. for the three months ended June 30, 2021 were as follows: Three Months Ended June 30, ($ in millions) 2021 2020 Cash pooling and general financing activities $ (585) $ 1,024 Net assets distributed to (contributed by) Merck Affiliates (838) — Cost allocations (72) (316) Income taxes deemed settled with Parent (136) (58) Allocated derivative and hedging gains (losses) (53) (56) Net transfers to Parent as reflected in the Condensed Consolidated Statement of Equity $ (1,684) $ 594 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal Groups, Including Discontinued Operations | The components of Income (loss) from discontinued operations, net of tax for the Merck Retained Products business for the three months ended June 30, 2021 and 2020 and the first six months of 2021 and 2020 are as follows: Three Months Ended June 30, Six Months Ended June 30, ($ in millions) 2021 2020 2021 2020 Sales $ 4 $ 418 $ 93 $ 883 Costs, Expenses and Other Cost of Sales 13 374 65 712 Selling, general and administrative 1 78 15 168 Research and development — 22 4 49 Restructuring costs — — — 5 Other (income) expense, net (6) (13) 4 12 Income (loss) from discontinued operations before taxes $ (4) $ (43) $ 5 $ (63) Taxes on income — 1 5 12 Income from discontinued operations, net of taxes $ (4) $ (44) $ — $ (75) ($ in millions) December 31, 2020 Assets Cash and cash equivalents $ 58 Accounts receivable 322 Inventories 58 Due from related party 189 Other current assets 47 Total current assets of discontinued operations 674 Property, Plant and Equipment, net 14 Other Noncurrent Assets 77 Total Noncurrent Assets of Discontinued Operations 91 Total Assets of Discontinued Operations $ 765 Liabilities Trade accounts payable $ 35 Accrued and other current liabilities 93 Total current liabilities of discontinued operations 128 Deferred Income Taxes — Other Noncurrent Liabilities 83 Total Noncurrent Liabilities of Discontinued Operations 83 Total Liabilities of Discontinued Operations $ 211 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The calculation of basic and diluted earnings per common share for the three and six months ended June 30, 2021 and 2020 was as follows: Three Months Ended June 30, Six Months Ended June 30, ($ in millions and shares in thousands, except per share amounts) 2021 2020 2021 2020 Net income attributable to Organon: Income from continuing operations $ 431 $ 586 $ 826 $ 1,320 Income from discontinued operations (4) (44) — (75) Net income attributable to Organon $ 427 $ 542 $ 826 $ 1,245 Basic weighted average number of shares outstanding 253,516 253,516 253,516 253,516 Stock awards and equity units (share equivalent) 312 — 312 — Diluted weighted average common shares outstanding 253,828 253,516 253,828 253,516 Earnings (Loss) Per Share Attributable to Organon common stockholders - Basic Income from continuing operations $ 1.70 $ 2.31 $ 3.26 $ 5.21 Income from discontinued operations (0.02) (0.17) — (0.30) Basic earnings per common share attributable to Organon common stockholders $ 1.68 $ 2.14 $ 3.26 $ 4.91 Earnings (Loss) Per Share Attributable to Organon common stockholders - Diluted Income from continuing operations 1.70 2.31 3.25 5.21 Income from discontinued operations (0.02) (0.17) — (0.30) Diluted earnings per common share attributable to Organon common stockholders $ 1.68 $ 2.14 $ 3.25 $ 4.91 |
Background and Nature of Oper_2
Background and Nature of Operations (Details) | Jun. 30, 2021manufacturingFacility$ / shares | May 17, 2021$ / sharesshares |
Class of Stock [Line Items] | ||
Number of manufacturing facilities | manufacturingFacility | 6 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Merck and Co., Inc. | ||
Class of Stock [Line Items] | ||
Common stock, par value (in dollars per share) | $ 0.50 | |
Shares distributed to each shareholder | shares | 0.1 |
Basis of Presentation (Details)
Basis of Presentation (Details) $ in Billions | 3 Months Ended |
Jun. 30, 2021USD ($)manufacturingFacility | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Proceeds from issuance of debt | $ | $ 9.5 |
Number of manufacturing facilities | manufacturingFacility | 6 |
Samsung Collaboration - Narrati
Samsung Collaboration - Narrative (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Brazil | |
Disaggregation of Revenue [Line Items] | |
Gross profit sharing arrangement percentage | 35.00% |
Samsung Bioepis | |
Disaggregation of Revenue [Line Items] | |
Collaboration agreement period | 10 years |
Potential future regulatory milestone payments | $ 25 |
Samsung Bioepis | Brazil | |
Disaggregation of Revenue [Line Items] | |
Gross profit sharing arrangement percentage | 65.00% |
Samsung Collaboration - Summari
Samsung Collaboration - Summarization of Collaboration Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||||
Sales | $ 1,595 | $ 1,526 | $ 3,101 | $ 3,306 | |
Cost of sales | 583 | 460 | 1,174 | 998 | |
Selling, general and administrative | 416 | 284 | 798 | 601 | |
Receivables from Samsung included in Other current assets | 1,507 | 1,507 | $ 1,038 | ||
Payables to Samsung included in Trade accounts payable | 1,812 | 1,812 | 259 | ||
Samsung Bioepis | |||||
Disaggregation of Revenue [Line Items] | |||||
Sales | 85 | 60 | 166 | 128 | |
Cost of sales | 47 | 39 | 100 | 79 | |
Selling, general and administrative | 17 | $ 18 | 32 | $ 37 | |
Receivables from Samsung included in Other current assets | 21 | 21 | 52 | ||
Payables to Samsung included in Trade accounts payable | $ 28 | $ 28 | $ 13 |
Acquisitions (Details)
Acquisitions (Details) - Alydia Health - USD ($) $ in Millions | Jun. 16, 2021 | Apr. 30, 2021 | Mar. 31, 2021 |
Asset Acquisition [Line Items] | |||
Transaction consideration | $ 219 | ||
Sales-based contingent milestone | $ 25 | ||
Acquisition payment | $ 169 | $ 50 | |
Intangible assets acquired | $ 247 | ||
Expected useful life | 11 years | ||
Other net liabilities | $ 7 | ||
Deferred tax liabilities | 44 | ||
Compensation expense | 23 | ||
Accelerated vesting of awards | $ 19 |
Restructuring - Narrative (Deta
Restructuring - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |||||
Restructuring costs | $ 1 | $ 19 | $ 2 | $ 31 | |
Severance Costs | 9 | 14 | |||
Other restructuring costs | $ 10 | $ 17 | |||
Restructuring activities | $ 6 | $ 6 | $ 17 |
Financial Instruments (Details)
Financial Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Foreign currency transaction gain (loss) | $ (38) | $ 0 | ||
Sales | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Loss) gains on derivatives | $ 23 | $ (7) | 55 | (18) |
Other (income) expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Loss) gains on derivatives | 30 | 63 | 33 | 15 |
Foreign currency transaction gain (loss) | $ 21 | $ 42 | $ 28 | $ (19) |
Financial Instruments - Narrati
Financial Instruments - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021USD ($) | Dec. 31, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2021EUR (€) | Jun. 02, 2021EUR (€) | Apr. 30, 2021EUR (€) | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Fair value hedge assets | $ 5 | $ 5 | ||||
Fair value hedge liabilities | 12 | 12 | ||||
Accounts receivables factored | 8 | |||||
Foreign Exchange Option | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Notional amount | 416 | 416 | ||||
Foreign Exchange Forward | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Notional amount | $ 881 | $ 881 | ||||
Merck and Co., Inc. | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Accounts receivables factored | $ 227 | |||||
Senior Notes | Organon Finance 1 LLC | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Face amount of debt | € | € 1,250,000,000 | |||||
Euro Denominated Term Loan B | Senior Notes | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Face amount of debt | € | € 750,000,000 | € 750,000,000 | ||||
2.875% Senior Secured Notes Due 2028 | Senior Notes | Organon Finance 1 LLC | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Face amount of debt | € | € 1,250,000,000 | |||||
Stated interest rate | 2.875% | 2.875% | 2.875% | 2.875% | ||
Euro Denominated Term Loan | Senior Notes | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Face amount of debt | € | € 1,750,000,000 | |||||
Gain on derivative | $ 56 | $ 56 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 327 | $ 351 |
Raw materials | 113 | 35 |
Work in process | 433 | 595 |
Supplies | 38 | 60 |
Total (approximates current cost) | 911 | 1,041 |
Decrease to LIFO costs | (2) | (1) |
Inventory | 909 | 1,040 |
Inventories | 871 | 913 |
Other assets | 38 | 127 |
Inventories valued under LIFO | $ 91 | $ 48 |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Less: accumulated depreciation | $ (873) | $ (820) |
Property, plant and equipment, net | 976 | 984 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 14 | 14 |
Building | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 608 | 647 |
Machinery, equipment and office furnishings | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 914 | 787 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 313 | $ 356 |
Long-Term Debt and Leases - Nar
Long-Term Debt and Leases - Narrative (Details) | Jun. 02, 2021USD ($) | Apr. 30, 2021USD ($) | Jun. 30, 2021USD ($)lease | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)lease | Jun. 30, 2020USD ($) | Jun. 30, 2021EUR (€)lease | Jun. 02, 2021EUR (€) | Apr. 30, 2021EUR (€) | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||||||||||
Net transfers from (to) Merck & Co., Inc. | $ 9,000,000,000 | |||||||||
Fair value of long-term debt | $ 9,600,000,000 | $ 9,600,000,000 | ||||||||
Other (discounts and debt issuance costs) | 135,000,000 | 135,000,000 | ||||||||
Proceeds from issuance of debt | 9,500,000,000 | |||||||||
Repayments of long-term debt | $ 0 | $ 118,000,000 | $ 0 | |||||||
Average maturity of long-term debt | 7 years 7 months 6 days | |||||||||
Weighted average interest rate of debt | 3.00% | |||||||||
Weighted-average remaining lease term (years) | 5 years 4 months 24 days | 5 years 4 months 24 days | 5 years 4 months 24 days | 4 years | ||||||
Operating lease cost | $ 20,000,000 | $ 11,000,000 | $ 37,000,000 | $ 22,000,000 | ||||||
Operating cash flows from operating leases | 10,000,000 | |||||||||
Operating lease assets obtained in exchange for operating lease liability | 282,000,000 | |||||||||
Operating lease not yet commenced | $ 13,300,000 | $ 13,300,000 | ||||||||
Real Estate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Weighted-average remaining lease term (years) | 6 years 2 months 12 days | 6 years 2 months 12 days | 6 years 2 months 12 days | |||||||
Number of leases with options to renew | lease | 2 | 2 | 2 | |||||||
Operating Lease One | Real Estate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Operating lease renewal term | 5 years | 5 years | 5 years | |||||||
Operating Lease Two | Real Estate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Operating lease renewal term | 1 year | 1 year | 1 year | |||||||
Senior Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt issuance costs | $ 118,000,000 | $ 118,000,000 | ||||||||
Senior Notes | Organon Finance 1 LLC | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | € | € 1,250,000,000 | |||||||||
Senior Notes | Term Loan B Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 3,000,000,000 | |||||||||
Debt term | 7 years | |||||||||
Interest payment terms | 0.25% | |||||||||
Senior Notes | Term Loan B Facility | Adjusted LIBOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 3.00% | |||||||||
Senior Notes | Term Loan B Facility | Adjusted LIBOR | Minimum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 0.50% | |||||||||
Senior Notes | Term Loan B Facility | Alternate Base Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 2.00% | |||||||||
Senior Notes | Term Loan B Facility | Adjusted EURIBOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 3.00% | |||||||||
Senior Notes | Term Loan B Facility | Adjusted EURIBOR | Minimum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 0.00% | |||||||||
Senior Notes | 2.875% Senior Secured Notes Due 2028 | Organon Finance 1 LLC | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | € | € 1,250,000,000 | |||||||||
Stated interest rate | 2.875% | 2.875% | 2.875% | 2.875% | 2.875% | |||||
Senior Notes | 4.125% Senior Secured Notes Due 2028 | Organon Finance 1 LLC | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 2,100,000,000 | |||||||||
Stated interest rate | 4.125% | 4.125% | ||||||||
Senior Notes | 5.125% Senior Unsecured Notes Due 2031 | Organon Finance 1 LLC | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 2,000,000,000 | |||||||||
Stated interest rate | 5.125% | 5.125% | ||||||||
Senior Notes | Euro Denominated Term Loan B | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | € | € 750,000,000 | € 750,000,000 | ||||||||
Debt term | 7 years | |||||||||
Term Loans | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt issuance costs | $ 19,000,000 | $ 19,000,000 | ||||||||
Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt term | 5 years | |||||||||
Borrowing capacity | $ 1,000,000,000 | |||||||||
Unused capacity commitment fee percentage | 0.50% | |||||||||
Step down on unused capacity commitment fee | 0.375% | |||||||||
Line of credit | $ 0 | $ 0 | ||||||||
Revolving Credit Facility | Adjusted LIBOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 2.00% | |||||||||
Revolving Credit Facility | Adjusted LIBOR | Minimum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 0.00% | |||||||||
Revolving Credit Facility | Alternate Base Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 1.00% | |||||||||
Revolving Credit Facility | Adjusted EURIBOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on variable rate | 2.00% |
Long-Term Debt and Leases - Sum
Long-Term Debt and Leases - Summary of Debt (Details) | Jun. 02, 2021USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2021EUR (€) | Jun. 02, 2021EUR (€) | Apr. 30, 2021USD ($) | Apr. 30, 2021EUR (€) | Dec. 31, 2020USD ($) |
Debt Instrument [Line Items] | |||||||
Other (discounts and debt issuance costs) | $ (135,000,000) | ||||||
Total principal long-term debt | 9,348,000,000 | ||||||
Current portion of long-term debt | 39,000,000 | $ 0 | |||||
Long-term Debt, Excluding Current Maturities | $ 9,309,000,000 | $ 0 | |||||
Senior Notes | Organon Finance 1 LLC | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of debt | € | € 1,250,000,000 | ||||||
Term Loan B Facility | Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt | $ 3,000,000,000 | ||||||
Face amount of debt | $ 3,000,000,000 | ||||||
Term Loan B Facility | Senior Notes | London Interbank Offered Rate (LIBOR) | |||||||
Debt Instrument [Line Items] | |||||||
Spread on variable rate | 3.00% | ||||||
Euro Denominated Term Loan B | Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt | $ 893,000,000 | ||||||
Face amount of debt | € | € 750,000,000 | € 750,000,000 | |||||
Euro Denominated Term Loan B | Senior Notes | London Interbank Offered Rate (LIBOR) | |||||||
Debt Instrument [Line Items] | |||||||
Spread on variable rate | 3.00% | ||||||
4.125% Senior Secured Notes Due 2028 | Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt | $ 2,100,000,000 | ||||||
4.125% Senior Secured Notes Due 2028 | Senior Notes | Organon Finance 1 LLC | |||||||
Debt Instrument [Line Items] | |||||||
Stated interest rate | 4.125% | 4.125% | |||||
Face amount of debt | $ 2,100,000,000 | ||||||
2.875% Senior Secured Notes Due 2028 | Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt | 1,490,000,000 | ||||||
2.875% Senior Secured Notes Due 2028 | Senior Notes | Organon Finance 1 LLC | |||||||
Debt Instrument [Line Items] | |||||||
Stated interest rate | 2.875% | 2.875% | 2.875% | 2.875% | |||
Face amount of debt | € | € 1,250,000,000 | ||||||
5.125% Senior Unsecured Notes Due 2031 | Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt | $ 2,000,000,000 | ||||||
5.125% Senior Unsecured Notes Due 2031 | Senior Notes | Organon Finance 1 LLC | |||||||
Debt Instrument [Line Items] | |||||||
Stated interest rate | 5.125% | 5.125% | |||||
Face amount of debt | $ 2,000,000,000 |
Long-Term Debt and Leases - Sch
Long-Term Debt and Leases - Schedule of Debt Principal Payments (Details) $ in Millions | Jun. 30, 2021USD ($) |
Debt Disclosure [Abstract] | |
2021 | $ 19 |
2022 | 39 |
2023 | 39 |
2024 | 39 |
2025 | 39 |
Thereafter | $ 9,308 |
Long-Term Debt and Leases - Sup
Long-Term Debt and Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Assets | ||
Other Assets | $ 293 | $ 31 |
Liabilities | ||
Accrued and other current liabilities | 66 | 8 |
Other Noncurrent Liabilities | 227 | 23 |
Present value of lease liabilities | $ 293 | $ 31 |
Weighted-average remaining lease term (years) | 5 years 4 months 24 days | 4 years |
Weighted-average discount rate | 3.20% | 1.90% |
Long-Term Debt and Leases - Mat
Long-Term Debt and Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
2021 (excluding the first six months of 2021) | $ 37 | |
2022 | 73 | |
2023 | 65 | |
2024 | 49 | |
2025 | 35 | |
Thereafter | 60 | |
Total lease payments | 319 | |
Less: Imputed interest | 26 | |
Present value of lease liabilities | $ 293 | $ 31 |
Contingencies (Details)
Contingencies (Details) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2014case | Dec. 31, 2018USD ($) | Jun. 30, 2021USD ($)case | Dec. 31, 2020USD ($) | |
Loss Contingencies [Line Items] | ||||
Amount of legal defense reserves | $ | $ 9 | $ 35 | ||
Fosamax | ||||
Loss Contingencies [Line Items] | ||||
Number of pending claims | 3,475 | |||
Fosamax | Federal | Femur Fracture Litigation | ||||
Loss Contingencies [Line Items] | ||||
Number of pending claims | 980 | |||
Number of claims dismissed | 650 | |||
Number of claims on appeal | 515 | |||
Fosamax | New Jersey State Court | Femur Fracture Litigation | ||||
Loss Contingencies [Line Items] | ||||
Number of pending claims | 2,215 | |||
Fosamax | California State Court | Femur Fracture Litigation | ||||
Loss Contingencies [Line Items] | ||||
Number of pending claims | 275 | |||
Fosamax | Other State Courts | Femur Fracture Litigation | ||||
Loss Contingencies [Line Items] | ||||
Number of pending claims | 5 | |||
Propecia/ Proscar | U.S. | ||||
Loss Contingencies [Line Items] | ||||
Number of pending claims | 3 | |||
Propecia/ Proscar | Outside the United States | ||||
Loss Contingencies [Line Items] | ||||
Number of pending claims | 16 | |||
Number of pending class actions | 4 | |||
Propecia/ Proscar | New Jersey Coordinated Proceedings | ||||
Loss Contingencies [Line Items] | ||||
Amount awarded to other party | $ | $ 4.3 | |||
Plaintiff participation percentage | 95.00% | |||
Plaintiff clawback participation rate percentage | 100.00% | |||
Nexplanon/Implanon NXT | Outside the United States | ||||
Loss Contingencies [Line Items] | ||||
Number of pending claims | 25 | |||
Nexplanon | Outside the United States | ||||
Loss Contingencies [Line Items] | ||||
Number of pending claims | 5 | |||
Implanon | Outside the United States | ||||
Loss Contingencies [Line Items] | ||||
Number of pending claims | 20 | |||
Implanon | Northern District of Ohio | ||||
Loss Contingencies [Line Items] | ||||
Number of pending claims | 2 | |||
Number of unfiled claims | 56 |
Stock-based Compensation Plan_2
Stock-based Compensation Plans - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 03, 2021 | Jun. 30, 2021 | Jun. 30, 2021 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Incremental stock-based compensation expense | $ 17 | ||
Amount of unrecognized compensation costs | 128 | $ 128 | |
Amount of unrecognized compensation costs period for recognition | 2 years 4 months 24 days | ||
2021 Incentive Stock Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares authorized | 35,000,000 | ||
Vested option awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Incremental stock-based compensation expense | 4 | ||
Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Incremental stock-based compensation expense | $ 13 | ||
Incremental options remaining vesting period | 2 years 7 months 28 days | ||
Converted from Merck, Stock Options, Shares | 4,100,000 | ||
Converted from Merck, Stock Options, Average Price (in usd per share) | $ 8.55 | ||
Stock appreciation rights and options | 2021 Incentive Stock Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting rights | three-year | ||
Award expiration period | 10 years | ||
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Conversion of shares awards issued | 3,300,000 | ||
Converted from Merck, Restricted Share Units Average Price (in usd per share) | $ 36.77 |
Stock-based Compensation Plan_3
Stock-based Compensation Plans - Summary of Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | ||||
Stock-based compensation expense | $ 18 | $ 11 | $ 29 | $ 21 |
Income tax benefits | $ 4 | $ 2 | $ 6 | $ 4 |
Stock-based Compensation Plan_4
Stock-based Compensation Plans - Equity Awards Outstanding (Details) $ / shares in Units, $ in Millions | 6 Months Ended |
Jun. 30, 2021USD ($)$ / sharesshares | |
Equity Awards Vested and Expected to Vest | |
Stock Options, Awards (in shares) | shares | 3,810,000 |
Stock Options, Average Price (in usd per share) | $ / shares | $ 34.30 |
Stock Options, Aggregate Intrinsic Value | $ | $ 2 |
Stock Options, Remaining Term (in years) | 8 years 4 months 20 days |
Equity Awards That are Exercisable | |
Stock Options, Awards (in shares) | shares | 1,454,000 |
Stock Options, Average Price (in usd per share) | $ / shares | $ 30.66 |
Stock Options, Aggregate Intrinsic Value | $ | $ 2 |
Stock Options, Remaining Term | 6 years 1 month 24 days |
Restricted Stock | |
Equity Awards Vested and Expected to Vest | |
Restricted Stock, Awards (in shares) | shares | 2,991,000 |
Restricted Stock, Average Price (in usd per share) | $ / shares | $ 0 |
Restricted Stock, Aggregate Intrinsic Value | $ | $ 100 |
Restricted Stock, Remaining Term | 2 years 4 months 13 days |
Equity Awards That are Exercisable | |
Restricted Stock, Awards (in shares) | shares | 0 |
Restricted Stock, Average Price (in usd per share) | $ / shares | $ 0 |
Restricted Stock, Aggregate Intrinsic Value | $ | $ 0 |
Pension and Other Postretirem_2
Pension and Other Postretirement Benefit Plans (Details) - USD ($) $ in Millions | Jun. 02, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 |
Defined Benefit Plan Disclosure [Line Items] | |||||
Total benefit plan expense | $ 11 | $ 15 | $ 29 | $ 28 | |
Increase for "grow-in" provision | $ 50 | ||||
Estimated average service period | 8 years | ||||
Expected future employer contributions for the remainder of year | 7 | 7 | |||
Defined benefit plan service cost | 6 | $ 1 | 7 | $ 2 | |
Merck and Co., Inc. | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Net liability | 109 | 109 | |||
Assets | 93 | 93 | |||
Liability | $ 202 | $ 202 | |||
Other Assets | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Increase for "grow-in" provision | $ 44 | ||||
Other Current Assets | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Increase for "grow-in" provision | $ 6 |
Other (Income) Expense, Net (De
Other (Income) Expense, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Other Income and Expenses [Abstract] | ||||
Exchange (gains) losses | $ 9 | $ 21 | $ 5 | $ 34 |
Interest expense | 62 | 0 | 62 | 0 |
Other, net | 11 | (11) | 13 | 0 |
Other (income) expense, net | $ 82 | $ 10 | $ 80 | $ 34 |
Taxes on Income (Details)
Taxes on Income (Details) - USD ($) $ in Millions | Jun. 02, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 |
Income Tax Examination [Line Items] | |||||
Effective income tax rate | 1.40% | 16.50% | 8.60% | 14.60% | |
Income taxes paid | $ 18 | ||||
Tax benefits recognized related to settlement | $ 29 | ||||
Foreign Tax Authority | |||||
Income Tax Examination [Line Items] | |||||
Step-up in tax basis | $ 70 | ||||
Uncertain tax positions for jurisdictions outside the U.S. | $ 79.3 |
Other Comprehensive Income (L_3
Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Beginning balance | $ 4,722 | $ 7,029 | $ 5,486 | $ 7,035 |
Other comprehensive income (loss), pretax | 218 | 29 | 154 | (119) |
Tax | (6) | (1) | (10) | (3) |
Other comprehensive income (loss), net of taxes | 212 | 28 | 144 | (122) |
Transfer of benefit plans from Merck affiliates | 13 | 14 | ||
Ending balance | (1,934) | 7,005 | (1,934) | 7,005 |
Accumulated Other Comprehensive (Loss) Income | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Beginning balance | (689) | (1,064) | (622) | (914) |
Ending balance | (464) | (1,036) | (464) | (1,036) |
Employee Benefit Plans | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Beginning balance | (33) | (346) | (32) | (354) |
Other comprehensive income (loss), pretax | 0 | 4 | 2 | 14 |
Tax | (6) | (1) | (10) | (3) |
Other comprehensive income (loss), net of taxes | (6) | 3 | (8) | 11 |
Transfer of benefit plans from Merck affiliates | 13 | 14 | ||
Ending balance | (26) | (343) | (26) | (343) |
Accumulated Foreign Currency Adjustment Attributable to Parent | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Beginning balance | (656) | (718) | (590) | (560) |
Other comprehensive income (loss), pretax | 218 | 25 | 152 | (133) |
Other comprehensive income (loss), net of taxes | 218 | 25 | 152 | (133) |
Ending balance | $ (438) | $ (693) | $ (438) | $ (693) |
Product and Geographic Inform_3
Product and Geographic Information - Narrative (Details) | 6 Months Ended |
Jun. 30, 2021segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Product and Geographic Inform_4
Product and Geographic Information - Sales of Company's Products (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenue from External Customer [Line Items] | ||||
Sales | $ 1,595 | $ 1,526 | $ 3,101 | $ 3,306 |
Nexplanon/Implanon NXT | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 184 | 132 | 98 | 326 |
Follistim AQ | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 65 | 44 | 368 | 85 |
NuvaRing | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 53 | 63 | 117 | 126 |
Ganirelix Acetate Injection | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 31 | 14 | 60 | 30 |
Cerazette | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 18 | 15 | 34 | 33 |
Other Womens Health | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 66 | 82 | 139 | 141 |
Renflexis | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 43 | 30 | 81 | 59 |
Ontruzant | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 22 | 19 | 45 | 40 |
Brenzys | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 11 | 11 | 21 | 29 |
Other Biosimilars | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 10 | 0 | 19 | 0 |
Zetia | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 99 | 137 | 190 | 282 |
Vytorin | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 45 | 39 | 86 | 92 |
Atozet | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 121 | 115 | 233 | 238 |
Rosuzet | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 18 | 31 | 33 | 63 |
Cozaar/Hyzaar | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 86 | 98 | 177 | 200 |
Zocor | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 16 | 16 | 31 | 39 |
Other Cardiovascular | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 45 | 54 | 69 | 87 |
Singulair | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 92 | 100 | 199 | 255 |
Nasonex | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 52 | 49 | 95 | 120 |
Dulera | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 52 | 39 | 91 | 122 |
Clarinex | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 30 | 33 | 55 | 84 |
Asmanex | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 14 | 14 | 32 | 42 |
Other Respiratory | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 8 | 5 | 12 | 15 |
Arcoxia | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 62 | 65 | 119 | 135 |
Fosamax | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 49 | 52 | 86 | 93 |
Diprospan | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 32 | 24 | 57 | 53 |
Diprosone | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 23 | 17 | 43 | 37 |
Other Non-Opiod Pain, Bone and Dermatology | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 52 | 44 | 93 | 93 |
Proscar | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 32 | 51 | 64 | 94 |
Propecia | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 36 | 28 | 67 | 58 |
Sinemet | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 18 | 19 | 36 | 31 |
Remeron | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 15 | 16 | 32 | 40 |
Other | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 48 | 46 | 102 | 116 |
Other | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 47 | 24 | 117 | 48 |
U.S. | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 339 | 303 | 690 | 697 |
U.S. | Nexplanon/Implanon NXT | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 129 | 87 | 47 | 237 |
U.S. | Follistim AQ | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 27 | 20 | 269 | 40 |
U.S. | NuvaRing | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 26 | 35 | 52 | 61 |
U.S. | Ganirelix Acetate Injection | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 5 | 3 | 14 | 3 |
U.S. | Cerazette | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
U.S. | Other Womens Health | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 23 | 54 | 63 | 75 |
U.S. | Renflexis | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 36 | 28 | 70 | 54 |
U.S. | Ontruzant | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 7 | 0 | 11 | 0 |
U.S. | Brenzys | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
U.S. | Other Biosimilars | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
U.S. | Zetia | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 2 | (1) | 4 | (4) |
U.S. | Vytorin | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 2 | 2 | 5 | 6 |
U.S. | Atozet | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
U.S. | Rosuzet | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
U.S. | Cozaar/Hyzaar | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 2 | 5 | 6 | 12 |
U.S. | Zocor | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 1 | 1 | 2 | 0 |
U.S. | Other Cardiovascular | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
U.S. | Singulair | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 3 | 4 | 8 | 9 |
U.S. | Nasonex | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 1 | 4 | 3 | 10 |
U.S. | Dulera | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 42 | 32 | 73 | 105 |
U.S. | Clarinex | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 2 | 2 | 3 | 3 |
U.S. | Asmanex | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 13 | 12 | 29 | 38 |
U.S. | Other Respiratory | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 0 | 0 | 0 | 1 |
U.S. | Arcoxia | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
U.S. | Fosamax | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 1 | 1 | 2 | 2 |
U.S. | Diprospan | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
U.S. | Diprosone | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 1 | 0 | 1 | 1 |
U.S. | Other Non-Opiod Pain, Bone and Dermatology | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 3 | 1 | 2 | 2 |
U.S. | Proscar | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 0 | 0 | 1 | 1 |
U.S. | Propecia | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 2 | 2 | 4 | 5 |
U.S. | Sinemet | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
U.S. | Remeron | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 1 | 1 | 1 | 1 |
U.S. | Other | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 12 | 6 | 23 | 29 |
U.S. | Other | ||||
Revenue from External Customer [Line Items] | ||||
Sales | (2) | 4 | (3) | 6 |
International | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 1,257 | 1,224 | 2,412 | 2,608 |
International | Nexplanon/Implanon NXT | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 56 | 44 | 52 | 90 |
International | Follistim AQ | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 38 | 24 | 98 | 44 |
International | NuvaRing | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 28 | 28 | 65 | 64 |
International | Ganirelix Acetate Injection | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 25 | 11 | 46 | 27 |
International | Cerazette | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 18 | 15 | 34 | 33 |
International | Other Womens Health | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 43 | 28 | 76 | 65 |
International | Renflexis | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 7 | 3 | 11 | 5 |
International | Ontruzant | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 15 | 18 | 34 | 40 |
International | Brenzys | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 11 | 11 | 21 | 29 |
International | Other Biosimilars | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 10 | 0 | 19 | 0 |
International | Zetia | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 97 | 138 | 186 | 285 |
International | Vytorin | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 42 | 37 | 81 | 87 |
International | Atozet | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 121 | 115 | 233 | 238 |
International | Rosuzet | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 18 | 31 | 33 | 63 |
International | Cozaar/Hyzaar | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 84 | 94 | 171 | 188 |
International | Zocor | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 15 | 14 | 29 | 39 |
International | Other Cardiovascular | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 45 | 54 | 69 | 87 |
International | Singulair | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 89 | 95 | 191 | 246 |
International | Nasonex | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 51 | 45 | 92 | 110 |
International | Dulera | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 10 | 7 | 18 | 18 |
International | Clarinex | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 29 | 32 | 52 | 81 |
International | Asmanex | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 1 | 2 | 3 | 4 |
International | Other Respiratory | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 8 | 5 | 12 | 14 |
International | Arcoxia | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 62 | 65 | 119 | 135 |
International | Fosamax | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 48 | 52 | 85 | 92 |
International | Diprospan | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 32 | 24 | 57 | 53 |
International | Diprosone | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 23 | 16 | 42 | 36 |
International | Other Non-Opiod Pain, Bone and Dermatology | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 49 | 43 | 91 | 91 |
International | Proscar | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 31 | 51 | 63 | 93 |
International | Propecia | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 34 | 26 | 63 | 53 |
International | Sinemet | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 18 | 19 | 36 | 30 |
International | Remeron | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 15 | 16 | 31 | 40 |
International | Other | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 35 | 41 | 80 | 87 |
International | Other | ||||
Revenue from External Customer [Line Items] | ||||
Sales | $ 49 | $ 20 | $ 119 | $ 41 |
Product and Geographic Inform_5
Product and Geographic Information - Revenues by Geographic Area (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenue from External Customer [Line Items] | ||||
Sales | $ 1,595 | $ 1,526 | $ 3,101 | $ 3,306 |
Europe and Canada | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 470 | 378 | 904 | 859 |
United States | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 339 | 303 | 690 | 697 |
Asia Pacific and Japan | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 309 | 419 | 587 | 836 |
China | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 236 | 211 | 442 | 429 |
Latin America, Middle East, Russia and Africa | ||||
Revenue from External Customer [Line Items] | ||||
Sales | 190 | 187 | 357 | 421 |
Other | ||||
Revenue from External Customer [Line Items] | ||||
Sales | $ 51 | $ 28 | $ 121 | $ 64 |
Related Party Disclosures - All
Related Party Disclosures - Allocations Included in Statement of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Related Party Transaction [Line Items] | ||||
Cost of sales | $ 583 | $ 460 | $ 1,174 | $ 998 |
Selling, general and administrative | 416 | 284 | 798 | 601 |
Research and development | 76 | 51 | 143 | 96 |
Costs, Expenses And Other | 1,158 | 824 | 2,197 | 1,760 |
Related Party | Merck and Co., Inc. | Transition Services Agreement | ||||
Related Party Transaction [Line Items] | ||||
Cost of sales | 13 | 122 | 69 | 253 |
Selling, general and administrative | 46 | 151 | 134 | 328 |
Research and development | 10 | 39 | 35 | 78 |
Costs, Expenses And Other | $ 69 | $ 312 | $ 238 | $ 659 |
Related Party Disclosures - Tra
Related Party Disclosures - Transactions with Merck Affiliates (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Discontinued Operations | ||||
Related Party Transaction [Line Items] | ||||
Supply sales to Merck affiliates | $ 154 | $ 12 | $ 298 | |
Purchases from Merck affiliates | $ 3 | 317 | 53 | 630 |
Other Merck Affiliates | Continuing Operations | ||||
Related Party Transaction [Line Items] | ||||
Supply sales to Merck affiliates | 58 | 0 | 143 | 0 |
Purchases from Merck affiliates | 28 | 0 | 65 | 0 |
Other Merck Affiliates | Continuing Operations | Cost Reimbursements and Fees | ||||
Related Party Transaction [Line Items] | ||||
Cost reimbursements and fees from Merck affiliates | 0 | 0 | 1 | 0 |
Other Merck Affiliates | Discontinued Operations | ||||
Related Party Transaction [Line Items] | ||||
Supply sales to Merck affiliates | 0 | 154 | 12 | 298 |
Purchases from Merck affiliates | $ 3 | $ 317 | $ 53 | $ 630 |
Related Party Disclosures - Bal
Related Party Disclosures - Balances with Merck Affiliates (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Related Party Transaction [Line Items] | ||
Due to related party | $ 0 | $ 1,339 |
Related Party | Continuing Operations | Merck and Co., Inc. | ||
Related Party Transaction [Line Items] | ||
Short term borrowings, net | 1,512 | |
Short term loans and notes payable, net | 0 | |
Trade payables (receivables), net | (173) | |
Due to related party | 1,339 | |
Related Party | Discontinued Operations | Merck and Co., Inc. | ||
Related Party Transaction [Line Items] | ||
Short term loans and notes payable, net | (25) | |
Short term loans receivables, net | 247 | |
Trade payables, net | (33) | |
Due from related party | $ 189 |
Related Party Disclosures - Net
Related Party Disclosures - Net Transfers to Parent (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Related Party Transaction [Line Items] | ||||
Cash pooling and general financing activities | $ (585) | $ 1,024 | $ 168 | $ 2,129 |
Cost allocations, excluding non-cash stock-based compensation | (72) | (316) | (209) | (638) |
Taxes deemed settled with Merck | (136) | (58) | (259) | (100) |
Allocated derivative and hedging (losses) gains | (53) | (56) | (88) | 3 |
Net transfers (from) to Merck & Co., Inc. as reflected in the Condensed Consolidated Statement of Cash Flows for Continuing Operations | (388) | 1,394 | ||
Net transfers to (from) Merck included in Net Cash Provided by (Used in) Discontinued Operations | 597 | (203) | ||
Total net transfers to Merck as included in the Condensed Consolidated Statement of Cash Flows | 209 | 1,191 | ||
Stock-based compensation expense (includes $3 and $7 of discontinued operations for the six months ended June 30, 2021 and 2020, respectively) | (32) | (28) | ||
Net assets distributed to (contributed by) Merck Affiliates | (838) | 0 | (778) | (10) |
Recognition of amounts in Accumulated other comprehensive loss related to employee benefit plan transfers to Merck affiliates | 13 | 0 | ||
Net transfers (from) to Merck & Co., Inc. as reflected in the Condensed Consolidated Statement of Equity | $ (1,684) | $ 594 | (588) | 1,153 |
Discontinued Operations | ||||
Related Party Transaction [Line Items] | ||||
Stock-based compensation expense (includes $3 and $7 of discontinued operations for the six months ended June 30, 2021 and 2020, respectively) | $ 3 | $ 7 |
Related Party Disclosures - Nar
Related Party Disclosures - Narrative (Details) - USD ($) $ in Millions | Jun. 02, 2021 | Jun. 30, 2021 | Apr. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 03, 2021 | Dec. 31, 2020 |
Related Party Transaction [Line Items] | |||||||
Out of period adjustment | $ 145 | ||||||
TSA termination period | 25 months | ||||||
Breach of covenant period | 2 years | ||||||
Accounts receivable | $ 991 | 991 | $ 991 | ||||
Accounts payable | 1,500 | 1,500 | 1,500 | ||||
Net transfers from (to) Merck & Co., Inc. | $ 9,000 | ||||||
Cash and cash equivalents | 730 | 730 | 730 | $ 900 | $ 12 | ||
Foreign Tax Authority | |||||||
Related Party Transaction [Line Items] | |||||||
Uncertain tax positions for jurisdictions outside the U.S. | $ 79.3 | ||||||
Transfers Between Organon Entities, the Transferring Entities and Merck Affiliates | |||||||
Related Party Transaction [Line Items] | |||||||
Accounts receivables, net | 751 | 751 | |||||
Inventories | 225 | 265 | |||||
Transition tax liabilities | 1,400 | 1,400 | |||||
Certain liabilities | 222 | 210 | |||||
Contribution of Assets | |||||||
Related Party Transaction [Line Items] | |||||||
Contribution of assets | 59 | 59 | |||||
Contribution of liabilities | $ 7 | $ 35 | |||||
Related Party | |||||||
Related Party Transaction [Line Items] | |||||||
Related party sales | 13.5 | ||||||
Cost of sales | 12.8 | ||||||
Reserve for inventory purchases | $ 400 |
Discontinued Operations - Narra
Discontinued Operations - Narrative (Details) - Discontinued Operations - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Related party sales | $ 154 | $ 12 | $ 298 | |
Costs for inventory purchases | $ 3 | $ 317 | $ 53 | $ 630 |
Discontinued Operations - Compo
Discontinued Operations - Components of Income (Loss) from Discontinued Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Costs, Expenses and Other | ||||
Income from discontinued operations, net of taxes | $ (4) | $ (44) | $ 0 | $ (75) |
Discontinued Operations, Held-for-sale or Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Sales | 4 | 418 | 93 | 883 |
Costs, Expenses and Other | ||||
Cost of Sales | 13 | 374 | 65 | 712 |
Selling, general and administrative | 1 | 78 | 15 | 168 |
Research and development | 0 | 22 | 4 | 49 |
Restructuring costs | 0 | 0 | 0 | 5 |
Other (income) expense, net | (6) | (13) | ||
Other (income) expense, net | 4 | 12 | ||
Income (loss) from discontinued operations before taxes | (4) | (43) | 5 | (63) |
Taxes on income | 0 | 1 | 5 | 12 |
Income from discontinued operations, net of taxes | $ (4) | $ (44) | $ 0 | $ (75) |
Discontinued Operations - Com_2
Discontinued Operations - Components of Assets and Liabilities of Discontinued Operations (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Assets | ||||
Cash and cash equivalents | $ 58 | $ 444 | $ 319 | |
Total current assets of discontinued operations | $ 0 | 674 | ||
Noncurrent assets of discontinued operations | 0 | 91 | ||
Liabilities | ||||
Total current liabilities of discontinued operations | 0 | 128 | ||
Total Noncurrent Liabilities of Discontinued Operations | $ 0 | 83 | ||
Discontinued Operations, Held-for-sale or Disposed of by Sale | ||||
Assets | ||||
Cash and cash equivalents | 58 | |||
Accounts receivable | 322 | |||
Inventories | 58 | |||
Due from related party | 189 | |||
Other current assets | 47 | |||
Total current assets of discontinued operations | 674 | |||
Property, Plant and Equipment, net | 14 | |||
Other Noncurrent Assets | 77 | |||
Noncurrent assets of discontinued operations | 91 | |||
Total Assets of Discontinued Operations | 765 | |||
Liabilities | ||||
Trade accounts payable | 35 | |||
Accrued and other current liabilities | 93 | |||
Total current liabilities of discontinued operations | 128 | |||
Deferred Income Taxes | 0 | |||
Other Noncurrent Liabilities | 83 | |||
Total Noncurrent Liabilities of Discontinued Operations | 83 | |||
Total Liabilities of Discontinued Operations | $ 211 |
Earnings per Share - Calculatio
Earnings per Share - Calculation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Earnings Per Share [Abstract] | ||||
Net income from continuing operations | $ 431 | $ 586 | $ 826 | $ 1,320 |
Income from discontinued operations | (4) | (44) | 0 | (75) |
Net Income | $ 427 | $ 542 | $ 826 | $ 1,245 |
Basic weighted average number of shares outstanding | 253,516,000 | 253,516,000 | 253,516,000 | 253,516,000 |
Stock awards and equity units (share equivalent) | 312,000 | 0 | 312,000 | 0 |
Diluted weighted average common shares outstanding | 253,828,232 | 253,516,000 | 253,828,232 | 253,516,000 |
Earnings (Loss) per Share Attributable to Organon & Co. Stockholders - Basic: | ||||
Continuing operations (in dollars per share) | $ 1.70 | $ 2.31 | $ 3.26 | $ 5.21 |
Discontinued operations (in dollars per share) | (0.02) | (0.17) | 0 | (0.30) |
Net Earnings per Share Attributable to Organon & Co. Stockholders - Basic (in dollars per share) | 1.68 | 2.14 | 3.26 | 4.91 |
Earnings (Loss) per Share Attributable to Organon & Co. Stockholders - Diluted: | ||||
Continuing operations (in dollars per share) | 1.70 | 2.31 | 3.25 | 5.21 |
Discontinued operations (in dollars per share) | (0.02) | (0.17) | 0 | (0.30) |
Net Earnings per Share Attributable to Organon & Co. Stockholders - Diluted (in dollars per share) | $ 1.68 | $ 2.14 | $ 3.25 | $ 4.91 |
Earnings per Share - Narrative
Earnings per Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021 | Jun. 30, 2021 | |
Share-based compensation plans | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 5.2 | 5.2 |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Subsequent Event [Line Items] | |||||
Research and development | $ 76 | $ 51 | $ 143 | $ 96 | |
Subsequent Event | ObsEva | Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | |||||
Subsequent Event [Line Items] | |||||
Maximum royalty payments | $ 90 | ||||
Sales based payments | 385 | ||||
Research and development | $ 25 |