Merck sees turnover rise across chemicals, pharma
pretax earnings dip in the second quarter of 2005, although the
results were skewed by the gain from its divestment of its
laboratory distribution business VWR International.
Second-quarter turnover rose 8.6 per cent to €1.48 billion, while operating profit rose 14.9 per cent to €202.9m. Net profit was down by a third, at €252.1m, while earnings per share were 1.30 euros, or 31.9 per cent lower. The figures are in line with consensus forecasts.
Bernhard Scheuble, Merck's chairman, noted that, "excluding the gains from our strategic divestments, Merck's profit after tax rose a very substantial 27 per cent," and that the company "continues to expect group sales to rise by a single-digit rate in 2005."
Chemicals sales rose 5.6 per cent to €478m, with gains posted by the Liquid Crystals and Life Science & Analytics divisions and a slight decline by the Pigments division. Life Science & Analytics, which includes its pharmaceutical ingredients business, saw sales rise 4.8 per cent to €211m, with the Switzerland-based folinates business (Merck Eprova), process separation and the food and environmental test businesses continuing to show good results.
Prescription drug revenues reached €438m, driven by lead product, the anticancer drug Erbitux (cetuximab). Which brought in revenues of €52m in the second quarter, a 22 per cent increase. Since its approval in the European Union a year ago, Erbitux has been cleared in 39 countries in Merck's marketing territory, with Hong Kong, South Korea, Colombia and Israel approving it during the second quarter.
Merck said it expects Erbitux sales to continue to grow as it gains approval in more countries. In addition, the firm plans to seek approval for the drug for the treatment of head and neck cancer in the EU this year, possibly as early as the third quarter.
The generics division, Merck's largest division with turnover of €465m in the second quarter, "continued its very satisfactory development," according to the firm, with sales rising more than 13 per cent.
Contributing to the success was its bestselling product in the US, the DuoNeb (albuterol and ipratropium) inhaler for treating chronic obstructive pulmonary disease (COPD). This performance has prompted five generics companies to apply to the US Food and Drug Administration for approval to market their generic versions of this value-added product before its patent expires in June 2022, said the company.
An approval from the FDA, if any, remains subject to the outcome of patent litigation filed by the German firm, which says it is using all legal means to vigorously defend its patent. The five cases will be consolidated in a trial in the Los Angeles Federal District Court in 2006.
However, aggressive competition as well as intense price pressure in the generics markets in Canada and the US has driven down sales of the Canadian subsidiary Genpharm, said Merck.
Overall, Merck said it expects its business to continue developing positively this year and in years to come.
In June, the company raised its mid-term financial targets. And boosted the return on sales objective to 20 from 15 per cent.
