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Merck raises guidance on solid Q3 sales

Rebif gains boost pharma division

Merck KGaA

Merck KGaA's pharmaceutical division Merck Serono posted a healthy rise in sales and earnings in the third quarter on the back of strong gains for flagship multiple sclerosis drug Rebif.

Third-quarter pharma revenues rose 10.5 per cent to €1.62bn, with the rise roughly split between organic growth and exchange rate factors, while total group sales were up 12 per cent to €2.84bn.

The advance in pharma was due largely to a 10 per cent gain in Rebif (interferon alfa-2b) sales to €499m, benefitting from volume and price increases in the US and volume increases in Europe, along with double-digit growth for fertility treatment Gonal-f (follitropin alfa) and Glucophage (metformin) for diabetes.

Sales of Merck Serono's second-biggest product Erbitux (cetuximab) for head/neck and colorectal cancer were flat at €224m, however, reflecting a tougher pricing environment in Europe and the fact that the company has struggled to broaden the indications for the product.

In September, Merck withdrew its marketing application for Erbitux in non-small cell lung cancer in Europe after the European Medicines Agency (EMA) said it would need to see another clinical trial.

Despite the sales gains, rising costs associated with restructuring efforts and higher manufacturing costs linked to a new bioproduction plant in Vevey dragged operating profit for the division down 11.5 per cent to €373m. Merck Serono is closing its main site in Geneva, Switzerland, and also announced 1,100 job reductions in Germany in recent months.

A weak market in Europe affected Merck's consumer health division, with revenues falling nearly 8 per cent to €123m and operating profit plunging 27 per cent to a little above €10m.

Merck has warned that widespread restructuring of the division in 2012 and 2013 "may lead to site closures" as it tries to boost its financial health.

Elsewhere in the group, the performance materials division had another bumper quarter, with sales up more than 31 per cent to €446m on the back of strong sales of liquid crystal materials, while lab and processing equipment unit Merck Millipore grew 9.5 per cent to €643m.

"Even in these tough economic times and while in the midst of our own business transformation, Merck is performing well operationally," said Merck's chairman Karl-Ludwig Kley.

He said the group is on track to make its profitability "competitive" with its peers in the industry in 2012, noting that its forecasts for the year have been raised slightly.

The group now expects revenues to come in at €10.9bn to €11.0bn - up from a €10.7bn prediction at the half-year statement - with operating profit at the top end of earlier expectations and in the €2.9bn to €2.95bn range.

15th November 2012

From: Sales

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