Merck integrates the risk management system into its ongoing business planning processes. Potential negative developments, for example changes in customer demand or new political framework conditions, are described and evaluated in the risk reports, so that the company can take countermeasures in good time if any events should lead to deviations from its business plan. As of December 31, 2007, the Merck Group operated 54 production sites in 24 different countries and took appropriate measures to minimize the risk of a supply bottleneck for important products. Total revenues and the operating result of the Merck Group are sustained by a large number of pharmaceutical and chemical products for various industries. This diversification itself minimizes risk, since the markets differ in their structure and economic cycles. This is also an expression of the Merck strategy to remain an integrated pharmaceutical and chemical company.
The company tries to prepare for the potential risks of a changing market environment, for example health care cost containment measures or new products from competitors, by continually observing market developments and acting with the appropriate foresight. The special risks in pharmaceutical development are constantly monitored by the port-folio and project management system that has been introduced throughout the Merck Group. Within the scope of the Serono integration, therapeutic areas and all pipeline projects were evaluated and refocused. As a research-based pharmaceutical company, there is the risk for Merck of development projects having to be discontinued – after substantial investment – at a late phase of clinical development. Decisions – such as those relating to the transition to the next clinical phase – are taken responsibly in order to minimize risk. The same applies to investment decisions, for which Merck uses detailed guidelines.
