Capital spending rises markedly Audited

In 2008, Merck invested a total of € 395 million in property, plant and equipment. This was € 131 million or 50% more than in 2007. As a result, the capital spending ratio as a percentage of total revenues increased to 5.2% compared with 3.7% in 2007.

Individual investment projects, each with a value of more than € 0.5 million, accounted for around two-thirds of capital spending. In regional terms, Europe accounted for 84% of the total, with the focus on Germany and Switzerland. In Germany, we invested € 160 million at our two largest production sites, namely Darmstadt and Gernsheim, for new and expanded production capacities and research and development facilities, among other things. In Switzerland, capital spending totaled € 119 million. Capital spending amounted to € 18 million in North America and € 19 million in Latin America. Our companies in Asia accounted for a total capital spending volume of € 24 million. Spending focused mainly on Japan, India and Korea, especially for the Chemicals business sector.

Capital spending by the Pharmaceuticals business sector totaled € 250 million in 2008, with the Merck Serono division accounting for the vast majority of this amount. The main focus of the investments was on the expansion of our biotechnology production capacities in Corsier-sur-Vevey, Switzerland. In November 2008, we placed the cornerstone for the expansion of the Merck Serono Biotech Center, which represents the single largest investment project of the Merck Group in both 2008 and 2009. Around 20% of capital spending for this business sector related to headquarters in Darmstadt, Germany.

Capital spending on property, plant and equipment amounted to € 143 million in the Chemicals business sector, with the Liquid Crystals division accounting for € 65 million and the Performance & Life Science Chemicals division for € 79 million of this total. Both divisions invested primarily at the Darmstadt and Gernsheim sites, our main locations, in order to expand and modernize existing production facilities, to improve infrastructure and to construct new research buildings.