Return on sales of the Merck Group
rises to 15.0% 

Total revenues of the Merck Group rose by 7.1% to € 7,558 million in 2008. Negative currency effects, especially in the Chemicals business sector, lowered growth by 4.2%. Organically – meaning adjusted for the impact of currency as well as acquisitions and disposals – growth amounted to 11%. Royalty income, which we disclose as part of total revenues, totaled € 356 million, 26% more than in 2007. Gross margin grew in line with total revenues by 7.1%. Marketing and selling expenses rose by 8.5% since the Merck Serono division intensified its marketing activities. This is closely related to new therapeutic areas, for which our drugs have been approved (details can be found in the chapter Merck Serono). At 28%, the marketing and selling ratio was only one percentage point higher than in 2007.

We maintained administration expenses at the previous year’s level of € 446 million. Other operating income and expenses totaled € 170 million and were thus only half as high as in 2007, which included high one-time integration and restructuring expenses following the acquisition of Serono.

Group-wide, we spent € 1,234 million on research and development. This corresponds to an increase of 20% over 2007 and a research ratio of 16% relative to total revenues. At € 573 million, amortization of intangible assets was slightly higher than in 2007 and relates almost exclusively to ongoing amortization resulting from the Serono purchase price allocation.

The operating result of the Merck Group increased by 16% to € 1,131 million in 2008. Return on sales (ROS) rose to 15.0% from 13.8%.