Free cash flow affected by higher business volume 

In addition to return on sales (ROS), we consider free cash flow an important indicator to assess the financial position of the company. In 2008, free cash flow amounted to € 438 million. In 2007, at € –1,473 million, this indicator reflected the acquisition of Serono and the sale of the Generics business. Free cash flow adjusted for acquisitions and disposals amounted to € 601 million in 2008, compared to € 978 million in 2007. This decline is due mainly to an increase of € 112 million in working capital. Aside from a higher business volume, the increase in receivables is due mainly also to the fact that we terminated a program to sell receivables in Italy and now disclose the financing in our balance sheet. In addition, we increased spending on property, plant and quipment by € 131 million. In 2007, Merck booked around 160 million from one-time gains on the sale of financial assets. Free cash flow before acquisitions and disposals as a
percentage of total revenues declined to 8.0%
compared to 13.9% in 2007.