Pessimism takes hold in the capital markets
Sentiment in the international capital markets worsened considerably in the course of 2008. Uncertainties regarding potential defaults on sub-prime mortgages, which had begun in 2007 and increased in the course of the year, led to the collapse of some banks in 2008. These banks were either sold or went bankrupt, which triggered a chain reaction in the stock markets, resulting in recessionary trends in different economies. The development of Merck shares was also characterized by this general turmoil in the capital market.
Merck shares finished 27% lower than in 2007. In terms of our share price performance, we ranked sixth among the DAX® 30 companies. The DAX® index suffered a 40% drop in value in 2008. Merck shares developed virtually consistent with the broad index of European pharmaceutical companies included in the Bloomberg Europe Pharmaceuticals Index (BEUPHRM). This pharmaceutical index recorded a decline of 22% in 2008 compared to 2007.
The relative stability of Merck shares in these turbulent times can be attributed, among other things, to the Merck Group’s business model. The Pharmaceuticals and Chemicals business sectors enable us to balance risk, putting Merck on a solid foundation.