Notes to the Interim Consolidated Financial Statements as of March 31, 2010 

The unaudited interim financial statements of the Merck Group as of March 31, 2010 comply with IAS 34. They have been prepared in accordance with the International Financial Reporting Standards (IFRS) in force on the reporting date and adopted by the European Union. In accordance with IAS 34, a condensed scope of reporting as compared with the consolidated financial statements as of December 31, 2009 was selected. With the exception of the disclosure changes described in the following, the accounting policies have remained unchanged in comparison with the previous year. In the consolidated financial statements as of December 31, 2009, Merck started to disclose commission income as a part of total revenues. In addition in Q1 2010, a separate item “Royalty and commission expenses” was for the first time introduced in the Income Statement. In the previous quarterly reporting, royalty and commission expenses as well as commission income were reported within marketing and selling expenses. The previous year’s presentation and key figures have been adjusted accordingly. The notes to the consolidated financial statements of the Merck Group for 2009, particularly the accounting policies, thus apply accordingly.

Income tax includes the taxes on taxable profit paid in the individual countries plus the change in deferred taxes. The income tax in the interim financial statements is calculated based on the income of the consolidated companies and the currently valid tax rate as a best possible estimate.

The preparation of the interim financial statements requires that assumptions and estimates be made to a certain extent. The assumptions and estimates are based on the state of knowledge and the data currently available.

The following amendments to standards and the following interpretations take effect as of fiscal 2010:

• Amendment to IAS 27 “Consolidated and Separate Financial Statements”
• Amendment to IAS 39 “Financial Instruments: Recognition and Measurement: Eligible Hedged Items”
• Revised version of IFRS 1 “First-time Adoption of International Financial Reporting Standards”
• Amendment to IFRS 2 “Share-based payment“
• Revised version of IAS 3 “Business Combinations”
• “Improvements to International Financial Reporting Standards“
• IFRIC 12 “Service Concession Arrangements”
• IFRIC 15 “Agreements for the Construction of Real Estate”
• IFRIC 16 “Hedges of a Net Investment in a Foreign Operation”
• IFRIC 17 “Distributions of Non-cash Assets to Owners”
• IFRIC 18 “Transfers of Assets from Customers”

The new rules do not have any material effects on the interim financial statements.

As of March 31, 2010, a total of 178 (December 31, 2009: 176) companies are fully consolidated. No companies are consolidated on a pro rata basis. One associate is included using the equity method. The following changes have occurred since the beginning of 2010: Five newly established companies have been consolidated for the first time. Three companies have been liquidated and deconsolidated.

Merck KGaA and Millipore Corporation, a leading life science company based in Billerica, Massachusetts, United States, announced on February 28, 2010 that they have entered into a definitive agreement under which Merck will acquire all outstanding shares of common stock of Millipore for USD 107 per share in cash. This corresponds to a total transaction value, including net debt, of approximately EUR 5.3 billion (USD 7.2 billion). The transaction was approved by the boards of directors of both companies. The transaction will be funded through available cash and borrowings. In addition to funds through the issuance of bonds with a nominal volume of EUR 3.2 billion, a loan amounting to EUR 1.0 billion is available, provided by Bank of America, Merrill Lynch, BNP Paribas and Commerzbank Aktiengesellschaft. The successful completion of the transaction is subject to the approval of Millipore shareholders. For this purpose, Millipore plans to hold a special shareholders’ meeting on June 3. Once Millipore shareholders have approved the transaction and all other customary conditions, such as antitrust clearance, have been met, all outstanding shares of Millipore common stock will be exchanged for the right to receive the agreed cash payment. Merck and Millipore expect the transaction to close in the second half of 2010.

The segment report presents the assets, income and other key figures by operating segment. Segmentation was performed in accordance with the internal reporting of the Merck Group. The operating segments are described in detail in the sections about the divisions in the interim management report. Expenses and income as well as assets and cash flows are fully allocated to the reported divisions and, to the extent they relate to corporate functions, to the segment Corporate and Other. The financial result and income taxes as well as the resulting cash flows are reported in full in the “Corporate and Other” segment. We determine the transfer prices of intragroup transactions in accordance with market values. There were no significant intercompany relations between the business segments. Operating assets have been reconciliated in the segment report as follows:

Basic earnings per share equal net profit after non-controlling interest divided by the weighted average number of outstanding theoretical shares. The theoretical number of shares reflects the fact that the general partner‘s equity capital is not represented by shares. In accordance with the division of the share capital of EUR 168.0 million into 64,621,126 shares, the general partner’s capital of EUR 397.2 million results in 152,767,813 theoretical shares. This results in a total of EUR 565.2 million or 217,388,939 outstanding theoretical shares.

As of March 31, 2010, there were no potentially dilutive shares. Diluted earnings per share corresponded to basic earnings per share.

In March 2010, Merck Financial Services GmbH issued euro bonds in three tranches, comprising a two-year issue with a volume of EUR 0.5 billion, a five-year issue with a volume of EUR 1.35 billion, and a ten-year issue with a volume of EUR 1.35 billion. The two-year tranche, which was priced at 99.775%, pays a coupon of 2.125%. The five-year tranche, which was priced at 99.769%, pays a coupon of 3.375%. The ten-year tranche, which was priced at 99.582%, pays a coupon of 4.500%. The bonds are admitted to trading on the regulated market of the Luxembourg Stock Exchange and are issued under the Euro Medium Term Note (EMTN) program. The issue proceeds will be used to fund the announced acquisition of the U.S. firm Millipore Corporation.

Furthermore, in connection with funding the planned acquisition of Millipore, Merck Financial Services GmbH has agreed a credit facility of EUR 1.0 billion with a maturity of three years at variable interest rates, which will be provided by a defined banking syndicate.

As of March 31, 2010, there were liabilities by Merck KGaA, Merck Financial Services GmbH and Merck & Cie, Altdorf, to E. Merck KG in the amount of EUR 310 million. In addition, as of March 31, 2010, there were receivables by Merck KGaA to E. Merck KG in the amount of EUR 9.4 million and to E. Merck Beteiligungen KG in the amount of EUR 1.1 million. The balances result mainly from the profit transfers by Merck & Cie to E. Merck KG as well as the reciprocal profit transfers between Merck KGaA and E. Merck KG. They included financial payables of EUR 109 million, which are subject to standard market interest rates. From January to March 2010, Merck KGaA performed services for E. Merck KG with a value of EUR 0.3 million. From January to March 2010, the companies of the Merck Group supplied goods with a value of EUR 0.1 million to associates.

Merck had no material subsequent events.