Marketing and selling expenses increased by 16% to EUR 540 million in the second quarter. Royalty and commission expenses rose by 16% to EUR 117 million mainly as a result of higher sales of the cancer treatment Erbitux® in Japan and higher royalty income compared to the year-ago quarter. In 2010, Merck began reporting royalty and commission expenses separately in the income statement. In the past, these expenses were reported under marketing and selling expenses.
Administration expenses increased by 6.6% to EUR 115 million mainly due to currency effects. For the half year administration expenses rose to EUR 220 million from EUR 215 million in the year-ago period.
Other operating expenses and income more than doubled to EUR –109 million due to the fact that prior-year period included positive effects from a favorable currency development whereas the second quarter of 2010 was adversely affected by unfavorable currency movements, including the Venezuelan currency devaluation. In addition, in the second quarter of 2010 Merck incurred further transaction and integration costs in connection with the acquisition of Millipore Corporation, Billerica, Massachusetts, USA. (See Merck Millipore for further details on this acquisition). Moreover, there were increased expenses for litigation partly due to unfavorable currency effects and accrued bonus payments because of the improved performance of the company. In the first half of 2010, other operating expenses and income rose 88% to EUR –244 million, which also included costs associated with the Millipore acquisition plus impairments on intangible assets due to termination of research alliances.
Research and development costs were little changed at EUR 339 million in the second quarter of 2010 compared to EUR 341 million in the year-ago quarter. In the first half, R&D expenses rose 5.0% to EUR 686 million.
Amortization of intangible assets, mainly stemming from the purchase of Serono in 2007, were unchanged in the second quarter at EUR 146 million.
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