Merck completed the acquisition of Millipore Corporation, a leading U.S.-based life science company, on July 14. The integration plan, which was already well underway at that point, called for combining Millipore with Merck’s existing life science businesses to create a new division called Merck Millipore. This division has three business units – Bioscience, Process Solutions and Lab Solutions – and is the second-largest division after Merck Serono.
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Merck Millipore | Key figures |
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XLS | ||
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|
|
|
|
|
|
EUR million |
3rd quarter |
3rd quarter |
Jan.–Sep. |
Jan.–Sep. |
|
Total revenues |
573.7 |
226.7 |
1,085.3 |
695.5 |
|
Gross margin |
295.7 |
104.0 |
565.2 |
324.8 |
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Research and development |
–30.9 |
–8.2 |
–46.0 |
–24.0 |
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Operating result |
10.0 |
20.2 |
45.2 |
74.6 |
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Exceptional items |
– |
– |
– |
– |
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Free cash flow |
–4,831.9 |
43.7 |
–4,791.2 |
104.6 |
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Underlying free cash flow |
101.8 |
43.7 |
142.6 |
104.6 |
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ROS in % |
1.7 |
8.9 |
4.2 |
10.7 |
Third-quarter total revenues of the Merck Millipore division rose to EUR 574 million. Of this sum, EUR 314 million is attributable to the new acquisition. Another 7.6% was due to positive currency effects and the remaining 6.6% stemmed from organic growth of the original Merck life science businesses.
Merck Millipore | Sales by region – Q3
All three business units increased their total revenues, with sales in Japan and India rising significantly.
The Bioscience business unit supplies products to specialized life science research laboratories. It accounts for about 20% of the division’s total revenues. Demand for instruments more than compensated for a slight softening in the antibodies business. Orders from the U.S. government and North American universities were above average during the quarter.
The Lab Solutions business unit supplies general laboratory applications to a variety of industries. It accounts for about 40% of the division’s total revenues. Third-quarter sales improved for analytics for food and environmental testing as well as for microbiology and hygiene. Demand for reagents also grew.
The Process Solutions business unit supplies products used in the production of biopharmaceutical drugs. It accounts for about 40% of the division’s revenues. Sales growth in the third quarter was driven by biotech production orders, especially from smaller biotech accounts in all regions of the world.
Despite higher cost of sales of EUR 43 million for the inventory step-up from Millipore, the division’s gross margin grew faster than revenues due to a favorable product mix and operational excellence, reaching EUR 296 million in the third quarter of 2010 from EUR 104 million in the year-ago quarter.
The division also booked EUR 48 million for amortization of intangible assets in connection with the preliminary purchase price allocation for the Millipore acquisition.
This led to a third-quarter operating result of EUR 10 million compared to EUR 20 million in the year-ago period.
Therefore, the division’s third-quarter ROS amounted to 1.7% compared to 8.9% in the third quarter of last year. Core ROS (which excludes costs related to the integration and purchase price allocation of Millipore) was 21.2%.
The division’s third-quarter free cash flow was EUR –4,832 million, including payments of EUR 4,934 million in connection with the Millipore acquisition, compared to EUR 44 million in the year-ago quarter. The underlying free cash flow for the third quarter of 2010 was EUR 102 million.