Chemicals | Merck Millipore 

The Merck Millipore division comprises the activities of the former Millipore Corporation, a leading U.S.-based life science company acquired last July, and the majority of Merck’s former Performance & Life Science Chemicals division. As the businesses are now fully integrated, it is not possible to provide comparable year-ago figures.

The division has three business units – Bioscience, which represents 18% of total revenues; Lab Solutions, 40%; and Process Solutions, 42%.

The Bioscience business unit supplies products and services to specialized life science research laboratories and pharmaceutical and biotech companies for drug discovery and development. Two of its newest products are aimed at making the work of research scientists faster, easier and more exact. The launch of the Scepter™ in early 2010 was very successful and is driving sales of the business unit. Scepter™ is the world’s first automated handheld cell counter, which eliminates the tedious and time-consuming process of visually counting cells. In the first quarter of this year, Merck Millipore launched the new Scepter™ 2.0, which gives extended application for cell counting. The Samplicity™ Filtration System, an innovative new technology that provides a convenient high throughput alternative to syringe-tip filters when preparing samples for chromatography, received the prestigious Editor’s Silver Award for best new product at the March 2011 Pittcon, the world’s largest laboratory science trade show.

The Lab Solutions business unit is a leading supplier addressing the needs of customers in laboratories, with chemicals, lab water equipment and products and tests ensuring product safety. As both Merck and Millipore had built up substantial expertise in this field, the business unit initiated “cross-selling” to exploit synergies. For example, pre-existing distribution channels are marketing products from both Merck and Millipore, especially in emerging markets.

One of the major product groups in this business unit is equipment to produce ultra-pure water, a necessity in every laboratory. The newest addition to this line is the Elix Gulfstream Clinical water purification system that can produce higher volumes of water with lower costs and down time.

Another area of expertise is biomonitoring. Merck announced in March that it is acquiring the microbiology business of Biotest AG in the attractive growth segment industrial microbiology for contamination detection for a purchase price of up to EUR 101 million including possible contingent payments. This business will add to Merck Millipore’s existing dehydrated cell culture media and testing systems, or “ready-to-use” culture media and instruments. The acquisition is expected to close in the second half of this year and should contribute about EUR 50 million in revenues on an annual basis.

The Process Solutions business unit mainly supplies products used in the production of biopharmaceutical drugs. Sales developed well, driven by biotech customers, in particular in the emerging markets of Asia. This is due to the increasing number of multinational customers moving to Asia and to increasing regulatory requirements in China.

Process Solutions also is acquiring a new business. Merck Millipore announced in January that it is purchasing Beijing Skywing Technology Co. Ltd., a leading supplier of cell culture media products, establishing a direct presence in this market segment in China. The purchase price is about EUR 14 million.

As with total revenues, both marketing and selling as well as R&D expenses increased significantly, primarily as a result of the acquisition. The division booked EUR 47 million for amortization of intangible assets in connection with the purchase price allocation for Millipore. Similar amounts will be recorded every quarter for several years.

This led to a first-quarter operating result of EUR 72 million with an ROS (operating result / total revenues) of 11.8%. The core operating result, which excludes Millipore-related amortization of intangible assets and integration costs, was EUR 131 million, resulting in a core ROS of 21.5%.

The underlying free cash flow for the first quarter of 2011 was EUR 58 million.