Cost of sales increased by 31%. Nevertheless, the gross margin in the first quarter improved by 19% to EUR 1,924 million from EUR 1,612 million in the year-ago quarter.
Most figures for the Group will continue to show significant variations in the first and second quarters due to the fact that the Millipore acquisition closed on July 14, 2010, and therefore there were no Millipore contributions in the first half of 2010. Consequently, marketing and selling expenses in the first quarter of 2011 rose 26% to EUR 592 million. Royalty, license and commission expenses declined 8.9% to EUR 111 million due to a decline in commission payments for pharmaceuticals.
Administration expenses increased by 20% to EUR 125 million in the first quarter of 2011 with 15 percentage points of the increase attributable to Millipore, another 2.2 percentage points to currency effects and 2.2 percentage points to organic growth.
Other operating expenses and income decreased by 28% to EUR -97 million. This figure includes Millipore integration costs of EUR 12 million and EUR 4.2 million for repairs to a Merck facility in Japan due to the March 11 earthquake.
Research and development spending rose 9.3% or EUR 32 million to EUR 380 million in the first quarter of 2011 mainly due to increases in the Chemicals divisions, amounting to EUR 5.2 million in Performance Materials and EUR 26 million in Merck Millipore.
Amortization of intangible assets increased significantly by 77% to EUR 248 million. This amount includes amortization of intangible assets from the Millipore purchase price allocation amounting to EUR 47 million and EUR 199 million from the 2007 purchase of Serono. The latter figure includes EUR 50 million for the impairment loss on the value of cladribine, a drug candidate for the oral treatment of multiple sclerosis.