Pharmaceuticals business sector

The pharmaceutical, chemical and life science businesses of Merck are organized into two business sectors – Pharmaceuticals and Chemicals – each of which consists of two divisions.

The Pharmaceuticals business sector’s divisions are Merck Serono for innovative prescription medicines and Consumer Health Care for over-the-counter pharmaceutical products. The Pharmaceuticals business sector generated 60% of the company’s total revenues and 39% of the Group operating result* during the first quarter. Total revenues for the Pharmaceuticals sector increased by 1.9% to EUR 1,544 million during the first quarter.

The smaller than usual increase in quarterly revenues for this business sector was due mainly to a one-time spike in sales of Rebif® and other Merck Serono products in the United States during March of 2010 owing to the changeover of a computer system in April. In addition, sales declined due to the divestment of the Théramex women’s health business. These factors were somewhat offset by the recovery in the Consumer Health Care division, which recorded an 8.4% rise in total revenues.

While the Pharmaceuticals business sector’s cost of sales declined and the gross margin rose during the first quarter, amortization of intangible assets was about EUR 50 million higher than normal due to the impairment of the multiple sclerosis drug candidate cladribine. Therefore, the sector’s first-quarter operating result fell by 13% to EUR 156 million compared to the year-ago quarter.

IMS Health, the world’s leading provider of market intelligence for the pharmaceutical and healthcare industries, said in its most recent forecast that it expects the global pharmaceutical market to grow by 5% to 7% in 2011.