The Merck Group operates globally in a variety of highly innovative business fields, which results in exposure to potential risks as well as opportunities. As of this date, the previously stated risk categories enumerated in the 2011 Annual Report’s Risk Report remain valid for the Merck Group. The company is not aware of any risks that could jeopardize the continued existence of the Merck Group. The company has a risk management system in place to identify and mitigate potential risks. Merck continuously monitors business risks such as issues regarding liquidity, defaults on payables and receivables, currency and interest rates, market pricing, pension obligations, assessment of independent rating agencies, human resources and information technology. Regarding legal risks, Merck monitors a host of potential issues such as litigation regarding product liability, antitrust law, pharmaceutical law, patent law and environmental protection among others.
On December 15, 2011, Merck received a Warning Letter from the Food and Drug Administration (FDA) related to inspections of production facilities in Tiburtina in Italy, and Aubonne and Vevey in Switzerland. These sites contribute to the production of Rebif® and other products for distribution in the United States. The letter primarily addressed several processes related to the manufacturing of Rebif®, which the FDA concluded were not in full compliance with good manufacturing practice standards. Merck is working closely with the FDA to address its observations. The agency has completed its initial evaluation of the company’s responses provided earlier this year. In its reply, the FDA stated that “We agree that your proposed corrective actions, if implemented appropriately, should adequately address the violations at issue.” Since that initial evaluation, all commitments to the corrective action plan submitted to the FDA have been completed on schedule and a final report was provided to the FDA in September, 2012. FDA re-inspections will take place in this year’s fourth quarter to confirm the complete implementation of the proposed corrective actions.
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