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Consumer Health | Forecast 2014 |
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€ million |
Actual results 2013 |
Forecast 2014 |
Key assumptions |
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Moderate organic growth driven by strategic core brands and all geographical markets, slightly offset by unfavorable foreign exchange development |
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Sales |
476.9 |
moderate increase on a comparable basis |
Neurobion® and Floratil® transfer from Merck Serono will increase sales by ~€ 265 million based on actual 2013 results; the two product groups are expected to grow in line with existing portfolio |
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Moderate increase in line with sales development |
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Slight increase in marketing and selling as well as R&D expenses in order to support growth in Emerging Markets and to invest in other growth projects |
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EBITDA pre |
72.5 |
moderate increase on a comparable basis |
Neurobion® and Floratil® transfer from Merck Serono will increase EBITDA pre one-time items by ~€ 100 million based on actual 2013 results |
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Slight increase driven by EBITDA pre one-time items, Working capital to increase slightly in line with sales increase |
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Business free cash flow |
83.9 |
slight increase on a comparable basis |
Neurobion® and Floratil® transfer from Merck Serono will increase business free cash flow by ~€ 77 million based on actual 2013 results |
With the decision by the Merck Executive Board to transfer the two product groups, Neurobion® and Floratil®, from the Merck Serono to the Consumer Health division as of January 1, 2014, the base for the Consumer Health division will increase by approximately € 265 million in sales, around € 100 million in EBITDA pre one-time items and around € 77 million in business free cash flow, based on the actual 2013 results of the transferred brands. Accordingly, the 2014 forecast for the Consumer Health division is based on the combined 2013 result.
After having set up a new regional operating model and significantly improving its cost structures over the past two years, the Consumer Health division will continue to focus its activities on the development and selective expansion of core strategic brands and on strengthening its position in key markets. The division’s goal is to achieve meaningful market shares in all relevant combinations of strategic core brands and focus markets. In doing that, profitable growth is expected from all regions, including Emerging Markets, where Consumer Health is presently underrepresented with its main consumer brands such as Bion®, Nasivin® or Femibion®.
As a consequence of a continued effort on focusing the portfolio and marketing efforts on core brands and markets, Merck expects sales of the Consumer Health division to increase moderately in 2014 and to develop in line with the over-the-counter (OTC) drug market in countries where Merck competes.
We expect the EBITDA pre one-time items of the Consumer Health division to increase moderately as marketing and selling expenses will be slightly increased to support growth in Emerging Markets and R&D spending will be raised to invest in developing a robust innovation pipeline beyond 2014. Business free cash flow is expected to be slightly above the level of 2013 as it is assumed that the EBITDA pre one-time items increase will be partly offset by increases in working capital proportionate to higher sales.