We want to make great things happen. Merck Group 

1. We want to make great things happen

Our mission is to make great things happen. With our research-driven specialty businesses, we help patients, customers, partners and the communities in which we operate around the world to live a better life. We are not aiming to manage the status quo. We want to achieve more – each and every day. And we want to continuously improve and achieve sustainable, profitable growth with superb, innovative products and services. This objective is not something that we simply communicate externally, but rather what we work toward each and every day within the company. We aim to offer our employees excellent development and career opportunities. That’s because we can only develop further if we attract the best people to work for us.

Merck is focusing on markets that need and reward innovation. For this, we invest around € 1.5 billion in research and development every year. Whether medicines, high-tech materials or life science technologies: we focus on profitable, high-margin products that meet special requirements.

Aspirations

We set the highest standards for ourselves

It is our ambition for Merck to be known throughout the world for innovation, quality, performance and efficiency. At the same time, we want to be liked for the way we do business, namely for our entrepreneurial spirit, the career opportunities that we offer, and our customer orientation, which we prove each and every day. We want to be respected by all our stakeholders for demonstrating value-driven behavior, thinking beyond generations, and living up to our responsibility for society.

Conducting research to develop the displays of tomorrow: Organic LEDs in the laboratory at Merck in Darmstadt.

China – a booming country: Merck Millipore production in Beijing.

Our principles have guided us well for centuries

The pursuit of these aspirations has been a driving force of our company for generations.

And we are doing everything we can to sustain our success for future generations. Therefore, it’s essential to maintain a good balance between opportunity and risk. The diversification of our portfolio across sectors and geographies ensures that this risk is diversified by very different product life cycles and business areas. The careful balance has guaranteed the sustainable development of the company for nearly 350 years.

Since we think in longer time frames, we are keenly aware of not only the importance of economic success, but also of our obligations to future generations. Merck therefore couples the pursuit of economic success with social responsibility and environmental protection.

Our values are our compass

In a world in which the only constant is change, a robust framework of values is vital to provide orientation for entrepreneurial decisions. We at Merck are united by strong values that offer all employees orientation for their daily actions. Entrepreneurial courage is elementary since it creates new opportunities. Yet economic success is only possible in conjunction with exceptional achievement. We want our daily actions to consistently reflect a strong sense of responsibility and we want to treat each other with respect. To us, integrity is an absolute must and transparency makes our actions understandable. This is the only way for us to maintain the trust and the credibility of our stakeholders over the long term.

The Merck family owns the majority interest in Merck and is committed to the Merck values and the company’s guiding principles. The sustainable development of the company and its employees is of primary concern to the Merck family.

2. The best of two worlds: tradition and progress

Transformational journey since 2007

Had continuous change not remained a constant throughout the long history of Merck, the company would not be as healthy as it is today. In 2007, we started refocusing our portfolio and successively introducing a change in management. This is also the historical context for our “Fit for 2018” transformation and growth program, which we launched in 2012 and are using to shape the next phase of our company’s development.

Founded in 1668 with the purchase of the “Engel-Apotheke” (Angel Pharmacy) in Darmstadt, today Merck is a German blue-chip company with sales of over € 11 billion and around 38,000 employees in 66 countries. Merck ranks among the world’s leading suppliers in its specialty businesses.

Innovations have always been a main driver of our business. Today, Merck enjoys market leadership with its multiple sclerosis therapy in the main European markets and is a world leader in fertility and colorectal cancer treatment. Merck ranks first in Europe with its probiotic multivitamins (Bion®3) and pregnancy vitamins (Femibion®). Our Performance Materials division is the undisputed world leader in liquid crystals. The same applies to pearl-luster pigments. And in products and services for the biotech industry we are growing faster than our key competitors.

Merck combines the best of two worlds: the tradition and values of a German family-owned company with the earning power, efficiency and state-of-the-art features of a leading global corporate group.

Our success is attributable to the fact that we never become complacent. With the two major acquisitions of Serono SA in 2007 and the Millipore Corporation in 2010, we elevated our pharmaceutical business to a new platform and established an internationally competitive life science business. After extensive management changes, we focused on developing and establishing a new leadership organization (NLO), in order to make the considerably larger Group more modern, faster and efficient. We launched a transformation and growth program known as “Fit for 2018” that covers all businesses, functions and regions. We have leveraged synergies, eliminated duplication, and made the organization fit for the future. We have optimized the research process at Merck Serono and focused ourselves on the further development of highly promising projects. And in October 2013, we marked the opening of the new Merck Serono headquarters in Darmstadt.

Our efforts have meanwhile really started to pay off. We have become faster, more innovative and, last but not least, far more profitable. In 2013, we already achieved the goals we had set ourselves for 2014. We are proud of what we have achieved; and we are well prepared for the future. But we cannot rest on our laurels. In a world that is constantly changing, we cannot stand still. Therefore, we will continue to resolutely pursue our successful strategy of sustainable growth.

3. Reaping the rewards

Today, Merck already generates the majority of its sales in high-tech sectors such as biotechnology and performance materials. Our profitability reflects this. Overall, with its products and services Merck is very well positioned to benefit from long-term, global megatrends. Global population growth and an expanding middle class in emerging markets are leading to increasing demand for smartphones and televisions, and consequently for our liquid crystals. An aging population and an associated rise in chronic disease will bolster demand for our biopharmaceutical products in the long term. Higher government spending on health care around the world is leading to sustainably positive sales expectations for both pharmaceuticals and life science tools. In order to fully exploit the potential of these trends, Merck has launched a range of business initiatives.

Merck Serono

To further raise the efficiency of pharmaceutical research, we have realigned Research & Development in a targeted manner. We introduced a more entrepreneurial model – the Translational Innovation Platforms (TIPs) – to elevate the performance dynamics of our research and early development activities. The TIPs will have three years to achieve their business plans. The TIPs are supported by Enabling Expert Functions (EEFs). These EEFs comprise specialists from fields such as medicinal chemistry and toxicology.

Additionally, we have launched a range of life-cycle initiatives, mainly in emerging markets, for our products that have been succeeding in the market for many years now. We are also benefiting from global megatrends such as economic growth, worldwide population expansion and generally higher life expectancy. We are endeavoring to develop new formulations, new combinations and new dosage forms. At Merck we know that the success of therapies often depends not only on the drug, but also on the way in which it is administered. Merck Serono benefits here from its many years of experience in developing user-friendly injection devices for its biotechnological medicines, for example in the therapeutic areas of multiple sclerosis, infertility and endocrinology.

Apart from internal Research & Development activities, the Merck Serono division is also counting on long-term cooperation with partner companies and scientific institutions. To enable Merck Serono to invest more in early innovation, in 2013 the size of the corporate venture capital fund MS Ventures was increased to € 100 million. MS Ventures also manages the € 10 million MS Israel Bioincubator Fund as well as the investment framework for spin-off companies funded through the € 30 million Entrepreneur Partnership Program. Moreover, Merck Serono is continuously working to strengthen its core therapeutic areas by in-licensing medicines.

Consumer Health

With it strong focus on strategic brands such as Bion®, Nasivin®, Femibion®, Seven Seas®, Sangobion®, Cebion®, Sedalmerck® and Kytta®, the Consumer Health division has increased its profitability to the level of its global peers. The division has a strong presence in Europe, Latin America and Southeast Asia and is growing rapidly in emerging markets. Focusing on strategic brands and key markets is increasingly paying off. We will continue to pursue this strategy while consistently meeting new consumer needs with our innovative products and compelling marketing of our brands. One example of the sharper focus on consumers is the transfer of the Neurobion® and Floratil® brands from the Merck Serono to the Consumer Health division in 2014. Neurobion® is a leading global brand in the vitamin B segment and Floratil® is a leading brand in the probiotic antidiarrheal segment in Brazil. Their commercialization by Consumer Health will allow a stronger focus on consumer needs and help to increase value added.

Performance Materials

With its specialty chemicals and high-tech materials business, the Performance Materials division is aiming to deliver a steady flow of innovations. This applies in particular to the liquid crystals business, where Merck has been the market and technology leader for many years now with a market share of over 60%. Here, Merck is working to identify new application areas for liquid crystal mixtures, also beyond displays. The Advanced Technologies unit is driving forward research-intense topics such as organic light-emitting diodes (OLEDs), materials for LEDs, and organic electronics.

We expect OLEDs to become a second pillar besides liquid crystals. Against this backdrop, we want to forge ahead with the development of a comprehensive OLED portfolio. We have already achieved initial success by cooperating with the printing manufacturer Seiko Epson. Together we have developed a technology that makes it possible to print OLED displays. The aim is to lower the costs of OLED display production, which is still time-consuming and expensive. In addition, we are working to continually expand our effect pigment portfolio. The metal effect pigments in the Meoxal® product family are the result of continuous research into new pigment technologies at Merck. They have a special additional coating and owing to this surface treatment, they are particularly suited for automotive and plastic coatings.

With the planned acquisition of AZ Electronic Materials, we want to further strengthen the portfolio of our Performance Materials division. AZ superbly complements our existing activities in the display industry. Moreover, we will win new customer groups in the electronics industry, for which AZ produces high-value, ultrapure process chemicals.

Merck Millipore

By offering products and services for the life science tools market, which has a volume of around € 30 billion, Merck Millipore delivers solid financial performance and above-average market growth. It focuses on two important customer groups: life science research and laboratories as well as pharmaceutical and biotech manufacturers. Merck Millipore is one of the world’s leading suppliers in this market with more than 60,000 products, continually delivering new and differentiated products for customers. For this reason, around 6% of sales are invested in research and development.

In addition, acquisitions are expanding the product portfolio. The acquisition of Biochrom in November 2012 has expanded Merck Millipore’s range of cell culture media, buffer solutions and single-use packaging. By acquiring CellASIC, we also strengthened our cell biology platform.

Sustainable success – beyond 2018

We made considerable progress on our transformation journey in 2013. We are systematically implementing our “Fit for 2018” transformation and growth program and are well on track. Yet success is not making us complacent. We want to achieve continuous improvements in all our businesses and operations. We want to further develop existing competencies to benefit customers. We want to continue to differentiate ourselves from the competition and to secure our businesses through sustainably profitable growth by our anniversary year in 2018 and well beyond.

In brief, we make great things happen.

Efficient research and development that promotes young, innovative researchers. Here: Merck Serono production in Vevey, Switzerland.

Consumer Health in Japan: Close to consumers with products that meet their health care needs.