Merck Serono discovers, develops, manufactures and markets innovative prescription drugs to treat cancer, multiple sclerosis (MS), infertility, and growth disorders, as well as certain cardiovascular and metabolic diseases and allergies. As the company’s largest division, in the first quarter of 2014 Merck Serono generated 53% of Group sales and 53% of EBITDA pre one-time items (excluding Corporate and Other). The present Merck Serono division was formed in 2007 with the acquisition of the Swiss biopharmaceutical company Serono SA, which was integrated stepwise into Merck’s prescription drugs business. The former Serono headquarters in Geneva, Switzerland was divested in 2013 and divisional headquarters moved to Darmstadt.
Merck Serono commercializes its products worldwide and has a strong presence in established markets. The regions of Europe and North America contributed 68% of divisional sales in the first quarter of 2014. In recent years, Merck Serono has steadily expanded its presence in Emerging Markets, which accounted for 25% of the division’s sales in the first quarter of 2014. Merck Serono mainly sells biopharmaceuticals. Rebif® is the top-selling product. It is used to treat relapsing forms of multiple sclerosis (MS), which is one of the most common neurological diseases among young adults.
In Oncology, Merck offers Erbitux® for the targeted treatment of metastatic colorectal cancer. Erbitux® is the second best-selling drug in Merck Serono’s product portfolio. This monoclonal antibody is also a standard in the treatment of squamous cell carcinoma of the head and neck.
Merck Serono also offers products that help couples to conceive a child. The division has a complete portfolio of recombinant gonadotropins, including Gonal-f®, the most frequently prescribed gonadotropin worldwide. The products in the Fertility franchise are an important growth driver for Merck Serono. This is primarily due to couples postponing childbearing until later in life when natural fertility declines.
The General Medicine franchise comprises brand-name products to treat cardiometabolic diseases. Although no longer patent-protected, these are still the therapies of choice for numerous diseases. This applies, for example, to Glucophage® containing the active ingredient metformin, the drug of choice for first-line treatment of type 2 diabetes, or Concor®, a drug for chronic cardiovascular disease. Particularly in emerging markets, there is a continuous rise in demand for cardiometabolic therapies. This is due to both increasing life expectancy and in part also to growing prosperity in this region, along with the resulting changes in lifestyle and eating habits.
Merck Serono is continuously working to improve ways to administer medicines and active ingredients. For several years, therefore, Merck Serono has been developing novel, more user-friendly injection devices, which make injections less painful and at the same time more reliable for patients than conventional, pre-filled syringes. In addition, these products make it easier for medical staff to check whether patients adhere to their therapeutic regimen. Examples are the Gonal-f® RFF Rebiject™ injection device and the electronic autoinjection device Rebif® Rebidose.
Merck has two further pharmaceutical business units: Allergopharma is specialized in developing high-dose hypoallergenic products for specific immunotherapy and diagnosis of type 1 allergies (such as hay fever or allergic asthma). The Biosimilars unit is developing biological medicines that are similar to an existing biological medicine (the ‘reference medicine’). The division is moving ahead with the development of a portfolio of biosimilar compounds applicable to various disease areas including Oncology and Autoimmune Diseases. The focus is on developing molecules through in-house research and development as well as through partnerships.
As of January 1, 2014, two product groups were transferred from the Merck Serono division to the Consumer Health division. These are Neurobion®, a vitamin B-based analgesic, and Floratil®, a leading brand in the probiotic antidiarrheal segment in Brazil. Sales of the two products totaled € 265 million in 2013. The effects of the product group transfers on Merck Serono’s figures for 2013 are presented in the table below.
Transfer of Neurobion® and Floratil® to Consumer Health
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Merck Serono | Adjusted |
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2013 reported |
2013 adjustment |
2013 adjusted |
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€ million |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
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Total revenues |
1,547.6 |
1,623.8 |
1,568.1 |
1,586.2 |
–65.5 |
–63.3 |
–70.2 |
–66.3 |
1,482.1 |
1,560.5 |
1,497.9 |
1,519.9 |
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Sales |
1,454.3 |
1,530.8 |
1,483.0 |
1,485.4 |
–65.5 |
–63.3 |
–70.2 |
–66.2 |
1,388.8 |
1,467.6 |
1,412.8 |
1,419.2 |
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Operating result (EBIT) |
195.2 |
282.5 |
274.5 |
140.8 |
–25.0 |
–16.1 |
–34.0 |
–24.8 |
170.2 |
266.4 |
240.5 |
116.0 |
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Margin (% of sales) |
13.4 |
18.5 |
18.5 |
9.5 |
– |
– |
– |
– |
12.3 |
18.2 |
17.0 |
8.2 |
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EBITDA |
433.3 |
493.8 |
479.8 |
479.5 |
–25.0 |
–16.1 |
–34.0 |
–24.8 |
408.3 |
477.7 |
445.8 |
454.7 |
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Margin (% of sales) |
29.8 |
32.3 |
32.4 |
32.3 |
– |
– |
– |
– |
29.4 |
32.6 |
31.6 |
32.0 |
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EBITDA pre one-time items |
462.7 |
490.9 |
501.4 |
499.9 |
–25.0 |
–16.1 |
–34.0 |
–24.8 |
437.7 |
474.8 |
467.4 |
475.1 |
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Marge (% of sales) |
31.8 |
32.1 |
33.8 |
33.7 |
– |
– |
– |
– |
31.5 |
32.4 |
33.1 |
33.5 |
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Business free cash flow |
354.1 |
511.3 |
536.6 |
473.6 |
–14.1 |
–25.6 |
–24.6 |
–24.3 |
340.0 |
485.7 |
512.0 |
449.4 |
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2013 reported |
2013 adjustment |
2013 adjusted |
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€ million |
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Jan.- |
Jan.- |
Jan.- |
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Jan.- |
Jan.- |
Jan.- |
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Jan.- |
Jan.- |
Jan.- |
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Total revenues |
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3,171.4 |
4,739.5 |
6,325.8 |
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–128.8 |
–199.1 |
–265.4 |
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3,042.6 |
4,540.5 |
6,060.4 |
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Sales |
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2,985.1 |
4,468.2 |
5,953.6 |
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–128.8 |
–199.1 |
–265.2 |
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2,856.3 |
4,269.1 |
5,688.4 |
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Operating result (EBIT) |
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477.8 |
752.2 |
893.0 |
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–41.1 |
–75.1 |
–99.9 |
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436.6 |
677.1 |
793.1 |
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Margin (% of sales) |
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16.0 |
16.8 |
15.0 |
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– |
– |
– |
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15.3 |
15.9 |
13.9 |
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EBITDA |
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927.1 |
1,407.0 |
1,886.5 |
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–41.1 |
–75.1 |
–99.9 |
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886.0 |
1,331.8 |
1,786.6 |
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Margin (% of sales) |
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31.1 |
31.5 |
31.7 |
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– |
– |
– |
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31.0 |
31.2 |
31.4 |
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EBITDA pre one-time items |
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953.6 |
1,455.1 |
1,955.0 |
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–41.1 |
–75.1 |
–99.9 |
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912.5 |
1,379.9 |
1,855.1 |
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Marge (% of sales) |
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31.9 |
32.6 |
32.8 |
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– |
– |
– |
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31.9 |
32.3 |
32.6 |
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Business free cash flow |
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865.4 |
1,402.0 |
1,875.7 |
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–39.7 |
–64.3 |
–88.6 |
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825.7 |
1,337.7 |
1,787.1 |
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