Merck Serono discovers, develops, manufactures and markets innovative pharmaceutical and biological prescription drugs to treat cancer, multiple sclerosis (MS), infertility, and growth disorders, as well as certain cardiovascular and metabolic diseases. As the company’s largest division, in the second quarter of 2014 Merck Serono generated 52% of Group sales and 51% 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 64% of divisional sales in the second quarter of 2014. In recent years, Merck Serono has steadily expanded its presence in Emerging Markets, which accounted for 29% of the division’s sales in the second quarter. Rebif®, its top-selling product, 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 Serono offers Erbitux® for the targeted and personalized 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. We are the only company with a complete portfolio of fertility drugs spanning the whole fertility treatment cycle with recombinant versions of the three hormones needed to treat infertility, 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 due to the increasing demand in emerging markets and to the trend of couples postponing childbearing until later in life when natural fertility declines.
The General Medicine franchise comprises branded 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 like hypertension. 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 dietary habits.
Merck Serono is continuously working to improve ways to administer medicines and active ingredients. For several years, Merck Serono has been developing novel injection devices, which make injections more user-friendly and at the same time more reliable for patients than conventional or prefilled syringes. In addition, these products make it easier for medical staff to support healthcare professionals and patients to reach their treatment goals. Examples are the electromechanical injection devices easypod™ for delivery of Saizen® (somatropin) and RebiSmart™ for Rebif® (interferon beta-1a).
Merck Serono is advancing its research and development (R&D) portfolio across the areas of oncology, immuno-oncology and immunology, and continues to invest in multiple sclerosis. With world-class expertise in discovery and early development, as well as approximately 30 compounds in clinical development, Merck Serono is focused on delivering differentiated new therapies to patients in need.
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 registered 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 following table.
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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Margin (% 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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Margin (% 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 |