As a global company with a variety of highly innovative business fields, the Merck Group is exposed to potential risks and opportunities. The risk categories presented as well as the opportunities described in the Report on Risks and Opportunities found on pages 120 to 137 of the Annual Report for 2013 remain valid for the Merck Group in the current reporting period.
As reported in the second quarter of 2014, the risk of an important ban on products to the United States due to a warning letter from the United States Food and Drug Administration (FDA) in connection with inspections of production facilities in Tiburtina (Italy) as well as Aubonne and Vevey (Switzerland) was eliminated. The corrective actions taken by Merck are considered to be adequate by the FDA. The FDA has formally closed out the procedure.
As of the reporting date, Merck is still party to legal disputes with Israel Bio-Engineering Project Limited Partnership (“IBEP”). IBEP is asserting claims for property rights and the payment of license fees for the past and the future. The legal disputes are connected to the financing of the development of medical research projects in the early 1980s. In August 2014, Merck reached a verbal agreement with IBEP to settle the legal disputes by paying a sum of money. This verbal agreement is expected to be confirmed in writing in the fourth quarter of 2014.
At present, the company is not aware of any risks that could jeopardize the continued existence of the Merck Group. The company has a Group-wide risk management system in place to identify, control 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.
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