Merck hit by Erbitux setback as Q2 profit falls

German drug and chemicals group Merck saw its second-quarter net profit fall 48% as higher r&d costs and expenses associated with the acquisition of Serono had an impact on figures.

The company reported a net profit of Euro 109m for April to June 2009 compared with â"šÂ¬207m a year earlier. Sales for the quarter were nearly unchanged at â"šÂ¬1.9bn.

"It is clear to see that the world remains in the midst of the economic crisis," said Dr Karl-Ludwig Kley, chairman of Merck KGaA. "Merck is also feeling its effects but to a lesser extent than many companies. In fact, we are able to continue investing in the development of innovative products that will secure our future."

Merck also suffered a regulatory setback for one of its key drugs as the Committee for Medicinal Products for Human Use (CHMP) rejected the use of Erbitux (cetuximab) to treat a form of lung cancer. CHMP said "modest" benefits for the proposed wider use of the drug "did not outweigh its risks" and recommended that the change to the marketing authorisation be refused.

Erbitux is one of Merck's top three products with Rebif and Gonal-f, which accounted for half of total sales during the second quarter at Merck Serono, the group's pharmaceutical division.

The division's r&d costs jumped 26% to â"šÂ¬302m in the second quarter and by 18% to â"šÂ¬574m in the first half of 2009, mainly due to the number of late-stage clinical trials taking place worldwide. Merck Serono is currently funding 10 Phase III international clinical trials, more than at any time in the company's history.

During the second quarter Kuvan, for the treatment of hyperphenylalaninemia (HPA) in phenylketonuria (PKU) or BH4-deficient patients and Glucophage powder, for the treatment of Type 2 diabetes, were launched in Europe. Merck also introduced RebiSmart, for the self-administration of its injectable MS treatment, Rebif in the EU and Canada.

The company applied to the European Medicines Agency (EMEA) for marketing authorisation for Cladribine tablets, the world's first oral treatment for multiple sclerosis.

Merck expects total group sales for 2009 to grow by between 0-5%.