Merck, headquartered in Darmstadt, faced integration costs relating to the purchase of Serono and Millipore, as well as impairment costs owing to over-capacity at the firm’s biotechnology production plant in Switzerland, as well as a provision of €20m for the remaining costs associated with halting the development of MS drug cladribine.
The firm now expects its operating profit will be approximately €1bn in 2011.
Merck reported an operating loss of €11.4m in the quarter to 30 June, compared with a profit of €326.2m in the previous year’s second quarter. Net profit was €–85.9m compared with €184.4m.
‘While a series of one-time charges adversely affected this quarter’s profits, this will give us a healthy basis on which our new management team can build,’ said Dr Karl-Ludwig Kley, chairman of Merck KGaA.
Kley said the acquisitions had strengthened Merck and set the course for the future. Yet he said improvements are still needed ‘especially with respect to the quality of the pharmaceutical pipeline as well as internal processes and structures’.
Total revenues of the Merck Group increased 16% to €2.5bn in the second quarter, boosted by the acquisition of Millipore in July 2010.
For the first half of 2011, total revenues rose 19% to €5.1bn and gross margin rose 13% to €3.7bn.
Merck Serono’s total revenues during Q2 increased 2% to €1.48bn compared with €1.45bn in the same quarter in 2010. In the first half of 2011, revenues rose 1.7% to €2.9bn.
Global sales of Rebif for the treatment of relapsing forms of multiple sclerosis rose 5.2% to €423m in the second quarter. Sales of the targeted cancer treatment Erbitux declined by 3% in the second quarter to €204m mainly due to a sales dip in Japan.
Due to one-time impairment losses and other costs, the Merck Serono division recorded an operating result of €–147m for the second quarter compared with a profit of €164m in the year-ago quarter. For the half year, the operating result was €1.8m in 2011 and €342m in 2010, while the core operating result was €464m in 2011 and €622m in 2010.
The Consumer Health Care division increased total revenues by 3.9% to €118m in Q2, with most of the increase coming from solid demand in European markets. In the first half of 2011, total revenues rose by 6.1% to €235m.
The division’s operating result improved to €9.3m in the second quarter from €–5.4m in the year-ago quarter. For the half year, the operating result rose to €17m from €–3.9m.
The Merck Millipore division has three business units – Bioscience representing 17% of Q2 total revenues; Lab Solutions representing 42%; and Process Solutions representing 41%. Total sales for the new division were €584m in the second quarter and €1.19bn in the first half of 2011.
The core operating result, which excludes integration costs, was €101m. For the first half of the year, the core operating result was €232m.