Merck KGaA's Serono unit posts 6.1-percent rise in Q4 sales, lifted by Rebif

Merck KGaA announced Thursday that fourth-quarter sales from its Serono unit climbed 6.1 percent year-over-year to 1.6 billion euros ($2.1 billion), boosted by the performance of Rebif. Three-monthly revenue from the multiple sclerosis therapy rose 9.4 percent to 471.3 million euros ($613.9 million), while sales of Erbitux slipped less than 1 percent to 223.8 million euros ($291.6 million).

Overall sales for the quarter increased 8 percent to 2.8 billion euros ($3.6 billion), coming in just ahead of analyst predictions. Meanwhile, net income more than doubled versus the year-ago period to 271.8 million euros ($354.2 million), which the company noted was due to one-time income tax effects and improvements from its previously announced restructuring plan. "Merck reported an excellent set of figures above expectations, despite higher than expected one-offs," remarked DZ Bank analyst Peter Spengler.

Merck indicated that during 2012, the company realised around 115 million euros ($149.6 million) in savings from its restructuring scheme, with approximately 100 million euros ($130.1 million) achieved via its Serono unit. As part of the plan, Merck is cutting jobs and closing its Serono headquarters in Geneva. The company said that two-thirds of the restructuring costs of 504 million euros ($655.9 million) recorded last year were related to the Serono division. Chairman Karl-Ludwig Kley remarked "not only did we make progress with one of the most extensive change programmes in the 345-year history of the company, we also succeeded in further expanding our business in a challenging economic environment."

Annual revenue from the Serono unit rose 8.2 percent versus 2011 to 6.4 billion euros ($8.3 billion), with a "strong" performance in North America, with sales up 17 percent to 1.3 billion euros ($1.7 billion). Revenue in emerging markets increased 6.8 percent to 1.7 billion euros ($2.2 billion), although Merck noted that "challenging business conditions in Europe, impacted by lower pricing as well as healthcare budget cuts," led to a 2.1 percent decline in sales to 2.5 billion euros ($3.3 billion).

The company added that 12-month sales of Rebif increased 7.5 percent to 1.9 billion euros ($2.5 billion), boosted by price increases in the US, while revenue from Erbitux grew 1.9 percent to 887 million euros ($1.2 billion). Merck's overall revenue in 2012 climbed 8.7 percent to 11.2 billion euros ($14.6 billion), as net income dropped 6.6 percent to 566.7 million euros ($737.6 million).

Looking ahead, the company said it predicts that overall sales will "grow organically at a moderate pace" in both 2013 and 2014 despite not expecting "any major new product launches in the pharmaceutical business in either year." Merck added that earnings "will increase faster than sales as a result of net cost savings" realised from its restructuring programme, which should lead to a "significant increase" in net income this year and next.

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