Annual sales at Merck KGaA's Serono unit slip on currency headwinds

Merck KGaA announced Thursday that sales from its Serono unit slipped 0.7 percent in 2013 to just under 6 billion euros ($8.2 billion), despite all of the division’s therapeutic areas recording organic growth. The company indicated that results were hit by strong headwinds from Japanese and US currencies of 4.6 percent.

Annual revenue from Rebif, which Merck noted is facing "more intense competition," fell 1.5 percent versus 2012 to 1.9 billion euros ($2.6 billion) as a result of foreign exchange effects. Analysts expect sales of Rebif to decline to around 1.5 billion euros ($2.1 billion) by 2019 as new oral therapies for multiple sclerosis take market share.

For other products, sales of Erbitux declined slightly by 5 million euros ($6.9 million) to 882 million euros ($1.2 billion), despite growth fuelled by its approval in head and neck cancer in Japan, as well as "good demand" in emerging markets region. Annual revenue from Gonal-f in 2013 fell to 586 million euros ($805 million), including negative foreign exchange effects of 3.5 percent. CEO Karl-Ludwig Kley remarked "within the scope of our ‘Fit for 2018’ transformation and growth programme, in the Merck Serono division we are working to realign our pipeline and to fully exploit the potential of the existing portfolio."

Merck has been undertaking a restructuring programme, which the company noted helped it post net income of 1.2 billion euros ($1.6 billion) for 2013, up from 567 million euros ($779 million) a year ago. Overall annual revenue slipped 0.7 percent to 11.1 billion euros ($15.3 billion)."We delivered on our promises in 2013," commented Kley, adding "we lowered our costs faster than planned and drove the realignment of the group."

For the fourth quarter, Merck said that net income rose 3.2 percent to 281 million euros ($386 million), topping analyst estimates of 260 million euros ($357 million), while sales fell 3.3 percent year-over-year to 2.7 billion euros ($3.7 billion), broadly in line with forecasts.

For 2014, Merck noted that it expects "stable sales," with earnings at the same level as last year despite "intensive competition in certain parts of the pharmaceutical business." The company indicated that this year will also see another 100 million euros ($137 million) in charges related to its restructuring programme.

Kley remarked that Merck has "developed our business with innovative and highly specialised products and services further, expanding our presence in global growth markets," adding that "the numbers reflect this development. Merck was never as profitable as it is today." Serono CEO Belen Garijo indicated last month that the company is looking to expand in emerging markets, partly by boosting investment in Erbitux and Gonal-f, while it is also interested in acquisitions in the US with a focus on oncology. Kley also recently highlighted biosimilars as an important new market for Merck, although he noted that innovative medicines would remain at the company's core.

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