Merck KGaA's Q2 profit surges, boosted by milestone payments for Bavencio, bintrafusp alfa

Headline results for the second quarter:

Healthcare sales

€1.7 billion ($1.9 billion)

+5.9%

Revenue

€4 billion ($4.5 billion)

+6.9%

Profit

€471 million ($528 million)

+90.8%

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"We achieved sales growth in all business sectors and regions," remarked CEO Stefan Oschmann, adding "the jump in earnings was due to the very good business performance of Life Science as well as the milestone payments in Healthcare."

Merck KGaA indicated that in the quarter, it received a milestone payment of €35 million ($39 million) from Pfizer linked to FDA approval of Bavencio in combination with Inlyta (axitinib) as a first-line therapy in patients with advanced renal cell carcinoma. Merck also said its agreement with GlaxoSmithKline to develop the immunotherapy bintrafusp alfa has a positive effect of €31 million ($35 million), while it also received a milestone payment of €75 million ($84 million) from BioMarin Pharmaceutical in connection with the sale of the rights to Palynziq in 2016.

Other results:

  • Rebif: €331 million ($371 million), -13.7%, mainly due to the "persistently challenging" competitive environment in North America
  • Erbitux: €212 million ($238 million), +4.2%, with the addition of the drug to China's National Reimbursement Drug List a "major driver" of growth in Asia
  • Gonal-f: €191 million ($214 million), +3.7%
  • Mavenclad: €61 million ($68 million), versus €20 million ($22 million) in the prior year, boosted by approval in the US at the end of March
  • Bavencio: €23 million ($26 million), +38.4%
  • Life Sciences: €1.7 billion ($1.9 billion), +10.5%

Looking ahead:

Merck reaffirmed that it expects overall sales to be between €15.3 billion ($17.1 billion) and €15.9 billion ($17.8 billion) this year, representing "moderate organic growth" of 3% to 5%. The company still forecasts earnings of between €4.15 billion ($4.7 billion) and €4.35 billion ($4.9 billion), representing a "strong organic increase" of 10% to 13%.

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