Merck KGaA on Tuesday reported that second-quarter sales for its Serono division increased 11 percent year-over-year to 1.5 billion euros ($1.9 billion), helped by favourable currency exchanges and higher sales of its multiple sclerosis drug Rebif and fertility franchise. CEO Karl-Ludwig Kley remarked that the results "show that we are making good progress in strengthening Merck for the future," adding that the Serono unit "performed particularly well, sustaining strong growth trends for a fifth consecutive quarter in emerging markets and in its fertility and endocrinology businesses."
Global sales for Rebif rose 9.6 percent during the quarter to 492 million euros ($607 million), compared with the same period last year, helped by strong performance in the US due in part to price increases. The company noted that European sales for the product were flat as pricing pressures were offset by volume increase. Erbitux revenue for the three-month period increased 7.1 percent to 226 million euros ($279 million). Merck said European sales for the cancer drug were weaker due to lower deliveries into the southern EU, but that emerging markets performed strongly. Meanwhile, quarterly sales for Gonal-f gained 17.7 percent to 161 million euros ($199 million) over the year-ago period.
Merck stated that Serono's double-digit sales growth in North America, emerging markets and elsewhere in the world "more than offset softer trading conditions in Europe, where sales declined for the fourth consecutive quarter, impacted by continued pricing pressures." Nonetheless, Merck indicated that it aims to reduce annual costs at the prescription drugs unit by 300 million euros ($370 million) by 2014. In June, it confirmed the closure of Serono's Geneva headquarters and cut up to 580 jobs as part of a cost-cutting initiative, as well as the shuttering of a manufacturing site.
In other results, Merck said that its after-tax loss narrowed to 60.5 million euros ($74.6 million) during the second quarter from 86.8 million euros ($107 million) last year, while total revenues for the quarter grew 11.6 percent to 2.6 billion euros ($3.2 billion).
Looking ahead, the company said it anticipates markets for "innovative biopharmaceuticals and over-the-counter preparations to grow, driven by volume growth in the emerging markets." Based on its quarterly performance, the company lifted its earnings guidance for the year to between 2.9 billion euros ($3.6 billion) and 3 billion euros ($3.7 billion), from a previous estimate of 2.8 billion euros ($3.5 billion) to 2.9 billion euros ($3.6 billion), on about 10.7 billion euros ($13.2 billion) in total revenue. The Serono unit is expected to generate the bulk of those earnings, at approximately 1.8 billion euros ($2.2 billion), the company said.
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