Merck KGaA reported second-quarter results Wednesday showing that sales for its Serono division fell 1.4 percent from the year-ago period to 1.4 billion euros ($1.9 billion), hurt by negative exchange-rate effects of 4.4 percent. However, the company noted that the biopharmaceutical unit "performed particularly well" in emerging markets, where sales grew by 16.7 percent to 415 million euros ($556 million), with China and Brazil among the main contributors. "Merck's stronger focus on this attractive region is visibly paying off," remarked CEO Karl-Ludwig Kley.
Merck noted that sales of the multiple sclerosis therapy Rebif declined by 7 percent to 464 million euros ($621 million), which the drugmaker attributed primarily to increased competition in North America and Europe. Meanwhile, Erbitux revenue rose 6.5 percent year-over-year to 229 million euros ($306 million). Additionally, royalty, licensing and commission income for the Serono division fell by 30.8 percent to 64 million euros ($85.6 million).
The company added that overall revenue was up 1.9 percent to 2.8 billion euros ($3.7 billion), in line with analyst estimates, with revenue for its consumer health division growing by 3.3 percent to 185 million euros ($248 million). The drugmaker noted that profit dipped 4 percent year-over-year to 303.3 million euros ($406 million). Commenting on the news, DZ Bank analyst Peter Spengler said Merck announced "a decent set of figures above expectations."
Kley, who described the quarter as "solid," remarked that "we want to further expand our [Serono] business with existing medicines this year." As such, he said the company is "focusing on emerging markets with a high number of underserved patients. The past quarters have already confirmed the success of this approach." Earlier this year, the executive disclosed that the company could pursue additional acquisitions in an effort to stimulate "organic and inorganic growth" over the next two years.
Based on its performance in the first half of 2014, Merck confirmed its forecast of between 10.9 billion euros ($14.6 billion) and 11.1 billion euros ($14.9 billion) in revenue and earnings ranging from 3.3 billion euros ($4.4 billion) to 3.4 billion euros ($4.5 billion). "Organic growth and the planned efficiency increases should be able to offset the effects of the decline in royalty, license and commission income, as well as the negative impact of foreign currency," the company noted.
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