Merck KGaA has announced its third-quarter results this morning which show strong sales of Rebif and Erbitux but the most striking news is the firm’s decision to pull out of diabetes research.

The acquisition of Serono,what with writedowns and integration charges resulted in the German drugmaker posting net income of 36.2 million euros, down 74.9%, but operating profit beat analysts’ expectations climbing 55.7% to 291.5 million euros, thanks to a strong performance of the Darmstadt-based firm’s liquid crystals operations and pharmaceuticals.

Total revenues leapt 60.6% to 1.74 billion euros and the pharmaceuticals business accounted for more than 70% of total revenues. Its Merck Serono unit saw revenues almost double to 1.09 billion euros from 476 million euros in the third quarter last year, driven by the multiple sclerosis treatment Rebif (interferon beta-1a) which rose 4.1% to 306 million euros. Sales of the cancer drug Erbitux jumped 36% to 118 million euros, though this figure was a little shy of most analysts’ estimates.

The company also noted that it has completed a portfolio review, the goal of which, according to Elmar Schnee, the board member with responsibility for pharmaceuticals, was to “create as much value as possible from our current compounds by better managing risk across the portfolio and directing resources to our most promising projects”. As such, Merck Serono will focus its R&D activities on oncology, neurodegenerative diseases, autoimmune and inflammatory diseases, fertility and “certain areas within endocrinology”.

However, for the company which was driven for many years by Glucophage (metformin), Merck added that it is “considering not investing further into diabetes R&D but is investigating partnerships” for its existing projects in that field. In total, six projects were added to the clinical pipeline and 11 were de-prioritized or stopped, so Merck now has 41 projects in the clinic between Phases I and III or submitted for regulatory approval. These are led by two Erbitux studies – a Phase III trial for gastric cancer and a

Phase II study for breast cancer, while atacicept for lupus is in Phase II/III.

Merck concluded by saying that it continues to expect an increase of more than 20% for its full-year operating profits, while proceeds from the 4.9 billion euro sale of its generics business to Mylan will be booked in the fourth quarter.