Merck KGaA of Germany posted a 5% increase in third-quarter sales this morning, with a solid performance by the firm’s pharmaceuticals unit offset by slowdown in chemicals and liquid crystals.
Merck’s recent agreement to acquire Swiss biotech Serono for 10.6 billion euros ($13.5bn) had a minimal impact on the third-quarter results, said Merck. That acquisition is designed to boost its pharmaceuticals pipeline and reduce its reliance on liquid crystals and indeed colorectal cancer drug Erbitux (cetuximab), which is facing competition in the USA from Amgen's recently approved rival Vectibix (panitumumab).
Overall, operating profit at the company fell nearly 10% to 262 million euros, but was made to look worse because of two exceptional payments to Merck in the year-earlier quarter of around 70 million euros from licensing deals with Takeda and Organon. Excluding these, profits would have risen 19%, said Merck.
Pharmaceuticals accounted for 1.03 billion euros out of a total 1.54 billion euros in third-quarter sales, and improved by a little over 7%. Once again the main driver for growth was Erbitux, which leaped 46% to 87 million euros.
Merck’s generic drugs business also did well at a time when many of its peers are struggling to make sales gains because of increased competition and downward pressure on pricing. Sales at the unit rose 6% to 456 million euros, with profits up 7% to 75 million euros.
But while all seemed well in the pharma division, investors seemed concerned about Merck’s liquid crystal business, which has been enjoying brisk growth in recent years on the back of an explosion in the use of liquid crystal displays in the consumer technology market.
Sales growth in this division was a little over 4% to 207 million euros, pegged back by inventory build-up that started in the second quarter and continued into the third, said Merck. The company also trimmed its annual sales forecast to an increase of around 10% this year.
Shares in Merck were down 1.3% in mid-morning trading on the Frankfurt stock exchange.