German drugmaker Merck KGaA said this morning that its pharmaceutical business posted quarterly sales of more than $1 billion for the first time, as colorectal cancer drug Erbitux – as well as the firm’s ultra-profitable liquid crystals business - continued on their growth trajectories.

Merck has decided to increase its growth forecasts for the year as a result of the strong first quarter, saying it now believes sales and operating profit will both increase at a double-digit rate in 2006.

Overall group sales were up 16% to 1.6 billion euros, while operating profits advanced nearly 46% to 288 million euros.

Pharmaceutical sales came in at 1.01 billion euros, with Erbitux (cetuximab) climbing 14% to 74 million euros. Although this growth rate has fallen back a little from prior quarters, Merck secured European Union approval in March for a new indication, head and neck cancer, that should inject additional momentum into the brand. Erbitux is also cleared for this type of cancer in the USA, Switzerland, Argentina and Colombia.

Merck’s generics business saw its turnover increase 11% to 435 million euros, with 4% growth in Europe despite price cuts and competition in France and the UK.

Turning to its pipeline, Merck noted that it will shortly start Phase III trials of its cancer vaccine Stimuvax, which it acquired from Canada’s Biomira earlier this year, after seeing a very promising impact on survival in lung cancer patients during a Phase II study. The company also said it expects to file for approval this year of sarizotan, a drug for Parkinson’s disease developed in-house, which is coming towards the end of Phase III testing.

Liquid crystals had a fantastic quarter, with sales up 60% to 233 million euros on continuing demand for big screen LCD televisions.

Merck’s robust figures should serve as some comfort as it recovers from a failed bid to acquire fellow German drugmaker Schering, now scheduled to become part of Bayer which also reported its first-quarter financial results this morning.

And investors also responded favourably to the figures, with shares in the company up more than 4% to 85.27 euros in mid-morning trading this morning.