Company Analysis - Merck Serono
Time for a Change
Accompanying the launch of Merck Serono is the news that Merck KGaA is now considering the sale of its generics business to offset the costs of acquiring Serono. This may seem quite a sacrifice, considering that the generics business alone had sales of €1,339.3 million from January to September 2006, almost equalling the figures for the Ethicals division of €1,413.6 ..Merck KGaA now stands as a pharmaceutical company of broad expertise with the potential to span increased therapeutic markets.million. In fact, the generics division increased its operating profit by 7.1% in 2006, compared with the previous year, and European sales of Merck generics rose by 13%. However, despite this success in a highly competitive area, German government initiatives to reduce healthcare costs, and price competition in the UK led to a decline in 2006 generics sales in both of these markets. This is a symptom of the fact that while marketing generics may be a lower-risk strategy than the development of novel therapeutics, it is also a less-lucrative one, and with the field of generics growing so rapidly the situation is not set to improve.
The new CEO of Merck Serono, Elmar Schnee, has expressed a positive view of the alliance. He said: "We have the unique opportunity to create a superb union of pharmaceutical chemistry and biotechnology". With the acquisition of Serono, Merck KGaA now stands as a pharmaceutical company of broad expertise with the potential to span increased therapeutic markets. With such assets, Merck KGaA could prove a powerful force in the ever-changing pharmaceutical industry.
Leanne Coyne
Pharmaprojects Analyst
