Merck 2008 Annual Report Download - page 27

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22 | Merck Annual Report 2008
Capital spending rises markedly
In 2008, Merck invested a total of € 395 million in property, plant and equipment. This
was € 131 million or 50% more than in 2007. As a result, the capital spending ratio as
a percentage of total revenues increased to 5.2% compared with 3.7% in 2007.
Individual investment projects, each with a value of more than € 0.5 million, accounted
for around two-thirds of capital spending. In regional terms, Europe accounted for 84%
of the total, with the focus on Germany and Switzerland. In Germany, we invested
€ 160 million at our two largest production sites, namely Darmstadt and Gernsheim, for
new and expanded production capacities and research and development facilities, among
other things. In Switzerland, capital spending totaled € 119 million. Capital spending
amounted to € 18 million in North America and € 19 million in Latin America. Our com-
panies in Asia accounted for a total capital spending volume of € 24 million. Spending
focused mainly on Japan, India and Korea, especially for the Chemicals business sector.
Capital spending by the Pharmaceuticals business sector totaled € 250 million in 2008,
with the Merck Serono division accounting for the vast majority of this amount. The
main focus of the investments was on the expansion of our biotechnology produc-
tion capacities in Corsier-sur-Vevey, Switzerland. In November 2008, we placed the
cornerstone for the expansion of the Merck Serono Biotech Center, which represents
the single largest investment project of the Merck Group in both 2008 and 2009.
Around 20% of capital spending for this business sector related to headquarters in
Darmstadt, Germany.
Capital spending on property, plant and equipment amounted to € 143 million in the
Chemicals business sector, with the Liquid Crystals division accounting for € 65 million
and the Performance & Life Science Chemicals division for € 79 million of this total. Both
divisions invested primarily at the Darmstadt and Gernsheim sites, our main locations, in
order to expand and modernize existing production facilities, to improve infrastructure
and to construct new research buildings.
Value added
Value added is a measure of the economic strength of a company and indicates how the
corporate result is achieved and for what it is used.
Laboratory
Distribution
Chemicals
Pharmaceuticals
2004 2005 2006 2007 2008
Capital spending on property, plant and equipment
€ million
400
300
200
100
Research & development
€ million
2004 2005 2006 2007 2008
1,600
1,200
800
400
High level of investment in
biotech protection facility.