Merck 2008 Annual Report Download - page 38

Download and view the complete annual report

Please find page 38 of the 2008 Merck annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 153

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153

MANAGEMENT REPORT OF THE MERCK GROUP 33
24 Responsibility
26 Merck shares
30 Pharmaceuticals business sector
50 Chemicals business sector
12 Overall economic situation
14 Economic development
of Merck
15 Financial position and results
of operations
60 Corporate and Other
61 Risk report
64 Report on expected developments
64 Subsequent events
Achieving growth with new therapeutic options
In 2008, the Merck Serono division generated total revenues of € 4,987 million,
12% more than in 2007. The continuous growth in sales was primarily the result of
the solid increases achieved by our main products, for example the biological drugs
Rebif®, Erbitux® and Gonal-f® as well as classic products such as Concor® and
Glucophage®. We achieved 58% of sales, equivalent to € 2,677 million, with biologi-
cal drugs. Rebif® was once again our top-selling product. Global sales of this drug
for the treatment of relapsing forms of multiple sclerosis (MS) rose to € 1,331 million
in 2008 – an increase of 9.3% over the previous year.
Sales of the targeted cancer therapy Erbitux® continued to grow at a strong double-
digit rate, increasing by 20% to € 565 million in 2008. Apart from the approval of
Erbitux® in the European Union for first-line treatment of head and neck tumors and
metastatic colorectal cancer (KRAS wild-type tumors), we also expanded our presence
in the key market of Japan. The approval of Erbitux® in Japan gives physicians and
patients a new therapeutic option in the second- and third-line treatment of metastatic
colorectal cancer. In addition, we laid the cornerstone for the expansion of our biotech
production in Corsier-sur-Vevey (Switzerland) in which we will invest a total of around
€ 300 million. By expanding this site, we will be able to produce greater quantities
of biotherapeutics, for example the oncology drug Erbitux® as well as treatments for
autoimmune and inflammatory diseases.
Operating result rises sharply
Gross margin increased by 11% to € 4,191 million over the previous year. The operat-
ing result rose by 66% to € 594 million. This increase was due, among other things, to
the conclusion of restructuring and integration measures following the acquisition of
the former Serono. In addition, we increased our royalty income by 25% to € 337 mil-
lion in 2008.
In Europe, sales by the Merck Serono division grew by 8.7% to € 2,653 million. Our
largest market was France, where sales increased by 7.7% to € 625 million. Sales in
Germany rose only slightly by 1.7% to € 484 million mainly as a result of restrictive
health policies. In both Italy and Spain, sales advanced by 10% and were virtually on
a par at € 296 million and € 295 million, respectively. Smaller markets such as Turkey,
Russia and the Czech Republic posted strong sales increases of 14%, 48% and 40%,
respectively.
Merck Serono | Key figures
€ million 2008 2007 ∆ in %
Total revenues 4,987 4,458 12
Gross margin 4,191 3,765 11
R&D 1,074 879 22
Operating result 594 357 66
Exceptional items –354 –744 –52
Free cash flow (FCF) 554 –6,505 –
FCF before acquisitions
and disposals 559 774 –28
ROS in % 11.9 8.0
Asia, Africa,
Australasia
North America
Latin America
Europe
627
13%
587
13%
783
17% 2,653
57%
Merck Serono | Sales by region
€ million
www.merckserono.com
We placed the cornerstone for
the expansion of our biotech-
nology production in Corsier-
sur-Vevey.