Merck 2008 Annual Report Download - page 4

Merck offers a wide range of specialty chemicals for techno-
logically sophisticated applications. Many of these are con-
tained in products that people encounter in everyday life, such
as mobile phones, televisions, automotive coatings, drugs and
cosmetics. Top quality, diversity as well as a customer-centric
approach to research and product development along with
extensive service characterize our Chemicals business.
Liquid Crystals division
Close cooperation in development and production of liquid
crystals (LC) with the world’s leading display manufacturers
has made Merck the global leader in this market. Modern life
would be hard to imagine without LC displays. Merck is tech-
nology leader and continually invests in research for these
and new technologies, e.g. OLEDs (organic light-emitting
diodes) or chemicals for energy-efficient lighting.
Performance & Life Science Chemicals division
Our specialty chemicals and our expertise in application
technologies, quality assurance and approval processes have
made us a successful supplier in key markets, in particular
the food, optics, plastics, coatings, printing, cosmetics and
pharmaceutical industries. Products and services from Merck
are used throughout the entire process chain, from analysis,
research and development, through to production. Our port-
folio includes, for example, effect pigments, cosmetic actives,
reagents and test kits.
Chemicals business sectorPharmaceuticals business sector
Merck develops, manufactures and markets innovative prescrip-
tion drugs as well as over-the-counter products. We develop
therapies for high unmet medical needs. Through their targeted
effect, these help patients to live a longer and better life. Our
over-the-counter products help prevent disease and relieve
minor complaints.
Merck Serono division
The product portfolio of this division includes leading prescrip-
tion drugs such as the cancer drug Erbitux® and the multiple
sclerosis treatment Rebif®. In addition, we offer therapies to
treat infertility, growth disorders, cardiovascular or metabolic
diseases, and psoriasis – indications mainly treated by special-
ists. Our research activities focus on Oncology, Neurodegenera-
tive Diseases, Fertility, Autoimmune and Inflam ma tory Diseases,
and Endocrinology.
Consumer Health Care division
Many consumers trust a wide range of well-known over-the-
counter brands that Merck develops, manufactures and markets
in its Consumer Health Care division. The portfolio ranges from
products for everyday health such as Bion®3, or Femibion®,
which is specially for women, classic cold remedies such as the
well-known brand Nasivin®, to products that strengthen the
joints such as Seven Seas® JointCare and Kytta®.
Merck 2008 at a glance
Key figures for 2008
€ million
Pharma-
ceuticals Chemicals
Corporate
and Others Total
Change
in %
Total revenues 5,428 2,123 6.6 7,558 7.1
Gross margin 4,485 1,170 –2.7 5,652 7.1
Research and development 1,091 143 0 1,234 20
Operating result 655 558 –81 1,131 16
Exceptional items –354 –46 0 –400 –48
Earnings before interest and tax (EBIT) 301 512 –81 731 –
EBIT before depreciation and
amortization (EBITDA) 1,381 645 –80 1,947 4.8
Return on sales in %
(ROS: operating result/total revenues) 12.1 26.3 – 15.0
Free cash flow 559 460 –581 438 –
Free cash flow adjusted for acquisitions
and disposals 598 474 –470 601 –38
Total revenues by business sector*
€ million
2004 2005 2006 2007 2008
8,000
6,000
4,000
2,000
Operating result by business sector*
€ million
2004 2005 2006 2007 2008
1,600
1,200
800
400
Laboratory
Distribution
Chemicals
Pharmaceuticals
Business Development 1999 – 2008
Change vs. 2007
in %
€ million 1999 2000 2001 2002 2003 2004 2005 20061200722008
Total revenues35,433 6,896 7,697 7,497 7,343 5,994 5,865 4,460 7,057 7,558 7.1
Pharmaceuticals32,924 3,035 3,469 3,244 3,438 3,579 3,885 2,314 4,877 5,428 11
Merck Serono 1,675 1,929 2,215 1,833 1,528 1,597 1,797 1,914 4,458 4,987 12
Generics 6577909351,0961,5841,6251,712––––
Consumer Health Care 263 299 319 315 327 357 376 400 420 442 5.2
Imaging
432917–– –––––––
Chemicals 1,398 1,677 1,720 1,788 1,705 1,694 1,905 2,112 2,150 2,123 –1.3
Liquid Crystals 174 312 297 383 443 589 741 895 916 877 –4.2
Performance & Life Science Chemicals 1,089 1,173 1,207 1,213 1,082 1,105 1,163 1,217 1,235 1,246 0.9
Electronic Chemicals4135192216192181––––––
Laboratory Distribution4 1,262 2,374 2,754 2,711 2,427 582 – – – – –
Intragroup sales –151 –190 –246 –246 –228 –62 – – – – –
Corporate and Other – – – – – 200 76 34 29 7 –77
Generics (Discontinued Operations)3–––– –––1,8241,3950–
Operating result3659 746 877 616 736 776 883 799 976 1,131 16
Pharmaceuticals3498 455 581 272 389 391 454 217 417 655 57
Chemicals 114 247 204 260 316 420 492 641 631 558 –12
Laboratory Distribution4474492847921–––––
Corporate and Other 0000–48–56–63–60–72–8114
Generics (Discontinued Operations)3–––– –––3071890–
Earnings before interest and tax (EBIT)3581 747 1,286 559 538 1,044 956 1,031 200 731 –
EBIT before depreciation and amortization (EBITDA)3900 1,184 1,694 985 1,008 1,419 1,245 1,334 1,858 1,947 4.8
Profit before tax344 0 524 1,078 412 423 961 893 982 –111 575 –
Profit after tax5235 262 655 215 218 672 673 1,001 3,520 379 –89
Free cash flow5 –1,081 324 664 441 442 1,889 657 –1,073 –1,473 438 –
Capital expenditure on property, plant and equipment5359 427 470 377 281 234 268 253 283 395 40
Research and development3498 546 577 608 605 599 713 615 1,028 1,234 20
Total assets 7,845 8,235 8,255 7,511 6,982 5,754 7,281 8,102 14,922 15,6454.8
Net equity 1,870 1,947 2,336 2,054 2,363 2,800 3,329 3,807 8,688 9,563 10
Employees (number as of December 31)332,721 33,520 34,294 34,504 34,206 28,877 29,133 25,531 30,968 32,800 5.9
Return on sales3 (ROS) in % (ROS: Operating result/Total revenues) 12.3 11.1 11.6 8.3 10.2 13.2 15.3 17.9 13.8 15.0
Earnings per share in € 1.32 1.44 3.66 1.18 1.15 3.47 3.40 5.07 16.21 1.69–
Dividend per share in € 0.85 0.90 0.95 1.00 0.80 0.80 0.85 0.90 1.20 1.50 –
One-time bonus per share in € – – – – – 0.20 – 0.15 2.00 – –
1 In order to harmonize accounting practices, as of 2006 the way in which certain customer rebates in the Pharmaceuticals business sector are reported has been changed.
2 Following its acquisition, the Swiss biopharmaceutical company Serono was integrated with the Ethicals division into Merck Serono in 2007.
3 The Generics division was sold in October 2007 and is thus reported as a Discontinued Operation. All revenue, profit and employee figures have been adjusted for 2006 and 2007.
4 Business was divested.
5 Still including Discontinued Operations (Generics) in 2006 and 2007.
*excluding Corporate and Other *excluding Corporate and Other