Merck 2008 Annual Report Download - page 52
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MANAGEMENT REPORT OF THE MERCK GROUP 47
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
Growth with brands that consumers trust
Focusing on four health themes
Our Consumer Health Care division is a specialized supplier of over-the-counter products
focused on four health themes: Cough and Cold, Mobility, Everyday Health Protection
and Women’s and Children’s Health. Our main distribution channels are pharmacies, as
well as retail chains and mail order in some countries. We are building on the strength
of our well-known brands and the trust consumers place in them with respect to their
quality and efficacy.
Total revenues of the Consumer Health Care division rose by 5.2% to € 442 million
in 2008. Organically, we posted a double-digit sales increase of 12%, more than twice
that of the estimated global OTC market. We are continuing to pursue a two-pronged
strategy. On the one hand, we are increasingly focusing our business on our strategic
brands, while on the other hand we are driving expansion in growth markets such as
those of eastern Europe, Asia and Latin America.
In 2008, we continued to invest significantly to further develop our strategic
brands. These were financed partly by the proceeds from the sale of the Spanish diet
product brand biManán® to the French company Nutrition & Santé for € 11 million.
While biManán® was the division’s most important brand in Spain, it was only of
local significance, did not focus on our health themes and recorded stagnant sales.
Strong currency impact in key markets
In many markets, negative currency effects seriously undermined our strong organic
growth. The most significant impact was felt in the United Kingdom, a key market,
as well as in the traditionally important markets of Mexico and Venezuela. By contrast,
positive currency effects were registered in the growth markets of eastern Europe, for
example Poland, the Czech Republic and Slovakia, though these were insufficient to
offset the general trend.
The operating result of the Consumer Health Care division increased to € 61 mil-
lion, 2.9% more than in 2007. Free cash flow adjusted for acquisitions and disposals
decreased by 19% to € 38 million mainly as a result of higher capital spending.
Consumer Health Care | Key figures
€ million 2008 2007 ∆ in %
Total revenues 442 420 5.2
Gross margin 294 284 3.5
R&D 17 12 40
Operating result 61 60 2.9
Exceptional items – – –
Free cash flow (FCF) 5.6 47 –88
FCF before acquisi-
tions and disposals 38 47 –19
ROS in % 13.9 14.2 –
Consumer Health Care |
Sales by region
€ million
78
18%
51
12%
306
70%
Asia, Africa,
Australasia
Latin America
Europe
www.merck.de/
consumerhealthcare