Merck 2010 Annual Report Download - page 104

Seen by therapeutic area, IMS Health predicts growth of more than 10% by 2014 for products
such as those to fight cancer and multiple sclerosis as well as to treat HIV and diabetes since
many products for these therapeutic areas are expected on the market. For 2011 alone, market
researchers expect launches of five new products with blockbuster potential (meaning products
generating sales of more than USD 1 billion).
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For the Merck Serono division, the Executive Board is expecting an increase in total revenues
in 2011 ranging between 5% and 10%, relative to EUR 5,754 million in 2010, and predicts
continued growth for 2012. Relative to EUR 565 million in 2010, we want to achieve significant
growth in the operating result in 2011 and a further increase in 2012. The stronger increase as
compared to total revenues can be attributed to a moderate cost increase, especially in marketing
and sales. Furthermore, high write-downs and impairments impacted the operating result in 2010.
As a regularly recurring expense, the result includes write-downs on intangible assets to their
fair value as a result of the acquisition of Serono. Amortization is expected to amount to around
EUR 600 million in both 2011 and 2012.
In the years to come, R&D spending will continue to be at the target level of 20% of total revenues
of the Merck Serono division.
Cancer and multiple sclerosis are very important for Merck, as they are markets in which we offer
patients therapeutic options. According to calculations made by Evaluate Pharma, a pharma-
ceutical service company, cancer therapies will continue to be the therapeutic area with the
highest sales. In the global market for all pharmaceuticals, oncology treatments had a share
of 7.9% in 2009, which is expected to rise to 8.8% by 2016, reaching sales of USD 70 billion.
With sales of USD 10 billion, drugs to treat multiple sclerosis ranked number 14. Here, Evaluate
Pharma forecasts an average annual increase of 3% to USD 12 billion up to 2016.
Biotech drugs accounted for 31% of the 100 best-selling pharmaceuticals in 2009. This share
is expected to increase to 48% by 2016. This figure is of interest to Merck, as biotech drugs
already account for 50% of our pharmaceuticals sold.
We see important opportunities and risks for the Merck Serono division closely linked to the
successful launch of new products:
Consequently, the special focus of Merck Serono will be on the market launch of cladribine
tablets. Cladribine was approved in Russia and Australia in 2010. For Europe, the Committee for
Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) issued
a negative opinion regarding the marketing authorization application in September 2010.
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