Merck 2010 Annual Report Download - page 160

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Sales are generated primarily from the sale of goods and to a limited degree include revenues
from services rendered. Merck Group sales totaled EUR 8,928.9 million in 2010, which represents
an increase of 21.0% compared to 2009. Adjusted for the impact of currency and acquisitions,
primarily as a result of the Millipore acquisition, organic growth amounted to 8.5%. Sales are
presented by business sector, division and region in the Segment Reporting.
In 2010, royalty and license income totaled EUR 339.4 million (2009: EUR 344.9 million) and
mainly included royalty and license income from the products Avonex ® (Biogen Idec), Humira ®
(Abbott), Enbrel ® (Amgen), Puregon ® (Merck & Co.) and vilazodone (Clinical Data), as well as
income from the active pharmaceutical ingredients bisoprolol and metformin.
In 2010, commission income totaled EUR 22.3 million (2009: EUR 24.4 million). This primarily
consisted of cooperation and distribution agreements, such as for Ikorel ® (Sanofi-Aventis),
Euthyrox ® (Bracco) and Allergan products. The breakdown of royalty, license and commission
income by business sector and division is presented in the Segment Reporting.
Cost of sales includes the cost of manufactured products as well as goods purchased for resale.
In accordance with IAS 2, the cost comprises overheads directly attributable to the production
process, including depreciation charges on production facilities, in addition to directly attributable
costs, such as the cost of mate rials, personnel and energy. We also disclose write-downs of inven-
tories as part of cost of sales. The Millipore inventories from the acquisition were stepped up by
EUR 85.8 million to fair values as of the first-time consolidation. This amount was fully expensed
in cost of sales in the second half of 2010 and had a one-time negative impact on gross margin.
In addition to the cost of sales and marketing departments and of the sales force, marketing and
selling expenses include advertising and logistics. The increase comparied to 2009 is due largely
to the first-time consolidation of Millipore. The breakdown of marketing and selling expenses by
business sector and division is presented in the Segment Reporting.
In 2010, royalty and license expenses amounted to EUR 179.5 million (2009: EUR 156.2 million)
and commission expenses totaled EUR 297.5 million (2009: EUR 256.8 million). The breakdown
of royalty, license and commission expenses by business sector and division is presented in the
Segment Reporting.
Personnel costs and material expenses of management and administra tive functions are recorded
under this item unless they have been charged to other cost centers as internal services. The increase
in administration expenses is due among other things to the first-time consolidation of Millipore as
well as currency effects. The breakdown of administration expenses by business sector and division
is presented in the Segment Reporting.
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156 Merck Annual Report 2010