Merck 2014 Annual Report Download - page 141

136 GROUP MANAGEMENT REPORT → Report on Expected Developments
FORECAST FOR THE HEALTHCARE BUSINESS SECTOR
HEALTHCARE →
FORECAST 2015
€ million Actual figures for 20141Forecast for 2015 Key assumptions
Sales 6,549.4 – Organic at the
previous year’s level
– Sales growth in Emerging Markets and of other key products by sales will
compensate for the significant organic decline in sales of Rebif®
– Strong organic growth in the Consumer Health business
EBITDA pre
one-time items
2,000.3 – Slight decline – Increasing research and development costs due to the prioritization and
intensification of the Biopharmaceuticals business research and development
projects, especially in connection with the further development of the anti-PD-L1
antibody within the scope of the strategic alliance with Pfizer; offset to a
significant extent by the upfront payment from Pfizer attributable to 2015
– Effect on earnings due to the expected decline in Rebif® sales
– Absence of Humira® royalty income
– Positive foreign exchange effects
Business free
cash flow
1,701.2 – Slight decline – Slight decline in EBITDA pre one-time items
– Higher investments in property, plant and equipment within the scope of current
strategic growth projects
1 Information relating to the past for the Healthcare business sector refers to the former Biopharmaceuticals and Consumer Health businesses, which have been part of the newly created
Healthcare business sector since January1, 2015.
Sales
The Group expects organic sales of the Healthcare business sector
in 2015 to remain at the 2014 level. For Rebif®, the top-selling
product in Healthcare, the company assumes a sharp organic sales
drop as a result of high competitive pressure in the United States
and also in Europe. However, it is expected that this decline in
sales will be compensated for by continued growth in Emerging
Markets and by growth of the other key products. The Consumer
Health business, for which the Group expects to see strong organic
sales growth, will also help to offset the decline.
EBITDA pre one-time items
In 2014, Merck KGaA, Darmstadt, Germany, already resolutely pri-
oritized its research and development activities in the Healthcare
business sector and discontinued various projects. For 2015, the
Group will drive strategically important projects forward, which
will lead to increasing research and development costs. An im port-
ant part of this will be the further development of the hypoxia-
activated prodrug TH-302 and particularly the anti-PD-L1 anti-
body within the scope of the strategic alliance with Pfizer. The
expenses incurred in this connection are likely to be offset to a large
extent by the share of the upfront payment from Pfizer attributable
to 2015. These developments, as well as the absence of royalty
income for Humira® and the impact of the expected significant
drop in sales of Rebif® on earnings, are likely to lead to a slight
decline in
EBITDA pre one-time items.
Business free cash flow
In particular, the Biopharmaceuticals business will be increasingly
investing in the modernization and expansion as well as the new
construction of production facilities in order to meet the increas-
ing demand for the company’s pharmaceuticals. Owing to these
investment activities and the slight decline in
EBITDA pre one-
time items, the Group expects a slight decrease in business cash
flow for the Healthcare business sector in 2015.