Merck 2014 Annual Report Download - page 85

80 GROUP MANAGEMENT REPORT → REPORT ON ECONOMIC POSITION → Macroeconomic and sector-specific environment
REPORT ON ECONOMIC POSITION
MACROECONOMIC AND SECTOR-SPECIFIC ENVIRONMENT
The year 2014 was characterized by the repercussions of the
financial crisis and uncertainties regarding future economic and
political developments. According to the most recent report pub-
lished by the International Monetary Fund ( IMF ), global gross
domestic product (GDP) grew by 3.3 % in 2014, which was 0.4per-
centage points more than in 2013. While the industrialized coun-
tries generated an increase of 1.8 %, emerging markets continued
to make the largest contribution to global growth, with GDP in
emerging economies rising by 4.4 %.
The GDP of the United States, the world’s largest economy,
grew by 2.2 % in 2014, which was 0.4 percentage points slower
than the 2013 forecast. Growth in the United States was stalled by
a decline in exports and a harsh winter. For the eurozone, the IMF
noted an increase of 0.8% in GDP. While particularly the countries
of southern Europe continued to struggle with the consequences
of the sovereign debt crisis, some nations, for example Germany,
showed signs of recovery.
The company’s performance was influenced by general global
trends as well as the continued growing importance of emerging
markets. In 2014, the Emerging Markets region accounted for
around 80 % of The Group’s organic sales growth. While the Life
Science division generated around 50 % of its sales growth in the
Emerging Markets region, the sales growth of both Performance
Materials (approx. 80 %) and Consumer Health (approx. 70 %) was
particularly strong in this region. The Biopharmaceuticals division
generated its sales growth nearly entirely in the Emerging Markets
region, thus compensating for a slight sales decline in Europe.
Healthcare market
IMS Health, a market research firm specialized in the health sector,
reported 8.1 % sales growth for the pharmaceutical market in
2014. This sales increase approximately corresponded to the 2013
forecast. The increase was primarily attributable to emerging
markets. For instance, the pharmaceutical market of China posted
growth of 11.6 % and in Latin America, the pharmaceutical market
grew by as much as 15.1 %. However, after having seen slightly
declining growth rates in 2013, the United States and Europe also
reported growth of 11.7 % and 2.5 % respectively. According to the
market research institute Evaluate Pharma, particularly the mar-
kets for multiple sclerosis therapies and type 2 diabetes treatments
delivered above-average growth rates of 13 % and 14 % respective-
ly. Whereas the market for oncology therapies to treat colorectal
can
cer saw a 2 % decline in sales, sales of Erbitux®, one of the
Biopharmaceuticals division’s top- selling products, increased
organically by around 6 % in this indication.
Nicholas Hall, a market research firm for the pharmaceutical
industry, reported a 4.0 % increase for the global over-the-counter
drug market in 2014, which fell 1 percentage point short of the
forecast made in 2013. Latin America and Asia were growth drivers
here, while Europe posted growth of 2.4 %.
Market for high-tech materials
With its liquid crystals business, the Group is the leading producer
of liquid crystal mixtures for the display industry. According to
market researchers from Display Search, the display industry reg-
istered a sharper sales increase of 10 % in 2014 following slightly
lower sales growth of 5 % in 2013, based on the surface areas
of liquid crystal displays sold. Liquid crystals remain the leading
display technology, with growth primarily coming from the
increasing size of television screens.
The markets for automotive coatings and cosmetics are crucial
to the company’s Pigments business. As reported by the German
Automobile Industry Association (VDA), global automobile sales
increased by 2 % in 2014. Declines in other markets were offset by
growth in China (+10 %), as well as the United States and western
Europe (+4 % each). Nevertheless, global automobile sales growth
in 2014 fell by 3 percentage points compared with 2013 (+ 5 %).
According to Euromonitor International, global consumption of
materials used to produce cosmetics grew by 1.9 %, with Asia
reporting the highest growth rate of 4.9 %.
The semiconductor industry is one of the main sales markets
for AZ Electronic Materials, another key business for the Perfor-
mance Materials division. According to Gartner, a market research
institute specializing in technology and electronics markets, the
semiconductor industry grew by 7.2 % in 2014 compared with
5.0 % in 2013.