Merck bounces back

Merck KgaA tripled its profit year-on-year in the first quarter of 2010, largely on the back of a better than expected performance in its chemicals business.

The company declared itself 'back on track' after the economic crisis, which hit its chemicals business in particular.

The German company’s total revenue was up 13% to 2.1 billion euros, with net profit after tax of 195 million euros.

Chemicals revenue jumped 34% to 585 million euros but pharma (largely through Merck Serono) weighed in with revenue of 1.5 billion euros for the quarter - up 6.5% year on year and still 72% of the company’s total.

Much of this was down to an increase in sales of two key drugs: multiple sclerosis treatment Rebif was up 17% between January and March to 429 million euros, while cancer brand Erbitux rose 19% to 192 million euros, performing particularly well in Japan and Europe.

However, Rebif’s growth was mainly due to US wholesalers receiving an extra 20 days’ supply in March ahead of a change to computer systems (precluding shipments this month) - so second-quarter US sales will be lower.

Factors such as higher commission expenses on sales of Rebif in the US and profit sharing on Erbitux in Japan, plus higher R&D costs, meant to a 2.2% decline in pharma’s operating profit to 180 million euros.

Merck Serono’s R&D costs rose 12% to 304 million euros, which the company says is due to the large number of expensive, late-stage clinical trials.

Its operating result was up 1.3% to 178 million euros in the first quarter, although return on sales fell from 13.4% a year ago to 12.7%.

Merck Serono revenue increased 7% to 1.4 billion in the first quarter, with sales of fertility drug Gonal-f  up 3.8% to 139 million euros and those of recombinant growth hormone Saizen rising 18% to 54 million.

“Although we don’t expect 2010 will be easy, we did start the year off quite well, especially in our chemicals business,” said group chairman Karl-Ludwig Kley.

The company has revised its guidance to suggest that group operating result for the year will be up 30-40% on its previous forecast.