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Merck Shares Rise to Three-Year High

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Merck said total 2011 sales were expected to reach between €10 billion, around €200 million lower than it had forecast earlier in the year. (Image: Stock.xchng)
Merck said total 2011 sales were expected to reach between €10 billion, around €200 million lower than it had forecast earlier in the year. (Image: Stock.xchng)

FINANCE

  • Shares rise 5.2% to €63.09 ($87.76) - biggest rise on Frankfurt Stock Exchange in almost 3 years
  • Q3 net profits rise 8% to €226.6 million ($315.2 million)
  • Company discontinues seven drug treatment programs

Shares in German pharmaceutical company Merck rose more than 5% on the Frankfurt Stock Exchange yesterday, surpassing all estimations in its third quarter financial results.

Third quarter net profit jumped almost 8% to €226.6 million ($315.2 million), up from €210.8 million for the same period last year and well above the €180 million industry experts had been predicting. Revenue rose 3.8% to €2.5 billion, marginally higher than expectations.

Shares in the Darmstadt-based company rose as much as 5.2% to €63.09, representing its biggest rise on the Frankfurt Stock Exchange in almost three years.

Despite the strong performance, profit before interest and income tax fell around 8.4% to €333 million, still slightly above analyst forecasts. In a statement, the company said the decline in profitability was due mainly to a weakening in demand for its chemical division, which had revised down revenue forecasts.

Merck, which manufactures the cancer treatment Erbitux, can attribute a large proportion of its profits to an increase in sales across its major drugs lines. Biotech equipment manufacturer Millipore Corp, bought out by Merck last year, also contributed to the gains with sales rising 5.2% to €588 million.

Sales of Multiple Sclerosis treatment Rebif rose 8.4% to €426 million, while revenue from Erbitux jumped 4.7% to €218 million, thanks in part to a rise in demand in developing economies.

The company said total 2011 sales were expected to reach between €10 billion and €10.2 billion, around €200 million lower than it had forecast earlier in the year.

New MS pill

Merck CEO Karl-Ludwig Kley said at a press conference the company had formed a new partnership with Japanese group Ono Pharmaceutical to develop a new oral treatment for MS, similar to a drug from rival Novartis, which is already on the market. Still in the experimental phase, the pill is Merck’s second attempt at an oral drug for MS sufferers.

The German and Japanese pharmaceuticals will also combine resources in Japan to advance development of Stimuvax, another cancer treatment from Merck which is in the final stage of clinical trials.

Kley also said that Merck was terminating seven drug development programs because they were losing money. One of them was a treatment for Parkinson’s disease, which the company will hand back to Swiss company Newron Pharmaceuticals.

The announcement comes just a few months after Merck said it would pull out of development programs in the United States and European Union for Cladribine, a relapse prevention treatment for MS.

Key Statistics – Global Pharmaceutical Industry (source: IMAP’s Pharma & Biotech Industry Global Report — 2011)

  • Global pharmaceutical sales projections indicate 5%-7% growth in 2011, with market value at $880 billion; most growth will be seen in 17 emerging markets, where sales are expected to rise up to 17%.
  • In 2010, 548 deals were signed in the pharmaceuticals industry totalling $51.5 billion – 68% less than the previous year.
  • The generic drugs market is expected to top $129 billion through 2014, rising at an annual growth rate of around 9%.
  • The rising cost of healthcare has driven up sales of generic drugs, which can cost up to 80% less than their marketed equivalents.

By James Mulholland for
James Mulholland is a Paris-based internet and broadcast journalist specializing in sports, current affairs and technology news, while also freelancing as a photographer.

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