Merck expects 2009 to be a challenge as chemicals business the feels impact of the recession

The Merck Group performed solidly during the first quarter of 2009, but said the recession was having a negative impact on its chemicals business. Total revenues in Q1 were stable at Euro 1.8bn. Royalty income, mainly from Merck Serono, climbed 31% to â"šÂ¬97m in the first quarter.

The Group's first-quarter operating result dropped 45% to â"šÂ¬198m, mainly because of the 79% decline in the operating result for the Chemicals division to $37m. In addition, r&d costs rose 8.8% to â"šÂ¬313m, mainly due to increased costs for accelerated late-stage clinical trials and higher marketing and selling expenses for new pharmaceutical products.

Earnings before interest and tax (EBIT) in the first quarter dropped 64% to â"šÂ¬129m.

Pharmaceuticals total revenues rose 9.7% to â"šÂ¬1.4bn. Excluding Corporate and Other business, this sector generated 76% of the company's total revenues during the first quarter.

Merck Serono's total revenues increased 11% to â"šÂ¬1.3bn in the first quarter and sales continued to improve, boosted by double-digit growth for the division's top products - Rebif, Erbitux and Gonal-f.

Worldwide sales of Rebif for the treatment of relapsing forms of multiple sclerosis jumped 18% to â"šÂ¬368m. Sales of Erbitux were up 11% to â"šÂ¬162m. Erbitux has marketing authorisation in 76 countries around the world as a treatment for colorectal cancer and/or squamous cell carcinoma of the head and neck. First-quarter sales of Gonal-f fertility products increased 17% to â"šÂ¬134m. Sales of Raptiva, for the treatment of moderate-to-severe psoriasis, dropped 36% during the first quarter to â"šÂ¬14m and will soon cease completely after the European Commission suspended marketing authorisation for the drug this month.

"This year will be a challenge for Merck but I am happy to say that our pharmaceuticals business remains strong," said Dr Karl-Ludwig Kley, chairman of the executive board of Merck KGaA. "As the fog obscuring the future has now lifted enough, we expect the Group's total revenues in 2009 will increase from zero to 5%."