Frankfurt: German drug and chemical maker Merck KGaA said Friday its second quarter net profit fell 48% as higher research costs and one-time effects from the acquisition of Serono weighed on the bottom line.
The Darmstadt-based company reported a net profit of €108 million ($153 million) in the April-June period compared with €207 million a year earlier.
Sales for the quarter were nearly unchanged at €1.9 billion.
The company changed guidance slightly on some of its business units, but reiterated its previous overall guidance of 2009 group revenues remaining steady or rising up to 5%. The group’s return on sales is expected at between 15% and 20% for the year.
“It is clear to see that the world remains in the midst of the economic crisis,” Karl Ludwig Kley, the company’s chief executive said. “Merck is also feeling its effects but to a lesser extent than many companies. ... We are able to continue investing in the development of innovative products that will secure our future.”
The company said its research and development costs jumped by about a quarter to €341 million in the April-June period, which was attributable to clinical trials on medicines. Also, it said it booked a charge of €146 million related to the acquisition of Serono, a Swiss biotechnology company Merck bought in 2006.
In terms of divisions, Merck said Serono revenues increased 6% in the quarter to €1.3 billion, with the multiple sclerosis treatment Rebif; cancer treatment Erbitux; and infertility medicine Gonal-F accounting for half the division’s sales.
The performance chemicals division reported a near 8% decline in sales to €297 million, as the global recession pinched demand.
“The pigments business remains under pressure due to the weakness in the global automotive industry,” the company said in its report.
Merck also makes liquid crystals, which are used in television and computer screens. The liquid crystal division saw sales fall to €189 million, down 21% from the year ago quarter.
However, Merck said total revenues for the liquid crystal division have climbed steadily since the beginning of the year, suggesting that the bottom of the slowdown was reached in December 2008.
Shares of Merck closed down slightly at €73.43 on Thursday.