Involved in 50 vaccination projects: Merck makes money from the fight against Corona

Involved in 50 vaccination projects
Merck makes money from the fight against Corona

Vaccines against the coronavirus are being researched around the world. The German pharmaceutical company is involved in dozens of projects, including supplies to Biontech. And this is how it should continue: The group expects stable growth.

A high demand for its products in the corona pandemic is giving Merck a tailwind. After a significant increase in sales and earnings in the past year, the pharmaceutical and life science group plans to grow further in 2021. "Our teams are currently working around the clock to meet the unprecedented demand," said the outgoing CEO Stefan Oschmann. Because global research into Covid-19 vaccines is causing an order boom in Merck's life science business, which is an important supplier for pharmaceutical and biotech companies. In total, the Darmstadt-based group supports more than 50 vaccine projects.

Merck KGaA 133.05

Oschmann expects strong organic sales growth in 2021. For the adjusted operating result (Ebitda) he is assuming growth in the high single-digit to low tens range. In May, after five years at the helm, the manager will hand over the reins to Vice President Belen Garijo. She would be the only woman at the top of a Dax group.

Oschmann expects slowdowns due to negative currency effects, above all from the US dollar. These could have a negative effect of up to five percent on sales and earnings. In addition, the forecast due to the pandemic is fraught with greater uncertainty. However, he does not assume that further outbreak waves will have a similarly negative impact as in the first half of 2020.

For the life science business, which offers products for pharmaceutical research and drug manufacture, Merck even expects "significantly positive contributions" because of the pandemic. Among other things, the company supplies highly specialized filters and cell culture media for vaccine production. For Biontech in Mainz, Merck provides the lipids required to manufacture the Covid-19 vaccine. To this end, the expansion of capacities is being worked at full speed and almost 340 million euros will be invested.

Higher dividend

The strong growth in the life science sector more than made up for corona-related weaknesses in other sectors last year. In the second quarter, the fertility treatments business, in which Merck is the global market leader, suffered as many fertility clinics remained closed during the pandemic. Sales recovered again in the second half of the year.

Business is doing well with new drugs such as the cancer immunotherapy Bavencio and the multiple sclerosis drug Mavenclad. Oschmann confirmed that Merck wants to achieve around two billion euros in sales through new products in the healthcare sector in 2022. In addition, the takeover of the US electronics materials manufacturer Versum, which Merck bought for around 5.8 billion euros at the end of 2019, is increasingly paying off. This reduced the company's dependency on the liquid crystals business for TV and mobile phone displays, which is under intense competitive pressure. In addition, the hoped-for savings are higher and will be achieved faster than planned.

In 2020, Merck sales rose by 8.6 percent to 17.5 billion euros. Adjusted operating profit climbed 18.6 percent to 5.2 billion euros, which means that the group achieved its targets for the year. In the fourth quarter, earnings increased by a good three percent to 1.2 billion euros. Adjusted earnings per share, the level of which is used to base the distribution, rose by a good fifth to EUR 6.70. The shareholders are to receive a dividend of EUR 1.40 per share, ten cents higher.

. (tagsToTranslate) Economy (t) Merck KGaA (t) Dax company (t) Quarterly figures (t) Pharmaceutical industry (t) Corona crisis