Merck KGaA “in a strong strategic position”

At its latest Capital Markets Day, Merck KGaA said that it is “in a strong strategic position” to profit from medium-term growth opportunities in all three of its business sectors after a transitional year in 2023. “We committed to return to growth in 2024 and this is materialising already,” said Belén Garijo, CEO and chair (pictured).

In Electronics, the company expects 5-9% organic growth, up from the previous 3-6%. Having become a pure play in semiconductors and display systems, the company said that it “benefits here from its unique position as a supplier of semiconductor solutions that meet the high demands of chips for artificial intelligence applications”.

Life Science will also have growth above the market average of 7-9%, driven by its ability to supply services for new modalities like viral vector-based cell and gene therapies, high potency APIs, antibody-drug conjugates (ADCs) and mRNA applications. This has been revised down slightly from 7-10% because of lower expectations of China’s mid-term growth prospects.

By contrast, Healthcare, the pharma business, will see only “slight” growth because of some recent pipeline setbacks. In the long term, the company intends to return to growth in the mid-single-digit percentage range. In addition, Merck said that it is also recording growing sales from sustainable products. In Life Sciences, for example, this part of the portfolio has grown by an average of 30%/year since 2020.

For fiscal 2024, Merck expects sales of €20.7-22.1 billion and EBITDA before exceptional items of €5.8-6.4 billion, with organic growth of 5% and 4-10% respectively. Capex will remain at €1.6-1.8 billion to 2026 and then fall, as it had previously risen “to prepare for medium- and long-term growth trends”.

he most recent expansion in this respect has been the €290 million, 23,000 m2 biosafety testing facility in Rockville, Maryland. It is the largest investment in contract testing in Merck’s history and is also driven by growing demand for services for both traditional and novel modalities.