After a significant decline in profits in 2023, Merck wants to grow again. The DAX company is relying on the boom in artificial intelligence and semiconductors. In the pharmaceutical business, however, things are looking poor.
After two flops with important drug candidates, the Darmstadt-based Merck Group is scaling back its ambitions for its pharmaceutical business. However, the DAX company is confident that it will grow again in the medium term in 2023 after the Corona boom and a significant decline in profits. Thanks to the current boom in AI applications, Merck wants to benefit from more dynamism in its electronics division with semiconductor materials. The group announced this on the occasion of a capital market day in Darmstadt.
In the electronics division, which Merck recently strengthened through a takeover, sales are expected to grow by an average of five to nine percent annually in the medium term – instead of the originally planned three to six percent.
Damage caused by failed drug tests
Merck, on the other hand, only expects the pharmaceutical business to achieve a slight annual increase in sales in the medium term – instead of the previous mid-single-digit increase. Most recently, the company had to bury its hopes for the cancer drugs xevinapant and evobrutinib against multiple sclerosis after failed drug tests. Medium-term ambitions in the laboratory business are also declining due to lower expectations for business in China.
CEO Belen Garijo confirmed the forecast for the current year. Merck raised its profit target in the summer due to good business with cancer drugs and a recovery in semiconductor materials for AI applications. Acquisitions remain an integral part of Merck’s strategy, Garijo said. For larger acquisitions, the focus is on the laboratory business. Merck also wants to invest more in licensing agreements for drug candidates.
Source: Stern
