Somatropin (Merck Serono SA)

About 2 in 5 Americans have obesity, but some anti-obesity medications are not covered under Medicare Part D. Healthcare organizations are continuing to push the Centers for Medicare & Medicaid Services (CMS) to rethink its coverage policy for anti-obesity medications. These medicines are not covered by Medicare Part D, because existing statutory exclusion is in place for these drugs that do not cover “agents when used for anorexia, weight loss or weight gain,” according to a press release. In a joint press conference hosted by health experts at Manatt, Phelps & Phillips and the Obesity Action Coalition, advocates laid out a legal basis in support of covering GLP-1s, stating that they can target obesity rather than describing the drugs solely in terms of their effects on weight. “Obesity is a disease that has multiple causes and consequences not limited to weight,” said Michael Kolber, a healthcare partner at Manatt Health, to reporters. “There are many drugs that cause weight loss or weight gain, even if that’s not why they’re being prescribed.” Kolber said GLP-1s can serve several purposes, including treating obesity. Obesity is largely considered a chronic disease, making CMS’ interpretation regarding the condition outdated. He noted that a drug like serostim, which HIV patients use to treat wasting or cachexia to increase body mass and weight, is covered by CMS. The drug’s coverage predated the Medicare Part D program, but the same statutory language applies to Medicaid. Instead, Kolber said CMS’ current approach is “arbitrary” and doesn’t reflect “reasoned policy” in that it covers some treatments for obesity, such as bariatric surgery, but not other treatments. Incorporating anti-obesity medications into Medicare Part D does not mean health plans would be required to cover drugs under cosmetic or non-medically necessary uses, but encouraging use of these drugs would align with recent FDA drug approvals, President Joe Biden’s Cancer Moonshot initiative and other health equity priorities that can be addressed by tackling obesity, he argued. “It's simply a decision that was made now more than 30 years ago by Congress, when the landscape of obesity treatment and the understanding of obesity as a disease was quite different,” said Kolber. Other federal agencies, including the Social Security Administration, the National Institutes of Health and the IRS, already consider obesity a disease, while the Department of Defense and the Department of Veterans Affairs provide coverage for anti-obesity medications. These FDA-approved medicines are covered by 17 states in fee-for-service Medicaid. “Obesity is a chronic condition resulting from a combination of genetic, environmental, behavioral, social and other factors,” said Tracy Zvenyach, Ph.D., director of policy strategy and alliances at the Obesity Action Coalition, adding that treating obesity can help treat adverse side effects and help reduce stigma people may face in everyday life. “Approximately 1-3% of people have access to evidence-based scientific obesity treatments.” She explained that CMS can improve access to care for older Americans, which can influence how health payers determine coverage policies. The white paper also calls on the Food and Drug Administration to update guidance surrounding stigmatizing language on the topic, said Manatt Health Partner Rachel Sher.

Financial results of Q2 2023 Net sales decrease organically by −1.1% to € 5.3 billion EBITDA pre down organically by −7.0% to € 1.6 billion Healthcare business sector increases net sales and earnings Weaker market environment in Life Science and Electronics Negative foreign exchange impact stronger than in Q1 2023 Updated forecast for fiscal 2023 Net sales: Organic development between −2% and +2 % Net sales excluding Covid-19 business: Organic growth of +1% to +5% EBITDA pre: Organic decline of −9% to −3% Foreign exchange impact on both net sales and EBITDA pre: −6% to −3% Darmstadt, Germany, August 3, 2023 – In the second quarter of 2023, Merck KGaA, Darmstadt, Germany, leveraged its diversified portfolio with three business sectors to navigate a challenging market environment. While net sales of Life Science and Electronics declined in softer markets, Healthcare delivered organic sales growth of 11.9%. Overall, Group net sales decreased by −4.8% to € 5,302 million compared to the same quarter of the previous year. The strong growth of the Healthcare business sector largely offset the decline in Life Science and Electronics, resulting in an organic development of Group sales of −1.1%. Despite the strong earnings growth of Healthcare, Group EBITDA pre declined by −12.8% (organically −7.0%) to € 1,553 million. This was caused primarily by decreased sales volumes and the proportionately lower share of higher-margin products. Negative foreign exchange effects put further pressure on both net sales and EBITDA pre. Against this backdrop, the company is updating its forecast for fiscal 2023. The company now expects an organic development of Group net sales of between −2% and +2% (previously +1% to +4%) along with an organic decline in EBITDA pre by −9% to −3% (previously: −5% to 0%). Excluding the Covid-19 business, Group sales are expected to grow organically by +1% to +5% (previously: +4% to +7%). Both net sales and EBITDA pre are likely to be impacted by negative foreign exchange effects of −6% to −3% (previously: −5% to −2%). “For us, 2023 remains a transition year,” said Belén Garijo, Chair of the Executive Board and CEO of Merck KGaA, Darmstadt, Germany. “In the second quarter, our Healthcare business once again proved to be a growth driver. We are building on the strengths of our diversified business model. We remain confident of our mid-term growth ambition and in delivering € 25 billion in sales by 2025.” Headwinds from foreign exchange effects pick up in Q2 2023 Sales in the second quarter of 2023 decreased organically by −1.1%. Foreign exchange effects, especially from the U.S. dollar and the Chinese renminbi, had an adverse impact of −3.7% on sales. By contrast, in the first quarter of 2023, foreign exchange effects still contributed positively to sales growth by 0.8%. EBITDA pre declined organically by −7.0% in the second quarter of 2023. The impact of foreign exchange on Group EBITDA pre was −5.7%. The EBITDA pre margin was 29.3%. Earnings per share pre were € 2.20. Weaker market environment in Life Science and Electronics weighs on business performance in the first half of 2023 In the first half of 2023, the Group generated net sales of € 10,595 million, reflecting a decline of −1.6% (organic: −0.2%) compared to the same period of the previous year. While net sales of the Healthcare business sector grew organically by 8.8% in the first six months of 2023, Life Science (−4.2%) and Electronics (−6.7%) reported organic sales decreases. The main reasons were the significant decline in Covid-19-related demand and the weaker market environment in both Semiconductor Solutions and Display Solutions. Organically, Group EBITDA pre decreased by −4.5% to € 3,140 million in the first half of 2023. Earnings per share pre were € 4.57. Life Science: Significant decrease in Covid-19-related demand drives organic decline in net sales and earnings In the second quarter of 2023, the Life Science business sector reported net sales of € 2,354 million, a decrease of −11.1% compared with the same quarter of the previous year. Organically, sales declined by −8.7%. Foreign exchange effects had a negative impact of −2.4% on sales. The Process Solutions and Life Science Services business units recorded organic sales declines of −11.8% and −30.5%, respectively. The main reasons were the significantly lower Covid-19-related demand and a considerable slow-down in the core business of Process Solutions due to destocking by key customers. Organically, EBITDA pre of Life Science decreased by −26.1% to € 712 million. Lower sales volumes were a significant factor for this decline, as was the comparatively lower share of higher-margin products in sales, partly driven by lower Covid-19-related sales. Foreign exchange had a negative impact of −3.3% on earnings. The EBITDA pre margin of Life Science was 30.2%. Healthcare: New products remain growth drivers, complemented by the positive development of the established product portfolio In the second quarter of 2023, the Healthcare business sector increased net sales by 6.5% (organically: 11.9%) to € 2,049 million, amid a negative foreign exchange impact of −5.4%. The key growth drivers were the new launches, namely of the immuno-oncology drug Bavencio, which grew organically by 26.8%, as well as Mavenclad for the treatment of relapsing multiple sclerosis, which generated organic growth of 28.1%. The established product portfolio also contributed positively to sales growth. Organically, net sales of the oncology drug Erbitux increased by 10.2% in the second quarter of 2023. The Fertility franchise generated organic sales growth of 24.7% compared with the same quarter of the previous year. Ongoing supply difficulties of a competitor had a favorable impact on net sales of the fertility products. In addition, the market for fertility treatments in China continued its recovery after the Covid-19-related lockdowns ended. In the second quarter of 2023, EBITDA pre of the Healthcare business sector amounted to € 704 million. Organic earnings growth of 30.4% was partly offset by negative foreign exchange effects of −13.9%. The EBITDA pre margin of Healthcare was 34.3%. Electronics: Second quarter impacted by weaker market environment in Semiconductor Solutions and Display Solutions The Electronics business sector recorded a −9.7% decline in net sales to € 899 million in the second quarter of 2023. Organically, sales decreased by −6.3% amid a foreign exchange effect of −3.8%. The Semiconductor Solutions business unit reported an organic sales decline of −4.7%. The robust project business in Delivery Systems & Services (DS&S) largely offset the decline in Semiconductor Materials in what was, as expected, a weaker market. A recovery in the Semiconductor Materials business is delayed further. Market consensus now assumes a stabilization in the second half of the year at a continued low level. Continued weak pricing and the comparatively lower share of higher-margin products in liquid crystals were the main reasons for the organic sales decline of −10.9% in the Display Solutions business unit. EBITDA pre of Electronics declined organically by −5.2% to € 262 million. Foreign exchange had a negative impact on EBITDA pre of −4.9%. The EBITDA pre margin was 29.1%. Updated forecast for fiscal 2023 Merck KGaA, Darmstadt, Germany, is updating its forecast for fiscal 2023. The reasons for this are, in particular, the persistently high inventory levels of our Life Science customers, the further delayed recovery of the market for semiconductor materials, an increased cost level due to inflation and an even stronger negative foreign exchange impact. The company once again confirms its mid-term objective of delivering sales of € 25 billion by 2025. For fiscal 2023, the forecast for the Group is as follows: Organic sales development: −2% to +2%, totaling € 20.5 billion to € 21.9 billion Organic sales growth excluding Covid-19 business: +1% to +5% Organic decline of EBITDA pre: −9% to −3%, totaling € 5.8 billion to € 6.4 billion Negative foreign exchange effects on sales and EBITDA pre: −6% to −3% EPS pre: € 8.25 to € 9.35, based on an underlying tax rate of 22 %. Overview of the key figures for Q2 2023 Group Key figures € million Q2 2023 Q2 2022 Change Jan.-June 2023 Jan.-June 2022 Change Net sales 5,302 5,568 -4.8% 10,595 10,766 -1.6% Operating result (EBIT) 1 969 1,177 -17.6% 2,004 2,350 -14.7% Margin (% of net sales) 1 18.3% 21.1% 18.9% 21.8% EBITDA 2 1,452 1,709 -15.1% 2,942 3,312 -11.2% Margin (% of net sales) 1 27.4% 30.7% 27.8% 30.8% EBITDA pre 1 1,553 1,782 -12.8% 3,140 3,411 -7.9% Margin (% of net sales) 1 29.3% 32.0% 29.6% 31.7% Profit after tax 706 870 -18.9% 1,506 1,754 -14.1% Earnings per share (€) 1.62 1.99 -18.6% 3.45 4.02 -14.2% Earnings per share pre (€) 1 2.20 2.64 -16.7% 4.57 5.05 -9.5% Operating cash flow 622 852 -27.0% 1,475 1,692 -12.8% Net financial debt 3 9,355 8,328 12.3% – – - Number of employees 4 63,701 62,759 1.5% – – - 1 Not defined by International Financial Reporting Standards (IFRS). 2 Not defined by International Financial Reporting Standards (IFRS); EBITDA corresponds to operating result (EBIT) adjusted by depreciation, amortization, impairment losses, and reversals of impairment losses. 3 Figures for the reporting period ending on June 30, 2023, prior-year figures as of December 31, 2022. 4 Figures for the reporting period ending on June 30, 2023, prior-year figures as of June 30, 2022. Prior-year figures have been adjusted. This figure refers to all employees at sites of fully consolidated entities. Life Science Net sales by business unit € million Q2 2023 Share Organic growth 1 Exchange rate effects Acquisitions/ divestments Total change Q2 2022 2 Share Science & Lab Solutions 1,182 50% -1.1% -2.9% – -4.1% 1,232 46% Process Solutions 994 42% -11.8% -2.1% – -13.9% 1,154 44% Life Science Services 178 8% -30.5% -1.4% – -31.9% 262 10% Life Science 2,354 100% -8.7% -2.4% – -11.1% 2,648 100% 1 Not defined by International Financial Reporting Standards (IFRS). 2 Prior-year figures have been adjusted owing to an internal realignment. Healthcare Net sales by major product lines/products € million Q2 2023 Share Organic growth 1 Exchange rate effects Total change Q2 2022 Share Oncology 458 22% 17.8% -7.7% 10.1% 415 22% thereof: Erbitux ® 260 13% 10.2% -9.2% 1.1% 258 13% thereof: Bavencio ® 178 9% 26.8% -5.0% 21.8% 146 8% Neurology & Immunology 467 23% 12.2% -3.4% 8.8% 429 22% thereof: Rebif ® 205 10% -3.2% -2.4% -5.6% 217 11% thereof: Mavenclad ® 262 13% 28.1% -4.5% 23.6% 212 11% Fertility 409 20% 24.7% -8.1% 16.5% 351 18% thereof: Gonal-f ® 219 11% 18.7% -8.6% 10.1% 198 10% Cardiovascular, Metabolism and Endocrinology 665 32% 0.9% -4.6% -3.7% 690 36% thereof: Glucophage ® 197 10% -8.9% -4.6% -13.6% 228 12% thereof: Concor ® 142 7% 1.8% -5.7% -3.9% 147 8% thereof: Euthyrox ® 131 6% -2.3% -3.4% -5.8% 139 7% thereof: Saizen ® 79 4% 22.1% -5.9% 16.2% 68 4% Other 50 3% 38 2% Healthcare 2,049 100% 11.9% -5.4% 6.5% 1,924 100% 1 Not defined by International Financial Reporting Standards (IFRS). Electronics Net sales by business unit € million Q2 2023 Share Organic growth 1 Exchange rate effects Acquisitions/ divestments Total change Q2 2022 Share Semiconductor Solutions 602 67% -4.7% -3.6% 0.5% -7.8% 653 66% Display Solutions 196 22% -10.9% -4.9% – -15.8% 233 23% Surface Solutions 101 11% -5.8% -2.8% – -8.7% 111 11% Electronics 899 100% -6.3% -3.8% 0.3% -9.7% 996 100% 1 Not defined by International Financial Reporting Standards (IFRS). Notes to editors: The press conference for media representatives will take place at 9:30 a.m. (CEST). The respective presentation and further information for journalists, including a digital press kit , can be found here The half-yearly financial report can be found here Twitter and LinkedIn Photos and images can be found here Stock symbols Reuters: MRCG, Bloomberg : MRK GY, Dow Jones : MRK.DE Frankfurt Stock Exchange : ISIN : DE 000 659 9905 – WKN : 659 990 All Merck KGaA, Darmstadt, Germany, press releases are distributed by e-mail at the same time they become available on the EMD Group website. In case you are a resident of the USA or Canada, please go to www.emdgroup.com/subscribe to register for your online, change your selection or discontinue this service. About Merck KGaA, Darmstadt, Germany Merck KGaA, Darmstadt, Germany, a leading science and technology company, operates across life science, healthcare and electronics. More than 64,000 employees work to make a positive difference to millions of people’s lives every day by creating more joyful and sustainable ways to live. From providing products and services that accelerate drug development and manufacturing as well as discovering unique ways to treat the most challenging diseases to enabling the intelligence of devices – the company is everywhere. In 2022, Merck KGaA, Darmstadt, Germany, generated sales of € 22.2 billion in 66 countries. The company holds the global rights to the name and trademark “Merck” internationally. The only exceptions are the United States and Canada, where the business sectors of Merck KGaA, Darmstadt, Germany, operate as MilliporeSigma in life science, EMD Serono in healthcare and EMD Electronics in electronics. Since its founding in 1668, scientific exploration and responsible entrepreneurship have been key to the company’s technological and scientific advances. To this day, the founding family remains the majority owner of the publicly listed company