Despite pharma growth, Merck KGaA's CDMO slowdown plays into company's overall sales decline

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来源: FiercePharma

Merck KGaA's revenue took a 6% dip in 2023 despite an increase of 3% in pharma sales.

After posting revenue increases for six straight years, including double-digit growth in 2021 and 2022, Merck KGaA took a hard fall last year, with its global sales declining by 6% to 21 billion euros ($22.7 billion).

Responsible for much of the downturn was the German company’s largest business sector, Life Science, which saw an 11% drop in revenue to 9.281 billion euros ($10 billion). The unit offers a range of development and manufacturing services, plus equipment for biopharma companies and researchers.

In its annual report, Merck KGaA blamed the decline on demand for COVID-related products, where sales fell from 800 million euros ($866 million) in 2022 to 250 million euros ($271 million) last year.

Life Science Services—which performs contract manufacturing and testing services—saw a 16% decline in annual sales. The unit's revenue fell from 943 million euros ($1 billion) in 2022 to 792 million euros ($857 million) last year.

The drop-off reflects an industry trend that has seen many CDMOs struggle in the post-COVID environment. Before the downturn, Merck KGaA’s manufacturing arm, MilliporeSigma, had contributed consistently to the group’s overall revenue increases in recent years.

Merck KGaA's CEO Belen Garijo called 2023 a “transitional year” for the Life Science sector, citing “significant market headwinds.” But she added that order trends in the second half of the year suggested the sector was heading "in the right direction.”

Meanwhile, as economic conditions also took a toll on the company’s Electronics sector revenue, which was down 9%, the company’s Healthcare sector was up 3% to 8.05 billion euros ($8.7 billion). The company's Healthcare segment encompasses its pharmaceutical operations.

The pharma growth came thanks to increasing revenues for cancer drug Bavencio, which grew sales by 23%, and multiple sclerosis treatment Mavenclad, which grew 16% to 956 million euros ($1.03 billion), achieving blockbuster status for the first time.

As for 2024, Merck said it will provide annual guidance with its first quarter report in May. Garijo said that she anticipates quarter-by-quarter improvement, with “a gradual recovery of Life Science” in the second half of the year.

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