Research and development costs jumped by 23% to € 341 million in the second quarter and by 16% to € 653 million in the first half of 2009. This was mainly attributable to the numerous late-stage clinical trials for new drug candidates and for expanding indications of medicines already on the market. Merck booked € -146 million in the second quarter for amortization of intangible assets from the 2007 acquisition of Serono, a 4.7% increase compared to the year-ago quarter. For the half year, this on-going cost amounted to € 294 million, a 4.8% increase.
For these reasons, plus higher marketing and selling expenses for launches of new pharmaceutical products and the decline in the Chemicals operating result, the Group operating result declined by 42% to € 184 million in the second quarter and by 44% to € 383 million in the first half of the year. The Group core operating result (excludes Serono-related amortization and integration costs) declined by 29% to € 330 million in the 2nd quarter and by 30% to € 673 million in the first half.
The Group return on sales (ROS: operating result/total revenues) declined to 9.7% in the second quarter of 2009 compared to 16.8% in the year-ago quarter. For the first half, Group ROS was 10.2% in 2009 compared to 18.1% in 2008. Group Core ROS (operating result excluding amortization of intangible assets and integration costs/total revenues) in the second quarter of 2009 was 17.4% compared to 24.4% in the yearago quarter. For the half year, Core ROS was 18.0% in 2009 and 25.7% in 2008.
As with the operating result, earnings before interest and tax (EBIT) fell by 42% to € 184 million in the second quarter compared to € 321 million in the year-ago quarter.
Half-year EBIT declined by 54% to € 314 million. Merck's financial result remained at a relatively low level, rising by 2.5% to € -36 million from € -35 million in the second quarter and by 8.0% to € -71 million from € -66 million in the first half of the year.
Profit before tax fell 48% to € 148 million in the second quarter compared to € 285 million in the year-ago quarter. For the first half of the year, profit before tax declined 61% to € 243 million. Merck's underlying tax rate was 25.9% for the second quarter compared to 26.5% in the year-ago quarter.
Merck's second quarter profit after tax amounted to € 110 million compared to € 211 million in the year-ago quarter. First-half profit after tax was € 170 million compared to € 454 million for the first six months of 2008.
Merck had 32,857 employees worldwide on June 30, 2009, 57 more than at the end of 2008.
About Merck KGaA
Merck is a global pharmaceutical and chemical company with total revenues of € 7.6 billion in 2008, a history that began in 1668, and a future shaped by approximately 33,000 employees in 60 countries. Its success is characterized by innovations from entrepreneurial employees. Merck's operating activities come under the umbrella of Merck KGaA, in which the Merck family holds an approximately 70% interest and free shareholders own the remaining approximately 30%. In 1917 the U.S. subsidiary Merck & Co. was expropriated and has been an independent company ever since.