Disclaimer Publication of
`
` Merck KGaA, Darmstadt, Germany. In the United States and Canada the
` subsidiaries of Merck KGaA, Darmstadt, Germany operate under the
` umbrella brand EMD.
`
`Page 1
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`

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`MERCK ANNUAL REPORT 2013
`TRANSFORMATION ON TRACK
`
`Merck
`
`Annual Report 2013
`
`Transformation on track
`
`Page 2
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`

`

`Contents
`
` Transformation on track
`003 ➝ Letter from Karl-Ludwig Kley
`006 ➝ The Executive Board
`008 ➝ The Merck Group: We make great things happen
`014 ➝ Merck Serono: We are continuing the fi ght
`018 ➝ Consumer Health: We are breathing easy
`022 ➝ Performance Materials: We make the world more colorful
`026 ➝ Merck Millipore: We make cutting-edge research a reality
`#01 Group Management Report
`033 ➝ Fundamental Information about the Group
`033 ➝ The Merck Group and its divisions
`037 ➝ Objectives and strategies of the Merck Group
`043 ➝
`Internal management system of the Merck Group
`048 ➝ Corporate Responsibility
`060 ➝ Research and Development at Merck
`076 ➝ Merck Shares
`078 ➝ Report on Economic Position
`078 ➝
` Macroeconomic and sector-specifi c environment
`080 ➝
` Review of forecast against actual business developments
`082 ➝
` Course of business and economic position
`082 ➝
` Merck Group
`095 ➝ Merck Serono
`103 ➝ Consumer Health
`108 ➝ Performance Materials
`113 ➝ Merck Millipore
`119 ➝ Corporate and Other
`120 ➝ Report on Risks and Opportunities
`138 ➝ Report on Expected Developments
`146 ➝ Report in accordance with Section 315 (4)
`of the German Commercial Code (HGB)
`147 ➝ Subsequent Events
`#02 Corporate Governance
`150 ➝ Capital structure and governance bodies of Merck KGaA
`151 ➝ Statement on Corporate Governance
`172 ➝ Report of the Supervisory Board
`175 ➝
` Objectives of the Supervisory Board
`with respect to its composition
`#03 Consolidated Financial Statements
`180 ➝ Consolidated Income Statement
`181 ➝ Consolidated Statement of Comprehensive Income
`182 ➝ Consolidated Balance Sheet
`183 ➝ Consolidated Cash Flow Statement
`184 ➝ Consolidated Statement of Changes in Net Equity
`186 ➝ Notes to the Group accounts
` Responsibility Statement
` Auditor’s report
`#04 More Information
`274 ➝ Glossary
`279 ➝ Financial calendar for 2014
`280 ➝ Awards and recognitions
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`Merck
`
`Annual Report 2013
`
`Transformation on track
`
`Page 3
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`

`

`The Merck Group
`
`↦ In brief
`
`Merck Group | Key figures
`
`€ million
`Total revenues
`Sales
`Operating result (EBIT)
`Margin (% of sales)
`EBITDA
`Margin (% of sales)
`EBITDA pre one-time items
`Margin (% of sales)
`EPS (in €)
`EPS pre one-time items (in €)
`Business free cash fl ow
`
`2013
`11,095.1
`10,700.1
`1,610.8
`15.1
`3,069.2
`28.7
`3,253.3
`30.4
`5.53
`8.78
`2,960.0
`
`2012
`11,172.9
`10,740.8
`963.6
`9.0
`2,360.2
`22.0
`2,964.9
`27.6
`2.61
`7.61
`2,969.3
`
`Change
` in %
`–0.7
`–0.4
`67.2
`
`30.0
`
`9.7
`
`111.9
`15.4
`–0.3
`
`Group sales
`
`€ million
`
`2013
`
`2012
`
`2011
`
`2010
`
`2009
`
`0
`
`0
`
`10,700.1
`
`10,740.8
`
`9,905.9
`
`8,928.9
`
`7,377.7
`
`EBITDA pre one-time items
`
`€ million
`
`2013
`
`2012
`
`2011
`
`2010
`
`2009
`
`0
`
`0
`
`3,253.3
`
`2,964.9
`
`2,723.8
`
`2,545.0
`
`1,652.6
`
`Page 4
`
`

`

`Emanuel Merck (1794 – 1855) ➝ established the world‘s oldest phar-
`maceutical and chemical company out of the Engel-Apotheke (Angel
`Pharmacy), which was founded in 1668. Today we are carrying this
`tradition into the future with pioneering spirit and innovative strength.
`
`Page 5
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`

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`Transformation on track
`
`Merck is a leading company for innovative and top-quality
`high-tech products in the pharmaceutical and chemical sectors.
`Around 38,000 employees work in 66 countries to improve the quality of
`life for patients, to further the success of our customers, and to help
`meet global challenges. In 2013, we generated total revenues of € 11.1 billion
`with our four divisions: Merck Serono, Consumer Health,
`Performance Materials and Merck Millipore.
`Merck is changing. We are on track with our transformation and growth
`program known as “Fit for 2018”. In 2007, we started with the realignment of
`our portfolio, refilled key management positions, fundamentally
`refocused our organization, and then implemented an efficiency program
`across all divisions and regions. The success achieved to date shows that
`our strategy is working. We have considerably improved not only our sales and
`earnings, but also our profitability.
`At the same time, we remain true to our roots and tradition. Merck is the
`world’s oldest pharmaceutical and chemical company. Since 1668 our name
`has stood for innovation, business success and responsible entrepreneurship.
`The founding family remains the majority owner of the company to this day.
`We are Merck, the original, and hold the global rights to the Merck name
`and brand. The only exceptions are Canada and the United States,
`where we are known as EMD.
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`Page 6
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`

`

`2
`
`Merck 2013
`Living Innovation
`
`Karl-Ludwig Kley
`Chairman of the Executive Board
`
`Page 7
`
`

`

`3
`
`
`
` Letter from
`Karl-Ludwig Kley
`
`In 2013 we again delivered what we promised. We further developed our businesses with
`innovative and highly specialized products and services. We expanded our presence in global
`growth markets. And through numerous development partnerships, we honed our ability to
`meet the needs and wishes of patients and our customers.
`
`The numbers reflect this development. Merck is in a strong financial position, despite a consistently
`challenging market environment. Thanks to solid organic growth of 4.2%, which nearly offset
`negative exchange rate effects in full, we maintained our sales at € 10.7 billion. EBITDA pre one-time
`items, our most important earnings figure, increased by 9.7% to a record level of € 3.3 billion.
`At € 1.2 billion, profit after tax more than doubled.
`
`As in 2012, our organic growth was particularly fueled by the dynamic business performance in
`the growth markets of Asia and Latin America. In the Emerging Markets region, sales increased
`organically by 9.3%. Accordingly, the share of Group sales generated by the Emerging Markets
`region rose to 36%.
`
`We also continued to reduce our debt in 2013, lowering net financial debt by 84.1% to € 306.6 mil-
`lion. At the same time, business free cash flow was € 3.0 billion, reaching the high level of 2012. We
`thus have a solid financial foundation for the coming years and enough room to grow, also through
`bigger acquisitions.
`
`We will propose to the Annual General Meeting to increase the dividend by € 0.20 to € 1.90 per
`share. This is in keeping with our aim to continually raise the dividend in line with increases in
`net income. However, in our deliberations on the dividend proposal, we also took into account that
`we are in a period of transformation.
`
`In 2013, we made good progress with our transformation and growth program known as
`“Fit for 2018”. We even reached some of our objectives faster than planned, for instance those
`aimed at lowering costs. Yet “Fit for 2018” extends well beyond efficiency improvements. The
`program also encompasses the strategic expansion of our product portfolio and the establishment
`of more productive structures and processes within the company. Our goal is clear: We want to
`achieve profitable growth with innovative products and strict customer focus.
`
`Living Innovation
`
`Merck 2013
`
`Page 8
`
`

`

`4
`
`Merck 2013
`
`
`
` Letter from
`Karl-Ludwig Kley
`
`“Fit for 2018” also applies to our divisional strategies:
`
`
`
`
`
`
`
`
`
`
`
` In the Merck Serono division, we are working to improve our pipeline and to fully exploit
`the potential of the existing portfolio. Our regional focus will be on the United States and
`on growth markets in Asia and Latin America. The aim is to establish Merck Serono globally
`as a preferred biopharmaceutical partner that offers innovative specialty medicines, leading
`brands and high-value solutions.
`
` We have successfully raised the profitability of Consumer Health and generated new growth
`by focusing on key brands and markets, bringing costs under control and recruiting new
`employees. The aim now is to ensure sustainable growth through innovations and convincing
`marketing of our strategic brands in rapidly growing markets.
`
` In Performance Materials, we intend to defend our position as the market and technology
`leader in liquid crystals. Through the steady development of our products and our strong
`positioning in OLED technology, we want to continue setting innovation standards for display
`technologies. In the Pigments business, we are focusing on strengthening and expanding
`our leading market positions for high-quality effect pigments.
`
` To strengthen our materials business, we want to acquire AZ Electronic Materials, a leading
`premium supplier of high-tech materials for the electronics industry. The acquisition would
`enable Merck to access additional growth areas in the electronics industry, allowing us to
`benefit even more from the increasing demand for electronic devices beyond displays, such as
`smartphones and tablet PCs. The successful completion of the transaction is, however,
`conditional upon antitrust clearance, among other things.
`
` In the Merck Millipore division, our efforts will concentrate on expanding and strategically
`aligning the portfolio in order to meet customer needs even better. The key focus regions are
`North America, Asia and Latin America. We are resolutely pursuing the goal of bringing
`further innovative products to market.
`
`Above and beyond the divisional strategies, we have defined four capability initiatives. They address
`fundamental topics that are of utmost importance to the performance of the entire company:
`
`
`
`
`
`
`
` We want to strengthen the Merck brand in order to further increase our global visibility
`as an innovative company and as “Merck – the original”.
`
` To raise our appeal as an employer, we want to better foster talent and performance. We are
`aiming to further develop the capabilities of our employees and increase workforce diversity.
`
` We want to further harmonize and streamline processes in order to make Merck faster,
`more flexible and more powerful.
`
`Living Innovation
`
`Page 9
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`

`

`Merck 2013
`
`
`
` Letter from
`Karl-Ludwig Kley
`
`5
`
`
`
` In order to be open and accessible to customers, business associates and the community, and
`to add more room for creativity, we are revamping our global headquarters in Darmstadt.
`An Innovation Center will be at the heart of this development, serving as a hub to advance
`cutting-edge projects at Merck.
`
`Customers and patients are at the center of all our efforts. After all, meeting their wishes and
`needs with the best products and highest quality standards is essential in order for us to achieve
`our own objectives. True to our mission statement: “Our aspiration is to make great things
`happen. With our research-driven specialty businesses, we help patients, customers, partners
`and our communities around the world to live a better life. We deliver entrepreneurial success
`through innovation.”
`
`For this we need the right team – and we have it. Our workforce of around 38,000 men and women
`in 66 countries is focused each and every day on finding innovative solutions for customers,
`patients and partners. They clearly show that at Merck, we are living innovation. I owe all Merck
`employees a debt of gratitude for their commitment and expertise.
`
`We have set ambitious goals that we at Merck want to achieve by our 350th anniversary in 2018.
`These goals have been condensed into nine aspirations. We want to be globally known for
`innovation, quality, as well as performance and efficiency. We want to be liked for our customer
`orientation, the career opportunities we offer, and the entrepreneurial spirit at Merck. And lastly,
`we want to be respected for our values, our entrepreneurial responsibility and commitment to
`sustainability, as well as for our corporate culture of thinking beyond generations instead of only
`in quarters.
`
`Merck is well-positioned to achieve these objectives. We will continue to work hard to create
`long-lasting success and a sustainable future for Merck. And we will work to deliver on our
`promises in 2014 and 2015 as well.
`
`I thank you for your trust in Merck and hope that you will continue this journey with us.
`
`Karl-Ludwig Kley
`Chairman of the Executive Board
`
`Living Innovation
`
`Page 10
`
`

`

`6
`
`Matthias Zachert
`Member of the Executive Board
`Chief Financial Officer
`
` Born in 1967, university degree
`in business administration
`
` Joined Merck in June 2011
`as a Member of the Executive Board
`Responsibility for Group functions:
`Group Accounting & Subsidiaries;
`Group Controlling & Risk Management;
`Corporate Finance; Group Tax;
`Group Procurement; Group Insurance;
`Investor Relations
`
`Stefan Oschmann
`Member of the Executive Board
`CEO Pharmaceuticals
` Born in 1957, veterinarian
`
` Joined Merck in January 2011
`as a Member of the Executive Board
`Responsibility for Group functions:
`Patents & Scientific Services
`
`Bernd Reckmann
`Member of the Executive Board
`CEO Chemicals
` Born in 1955, biochemist
`
` Joined Merck in 1986, member of
`the Executive Board since January 2007
`Responsibility for Group functions:
`Environment, Health, Safety,
`Security & Quality
`
`Page 11
`
`

`

`7
`
`Kai Beckmann
`Member of the Executive Board
`
` Born in 1965, university degree
`in computer science
`
` Joined Merck in 1989, member of
`the Executive Board since April 2011
`Responsibility for Group functions:
`Group Human Resources; Group Information
`Services; Site Operations; Inhouse Consulting
`
`Karl-Ludwig Kley
`Chairman of the Executive Board
` Born in 1951, lawyer
`
` Member of the Supervisory Board and Board of
`Partners of Merck from March 2004 to June 2006;
`Member of the Executive Board since September 2006,
`Chairman since April 2007
`Responsibility for Group functions:
`Group Strategy; Group Communications;
`Group Legal & Compliance; Group Internal Auditing
`
`Page 12
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`

`

`8
`
`Merck Group
`
` We want to
` make great
`
`things happen
`
`Merck is a successful, global and
`diversified pharmaceutical and
`chemical company with a focus on
`innovation and research.
`
`2018
`
`… will mark the 350th anniversary of Merck.
`At the same time, the year will represent an
`important milestone in the “Fit for 2018” trans-
`formation and growth program.
`
`38,000
`
`… employees are committed to finding innovative
`solutions that will “make great things happen”.
`
`1. We want to make great
`things happen
`Our mission is to make great things hap-
`pen. With our research-driven specialty
`businesses, we help patients, customers,
`partners and the communities in which we
`operate around the world to live a better
`life. We are not aiming to manage the
`status quo. We want to achieve more –
`each and every day. And we want to
`continuously improve and achieve sus-
`tainable, profitable growth with superb,
`innovative products and services. This
`objective is not something that we simply
`communicate externally, but rather what
`we work toward each and every day
`within the company. We aim to offer our
`employees excellent development and
`
`career opportunities. That’s because we can
`only develop further if we attract the best
`people to work for us.
`Merck is focusing on markets that need
`and reward innovation. For this, we invest
`around € 1.5 billion in research and devel-
`opment every year. Whether medicines,
`high-tech materials or life science tech-
`nologies: we focus on profitable, high-
`margin products that meet special
`requirements.
`All our products and services have two
`things in common: Firstly, they help to
`improve quality of life for patients and
`customers. And secondly, they consist-
`ently meet the highest quality standards
`on which our customers around the world
`can rely.
`
`Living Innovation
`
`Merck 2013
`
`Page 13
`
`

`

`Merck 2013
`Living Innovation
`
`9
`
`Courage, Achievement, Responsibility
`Respect, Integrity, Transparency
`
`Values
`
`Our aspiration is to make great things happen. With our
`research-driven specialty businesses, we help patients, customers,
`partners and our communities around the world to live a better life.
`We deliver entrepreneurial success through innovation.
`
`Mission
`
`Merck will be ...
`
`known for
`➝ Innovation
`➝ Quality
`➝ Performance &
`Efficiency
`
`liked for
`➝ Customer orientation
`➝ Entrepreneurial spirit
`➝ Career opportunities
`
`respected for
`➝ Values
`➝ Responsibility &
`Sustainability
`➝ Thinking
`beyond generations
`
`Aspirations
`
`Page 14
`
`

`

`10
`
`Conducting research to develop the displays
`of tomorrow: Organic LEDs in the laboratory at
`Merck in Darmstadt.
`
`China – a booming country:
`Merck Millipore production in Beijing.
`
`We set the highest standards
`for ourselves
`It is our ambition for Merck to be known
`throughout the world for innovation,
`quality, performance and efficiency. At
`the same time, we want to be liked for the
`way we do business, namely for our entre-
`preneurial spirit, the career opportunities
`that we offer, and our customer orienta-
`tion, which we prove each and every day.
`We want to be respected by all our stake-
`holders for demonstrating value-driven
`behavior, thinking beyond generations,
`and living up to our responsibility for
`society.
`
`Our principles have guided us well
`for centuries
`The pursuit of these aspirations has been
`a driving force of our company for gen-
`erations.
`And we are doing everything we can to
`sustain our success for future generations.
`Therefore, it’s essential to maintain a good
`balance between opportunity and risk. The
`diversification of our portfolio across
`sectors and geographies ensures that this
`risk is diversified by very different product
`life cycles and business areas. The careful
`balance has guaranteed the sustainable
`development of the company for nearly
`350 years.
`
`Since we think in longer time frames, we
`are keenly aware of not only the impor-
`tance of economic success, but also of our
`obligations to future generations. Merck
`therefore couples the pursuit of economic
`success with social responsibility and
`environmental protection.
`
`Our values are our compass
`In a world in which the only constant is
`change, a robust framework of values is
`vital to provide orientation for entrepre-
`neurial decisions. We at Merck are united
`by strong values that offer all employees
`orientation for their daily actions. Entre-
`preneurial courage is elementary since it
`creates new opportunities. Yet economic
`success is only possible in conjunction
`with exceptional achievement. We want
`our daily actions to consistently reflect a
`strong sense of responsibility and we
`want to treat each other with respect. To
`us, integrity is an absolute must and
`transparency makes our actions under-
`standable. This is the only way for us to
`maintain the trust and the credibility of
`our stakeholders over the long term.
`The Merck family owns the majority inter-
`est in Merck and is committed to the
`Merck values and the company’s guiding
`principles. The sustainable development
`of the company and its employees is of
`primary concern to the Merck family.
`
`2. The best of two worlds:
`tradition and progress
`Had continuous change not remained a
`constant throughout the long history of
`Merck, the company would not be as
`healthy as it is today. In 2007, we started
`refocusing our portfolio and successively
`introducing a change in management. This
`is also the historical context for our “Fit
`for 2018” transformation and growth
`program, which we launched in 2012 and
`are using to shape the next phase of our
`company’s development.
`
`Living Innovation
`
`Merck 2013
`
`Page 15
`
`

`

`11
`
`Transformational journey since 2007
`
`Aspirations
`2018
`
`Growth
`Opportunities
`
`Organizational
`Realignment
`
`Efficiency
`Measures
`
`Organic Growth Initiatives
`
`Portfolio
`
`Management
`Changes
`
`Portfolio
`Rebuilding
`
`2007 – 2011
`Portfolio & Management
`
`2012 – 2013
`Processes & Efficiencies
`
`2014 – 2018
`Sustainable Business Development
`
`Founded in 1668 with the purchase of the
`“Engel-Apotheke” (Angel Pharmacy) in
`Darmstadt, today Merck is a German blue-
`chip company with sales of over € 11 bil-
`lion and around 38,000 employees in
`66 countries. Merck ranks among the
`world’s leading suppliers in its specialty
`businesses.
`Innovations have always been a main
`driver of our business. Today, Merck enjoys
`market leadership with its multiple sclero-
`sis therapy in the main European markets
`and is a world leader in fertility and colo-
`rectal cancer treatment. Merck ranks first
`in Europe with its probiotic multivitamins
`(Bion®3) and pregnancy vitamins
`(Femibion®). Our Performance Materials
`division is the undisputed world leader in
`liquid crystals. The same applies to pearl-
`luster pigments. And in products and
`services for the biotech industry we are
`growing faster than our key competitors.
`Merck combines the best of two worlds: the
`tradition and values of a German family-
`owned company with the earning power,
`efficiency and state-of-the-art features of
`a leading global corporate group.
`Our success is attributable to the fact that
`we never become complacent. With the
`two major acquisitions of Serono SA in
`2007 and the Millipore Corporation in
`2010, we elevated our pharmaceutical
`business to a new platform and estab-
`lished an internationally competitive life
`
`science business. After extensive manage-
`ment changes, we focused on developing
`and establishing a new leadership organ-
`ization (NLO), in order to make the con-
`siderably larger Group more modern,
`faster and efficient. We launched a trans-
`formation and growth program known as
`“Fit for 2018” that covers all businesses,
`functions and regions. We have leveraged
`synergies, eliminated duplication, and
`made the organization fit for the future.
`We have optimized the research process
`at Merck Serono and focused ourselves on
`the further development of highly promis-
`ing projects. And in October 2013, we
`marked the opening of the new Merck
`Serono headquarters in Darmstadt.
`Our efforts have meanwhile really started
`to pay off. We have become faster, more
`innovative and, last but not least, far more
`profitable. In 2013, we already achieved
`the goals we had set ourselves for 2014.
`We are proud of what we have achieved;
`and we are well prepared for the future.
`But we cannot rest on our laurels. In a
`world that is constantly changing, we
`cannot stand still. Therefore, we will con-
`tinue to resolutely pursue our successful
`strategy of sustainable growth.
`
`3. Reaping the rewards
`Today, Merck already generates the major-
`ity of its sales in high-tech sectors such
`
`Merck combines the
`best of two worlds: the
`tradition and values
`of a German family-
`owned company with
`the earning power, effi-
`ciency and state-of-the-
`art features of a leading
`global corporate group.
`
`as biotechnology and performance mate-
`rials. Our profitability reflects this. Overall,
`with its products and services Merck is
`very well positioned to benefit from long-
`term, global megatrends. Global popula-
`tion growth and an expanding middle class
`in emerging markets are leading to
`increasing demand for smartphones and
`televisions, and consequently for our liquid
`crystals. An aging population and an asso-
`ciated rise in chronic disease will bolster
`demand for our biopharmaceutical prod-
`ucts in the long term. Higher government
`spending on health care around the world
`is leading to sustainably positive sales
`expectations for both pharmaceuticals and
`life science tools. In order to fully exploit
`the potential of these trends, Merck has
`launched a range of business initiatives.
`
`Living Innovation
`
`Merck 2013
`
`Page 16
`
`

`

`12
`
`Merck Serono
`To further raise the efficiency of pharma-
`ceutical research, we have realigned
`Research & Development in a targeted
`manner. We introduced a more entrepre-
`neurial model – the Translational Innova-
`tion Platforms (TIPs) – to elevate the
`performance dynamics of our research and
`early development activities. The TIPs will
`have three years to achieve their business
`plans. The TIPs are supported by Enabling
`Expert Functions (EEFs). These EEFs com-
`prise specialists from fields such as
`medicinal chemistry and toxicology.
`Additionally, we have launched a range of
`life-cycle initiatives, mainly in emerging
`markets, for our products that have been
`succeeding in the market for many years
`now. We are also benefiting from global
`megatrends such as economic growth,
`worldwide population expansion and gen-
`erally higher life expectancy. We are
`endeavoring to develop new formulations,
`new combinations and new dosage forms.
`At Merck we know that the success of
`therapies often depends not only on the
`drug, but also on the way in which it is
`administered. Merck Serono benefits here
`from its many years of experience in devel-
`oping user-friendly injection devices for its
`biotechnological medicines, for example in
`
`We are systematically
`implementing our
`“Fit for 2018” program
`and have already made
`excellent progress.
`
`the therapeutic areas of multiple sclerosis,
`infertility and endocrinology.
`Apart from internal Research & Develop-
`ment activities, the Merck Serono division
`is also counting on long-term cooperation
`with partner companies and scientific
`institutions. To enable Merck Serono to
`invest more in early innovation, in 2013
`the size of the corporate venture capital
`fund MS Ventures was increased to
`€ 100 million. MS Ventures also manages
`the € 10 million MS Israel Bioincubator
`Fund as well as the investment framework
`for spin-off companies funded through
`the € 30 million Entrepreneur Partnership
`Program. Moreover, Merck Serono is
`continuously working to strengthen its
`core therapeutic areas by in-licensing
`medicines.
`
`Consumer Health
`With it strong focus on strategic brands
`such as Bion®, Nasivin®, Femibion®, Seven
`Seas®, Sangobion®, Cebion®, Sedalmerck®
`
`and Kytta®, the Consumer Health division
`has increased its profit ability to the level
`of its global peers. The division has a
`strong presence in Europe, Latin America
`and Southeast Asia and is growing rapidly
`in emerging markets. Focusing on strate-
`gic brands and key markets is increasingly
`paying off. We will continue to pursue this
`strategy while consistently meeting new
`consumer needs with our innovative prod-
`ucts and compelling marketing of our
`brands. One example of the sharper focus
`on consumers is the transfer of the
`Neurobion® and Floratil® brands from the
`Merck Serono to the Consumer Health
`division in 2014. Neurobion® is a leading
`global brand in the vitamin B segment and
`Floratil® is a leading brand in the probiotic
`antidiarrheal segment in Brazil. Their com-
`mercialization by Consumer Health will
`allow a stronger focus on consumer needs
`and help to increase value added.
`
`Performance Materials
`With its specialty chemicals and high-tech
`materials business, the Performance
`Materials division is aiming to deliver a
`steady flow of innovations. This applies in
`particular to the liquid crystals business,
`where Merck has been the market and
`technology leader for many years now
`
`Efficient research and devel-
`opment that promotes young,
`innovative researchers.
`Here: Merck Serono production
`in Vevey, Switzerland.
`
`Living Innovation
`
`Merck 2013
`
`Page 17
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`

`

`13
`
`Consumer Health in China:
`Close to consumers with products that
`meet their health care needs.
`
`we also strengthened our cell biology
`platform.
`
`Sustainable success – beyond 2018
`We made considerable progress on our
`transformation journey in 2013. We are
`systematically implementing our “Fit for
`2018” transformation and growth pro-
`gram and are well on track. Yet success is
`not making us complacent. We want to
`achieve continuous improvements in all
`our businesses and operations. We want
`to further develop existing competencies
`to benefit customers. We want to con-
`tinue to differentiate ourselves from the
`competition and to secure our businesses
`through sustainably profitable growth by
`our anniversary year in 2018 and well
`beyond.
`
`In brief, we make great things happen.
`
`with a market share of over 60%. Here,
`Merck is working to identify new applica-
`tion areas for liquid crystal mixtures, also
`beyond displays. The Advanced Technolo-
`gies unit is driving forward research-intense
`topics such as organic light-emitting
`diodes (OLEDs), materials for LEDs, and
`organic electronics.
`We expect OLEDs to become a second
`pillar besides liquid crystals. Against this
`backdrop, we want to forge ahead with
`the development of a comprehensive OLED
`portfolio. We have already achieved initial
`success by cooperating with the printing
`manufacturer Seiko Epson. Together we
`have developed a technology that makes
`it possible to print OLED displays. The aim
`is to lower the costs of OLED display pro-
`duction, which is still time-consuming and
`expensive. In addition, we are working to
`continually expand our effect pigment
`portfolio. The metal effect pigments in the
`Meoxal® product family are the result of
`continuous research into new pigment
`technologies at Merck. They have a special
`additional coating and owing to this sur-
`face treatment, they are particularly
`suited for automotive and plastic coatings.
`With the planned acquisition of AZ
`Electronic Materials, we want to further
`
`strengthen the portfolio of our Performance
`Materials division. AZ superbly comple-
`ments our existing activities in the display
`industry. Moreover, we will win new cus-
`tomer groups in the electronics industry,
`for which AZ produces high-value,
`ultrapure process chemicals.
`
`Merck Millipore
`By offering products and services for the
`life science tools market, which has a vol-
`ume of around € 30 billion, Merck Millipore
`delivers solid financial performance and
`above-average market growth. It focuses
`on two important customer groups: life
`science research and laboratories as well
`as pharmaceutical and biotech manufac-
`turers. Merck Millipore is one of the
`world’s leading suppliers in this market
`with more than 60,000 products, continu-
`ally delivering new and differentiated
`products for customers. For this reason,
`around 6% of sales are invested in
`research and development.
`In addition, acquisitions are expanding
`the product portfolio. The acquisition
`of Biochrom in November 2012 has
`expanded Merck Millipore’s range of cell
`culture media, buffer solutions and single-
`use packaging. By acquiring CellASIC,
`
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`Merck 2013
`
`Page 18
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`

`

`➝ Full speed ahead.
`In China, growth is also compromising
`people’s health. With high-quality medicines,
`Merck is capturing the Chinese market and
`fighting diseases of affluence.
`
`Page 19
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`

`

` Merck Serono
`
`We are
`continuing
`the fight
`
` China is a country in transition, which is leading
`to new health care challenges. In order to stop diabetes from
`becoming an epidemic in China, Merck is responding to the
`needs there, and aims to support the Chinese government’s
`efforts to increase patient access to quality care by bringing
`high-quality, cost-effective medicines to a broader population.
`
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`16
`
`Portrait: Belén Garijo
`The economic boom in China is impressive, but it has a downside:
`nowhere else in the world is home to as many people with diabetes
`as China. To counter this trend, Merck Serono is increasing its
`engagement in China and will make one of the leading antidiabetic
`agents accessible even in remote regions.
`
` “We exist to help people.”
`
`Belén Garijo,
`President and CEO
`of Merck Serono
`
`100 million people with type 2 diabetes in
`China are too many – far too many, and
`Belén Garijo is keenly aware of it. “As a
`biopharmaceutical company, we exist to
`help people. This is our raison d’être – in
`China like anywhere else in the world.”
`One out of four people with diabetes
`worldwide lives in China, which means
`there is much to be done there. Economic
`power, population, demand, consumption
`– there is hardly anything in China that is
`not growing at an astonishing rate. This
`upward trend applies to health care needs
`as well, in particular diabetes.
`
`Medicines that hit the target
`As the President and CEO of Merck Serono,
`Belén Garijo intends to play a key role in
`facilitating access to antidiabetic agents
`in places where they used to be hard to
`obtain. One example is Glucophage®, an
`established standard of care for treating
`type 2 diabetes that has been utilized in
`China for 14 years: Until recently, Bristol-
`
`Living Innovation
`
`Merck 2013
`
`Page 21
`
`

`

`Division
`
`Merck Serono
`
` At Merck Serono, the biopharmaceutical division of
`Merck, the focus is on making a lasting difference in the lives of
`patients. Science and research form the