Seven Seas owner improves options for expansion
business owned by German drug company Merck KgaA, but the company
is a long way from its targeted double-digit growth.
The unit, which has been operating as an independent business within the Merck Group since November 2001, reported a 3.8 per cent sales increase in 2003 to €321 million. This included a 5.7 per cent rise to €84 million in the final quarter, helped by the purchase of UK-based Peter Black Direct Marketing, now called Lamberts Healthcare, bought in the later stages of 2003.
Merck said acquisitions contributed 4.7 per cent to the annual sales growth of the unit but negative currency effects - especially in the UK, Venezuela and Mexico - lowered the growth rate by 9.0 per cent.
The business was also hit by new health-care reform law in Germany where sales declined. The Kytta range of herbal-based products was especially hard hit, according to the company.
In the UK, Consumer Healthcare's biggest market, the Seven Seas products continued to perform well and the newly established vitamins, minerals and supplements category in France was also a strong contributor.
Merck Consumer HealthCare has expanded its market share in Great Britain, where it is already the leader in the vitamins and minerals, with the Peter Black acquisition.
It has also seen good growth in France, after the puchase of Laboratoires Richelet in July 2002, with sales already up 14 per cent on 2001 in the 2002 period. The business provides supplements (prescribed by the medical community).
But the unit is still looking for further expansion through possible acquisitions and international strategic alliances and with another major divestment announced at the group this week, it has greatly improved its cash position.
At Merck KgaA overall, operating profit jumped 19 per cent to €736 million for 2003, boosted by strong performances from Liquid Crystals and Generics and higher payments from US pharmaceutical sales. Income increased 2.6 per cent to €208 million, although sales were hit by currency rates, dropping 2.7 per cent to €7,202 million.
But the planned sale of a 50 per cent stake in BioMer and the whollyowned VWR International, expected to reduce sales and operating profit, will significantly improve the group's profit margin, it claims. Cash from the sales will make the company almost free of financial debt, said Merck, helping it expand its core pharmaceuticals and chemicals units.
The firm's net debt had stood at €2.9 billion ahead of the announcement, making it one of the most highly-geared companies in the sector.
