German drugmaker Merck sticks to forecast despite market turbulence

Merck KGaA, the German drug and chemical company, said Friday the crisis in the U.S. financial market had not affected its earnings forecast for 2008 and it is looking to the Japanese market for growth.

"We expect total revenues to increase in a range between 5 percent and 9 percent and the operating result to show double-digit growth," Chief Executive Karl-Ludwig Kley told the company's annual general meeting.

In 2007, the company generated total revenue of 7.1 billion euros ($11.22 billion) and operating profit of 1 billion euros ($1.6 billion).

"At present, we do not yet know how the crisis in the U.S. financial market will impact consumer demand, especially in the United States. Our realizations to date do not give me reason to alter our forecast," he said.

The Darmstadt-based company's products include the multiple sclerosis drug Rebif and cancer treatment Erbitux.

"Today, we are one of the world's leading biopharmaceutical companies. The Japanese Market is one of our next objectives," Kley said in his speech.

The news sent Merck shares nearly 1 percent higher to 82.20 euros ($129.84) in trading Friday in Frankfurt.

For 2007 as a whole, Merck's share price rose more than 12 percent, the company said, and Kley expressed hopes that it would remain strong despite the turbulent market.

Merck said it would also propose increasing its dividend by 33 percent to 1.20 euros ($1.90).

"In addition, we are distributing a special dividend of 2 euros ($3.16), through which we are enabling you to share in the gain on the disposal of the generics business," Kley said.

He said that would make the total dividend payment worth 700 million euros ($1.1 billion).

Merck sold the generics business to U.S.-based Mylan Inc. in October for 4.9 billion euros ($7.7 billion).

Merck also said it would extend its supervisory board ranks from 12 to 16 members, a requirement of German corporate law, as employee numbers in Germany have grown to around 10,000 since the 2007 acquisition of Serono, a biotechnology and pharmaceutical company headquartered in Geneva.

Merck of Germany is the oldest drug company in the world and has been separate from the U.S.-based Merck & Co. since the end of World War I.

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On the Net:

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