By Ludwig Burger
FRANKFURT (Reuters) – Germany’s diversified group Merck KGaA has raised the prospect of returning to revenue growth next year, recovering from a slump in demand for its specialty materials to produce biotech drugs and semiconductors.
“We are expecting to leave the transition year 2023 behind, returning to growth in 2024,” CEO Belen Garijo told Reuters ahead of the company’s capital markets day on Thursday, referring to gains adjusted for currency swings.
At the group’s key biotech process solutions business, which helps drugmakers run cell cultures and bioreactors, large customers would likely stop drawing on inventories and place orders, “with sales picking up again in the first half of the year”, it said in a statement.
During the pandemic, makers of drugs and vaccines purchased excess amounts of Merck’s supplies such as filters and bioreactors, which were repurposed for other products after the pandemic.
The market for semiconductor materials, for its part, should “recover incrementally in 2024”, Merck added.
“The industry is forecasting a recovery incrementally in 2024. We are still following up on when exactly this is going to happen,” the CEO said.
The company reaffirmed that sales would be broadly flat this year, at between 20.5 billion euros ($21.6 billion) and 21.9 billion euros, compared with 22.2 billion last year.
The previous outlook for adjusted core earnings of 5.8 billion to 6.4 billion euros this year, down from 6.85 billion in 2022, was also confirmed.
Higher interest rates have dampened investor appetite for risky biotech drug ventures, compounding a decline in coronavirus-related activities.
That has also hit rival laboratory gear maker Sartorius, French drug ingredients maker EuroAPI and Swiss drug contract manufacturer Lonza
($1 = 0.9484 euros)
(Reporting by Ludwig Burger; Editing by Kirsten Donovan)
