Merck

Merck KGaA (in North America MilliporeSigma, EMD Serono and EMD Electronics) is a German chemical and pharmaceutical company headquartered in Darmstadt.

Today's Merck Kommanditgesellschaft auf Aktien is independent of the US pharmaceutical company Merck & Co., Inc. (in the rest of the world Merck Sharp and Dohme (MSD)). Both companies trace their origins back to the German industrialist family Merck, which operated Merck & Co., Inc. (now Merck Sharp and Dohme (MSD)) as a subsidiary of E. Merck (now Merck KGaA - MilliporeSigma in North America) until World War I. As a result of the war, Merck & Co., Inc. (now Merck Sharp and Dohme (MSD)) became an independent company through expropriation.

Due to the expropriation of its US subsidiary, the German Merck lost the rights to the name Merck in the USA and Canada and is no longer allowed to use it there. Therefore, the three business sectors of the German Merck KGaA operate in North America under the names MilliporeSigma, EMD Serono and EMD Electronics. Abroad, the US-American Merck & Co., Inc. operates as Merck Sharp & Dohme (MSD).

Merck's origins date back to 1668. Merck is therefore considered the oldest pharmaceutical-chemical company in the world. Unlike most larger competitors, Merck continues to operate in both the chemical and pharmaceutical industries.

Company Development

Historical Development

On August 26, 1668, Friedrich Jacob Merck received permission to operate a pharmacy in Darmstadt. The Engelapotheke (Angel Pharmacy) still belongs to the Merck family today. Heinrich Emanuel Merck began selling self-isolated active ingredients, including alkaloids such as morphine, in 1827. With his sons, he founded a joint venture in 1850 (E. Merck Darmstadt), which by 1860 already offered 800 different products. It is considered a special innovation that Merck worked according to bindingly formulated purity standards. From 1889, the US subsidiary Merck & Co., Inc., published the Merck Index, a standard work for substance properties of the most important medicinal substances, chemicals, drugs, and biochemical substances. In its 15th edition, now published by the Royal Society of Chemistry, the Merck Index contains over 10,000 monographs on individual substances or active substance classes.

In the 19th century, Merck was probably the highest-revenue pharmaceutical company in the German Empire. In 1894, the world's first thyroid preparation was developed. Around the turn of the century, Merck transformed from a "large pharmacy" for natural products into a company for synthetic active ingredients. In 1903, the hypnotic Veronal (active ingredient: barbital) was introduced – the world's first barbiturate.

In 1903/1904, the company, which had by then grown to over 1000 employees, moved to new premises in the north of Darmstadt. From 1906 to 1918, Merck belonged to a larger manufacturing, purchasing, and price cartel directed against IG Farben. Until World War I, the number of employees and sales increased sharply. A sales office had already existed in the USA since 1887, which was converted into the formally independent but still closely linked stock corporation Merck & Co. in 1908. After the USA entered the war, Merck & Co. was confiscated and sold in 1919 to a consortium led by family member George Merck, who had previously managed the branch and had become a US citizen. As a result of this confiscation, neither the German E. Merck may operate under the name Merck in North America, nor may the US company outside North America.

During World War I, E. Merck produced essential medical supplies, as well as gas masks and ammunition. A new development was the opioid Eukodal (Oxycodone). In 1920, the management board consisted for the first time not exclusively of family members. From 1927, a vitamin D preparation was marketed.

In 1939, Merck had 4,000 employees. The company's management was led by Karl Emanuel Merck from 1932 until 1959, a NSDAP member since 1933 and a Wehrwirtschaftsführer (war economy leader) during the Nazi era. From 1942, the family's influence on business management decreased in favor of the strictly National Socialist board member Bernhard Pfotenhauer, also appointed Wehrwirtschaftsführer.

During World War II, starting in 1941, forced laborers from Western Europe were employed, and from 1942, also Eastern workers, to produce, among other things, pharmaceuticals and chemical pesticides essential for the war effort. The Eastern European laborers were housed in barracks and were paid and treated worse than the regular workforce; severe abuse is not reported. Merck had a significant stake in the company Elektrochemische Werke München, Dr. Adolph, Albert Pietzsch & Co. (EWM), which was led by Albert Pietzsch, who later became the head of the Reichswirtschaftskammer. EWM produced special fuels for submarines, torpedoes, and rockets. On December 12, 1944, Merck was hit by an air raid that killed 60 employees and destroyed over 70 percent of its production capacity. Merck has joined the Compensation Fund of the German Economy and is also making efforts to provide reparations, especially in Belarus.

Merck received its first new production permit in April 1945. The company's assets were confiscated (until 1948) and an external plant management was appointed. At the end of 1945, 2290 employees were employed. In the 1950s and 1960s, many new active ingredients were brought to market (e.g., Oxymetazoline/Nasivin, the birth control pill Aconcen, light protection substances). Research into liquid crystals began, a technologically leading sewage treatment plant was built for the Darmstadt plant, and the construction of the second largest group operating site in Gernsheim began (e.g., production of pearlescent pigments and thioglycolic acid).

Aconcen was taken off the market as a precaution in 1970; in the same year, Hans Joachim Langmann became Chairman of the Executive Board. Sales amounted to the equivalent of 358 million euros; in 2000, the value was 6.74 billion euros. In 1972, Merck acquired half of the Italian Bracco Group (sold in 2000). The deworming agent Praziquantel received the Galenus von Pergamon Prize in 1985. In the 1980s, Otto Esser and Hans Joachim Langmann, two members of the management, held top positions in German business associations. In 1991, Merck acquired the French company Lipha, which brought in the blockbuster Glucophage (active ingredient: Metformin).

In 1995, the family sold 26% of the shares in the company, now organized as Merck KGaA, to limited partners. The rest is held by the family, which acts as the general partner of E. Merck OHG. In 1996, Merck acquired liquid crystal activities from Hoffmann-La Roche. Acamprosate received the Galenus von Pergamon Prize in 1999. In 2001, the company had to pay a fine of 9.2 million euros for illegal price agreements in the vitamin market. In 2003, Merck researchers received the German Future Prize for their work on liquid crystals.

Since the beginning of the 21st century, Merck has been undergoing a group restructuring. In 2004, Merck sold, among other things, Biomet Merck (bone substitute materials, implants) and VWR International (laboratory distribution). Merck was debt-free in 2006 and attempted to take over its Berlin competitor Schering AG against its will. The takeover failed, but the engagement was a financial success.

In 2006/7, Merck acquired Serono, then the world's third largest biotechnology company, for the equivalent of 10.6 billion euros. Serono, based in Geneva, was active in four therapeutic areas: infertility, multiple sclerosis, growth and metabolism, and psoriasis. To finance this, the high-revenue generics division was sold to Mylan. In the 2006 financial year, it accounted for 29% of the Merck Group's revenue with almost 5,000 employees and sales in over 90 countries. The Merck family's stake in Merck KGaA has since been 70%. In 2010, the takeover of the US laboratory supplier Millipore Corp. also succeeded. Further acquisitions in 2014 included the British specialty chemicals company AZ Electronic Materials, in 2015 the large US company Sigma-Aldrich (13.1 billion euros) and in 2019 the US semiconductor supplier Versum (6.5 billion euros). Residues from Lindane production, which were legally disposed of in the Gernsheim plant in the 1950s to 1970s, had to be retrieved and professionally incinerated with great effort in recent years.

Merck KGaA today

The company employs approximately 58,100 people, of whom 13,300 are in Germany. At the main headquarters in Darmstadt, 11,000 people are employed. This is also where the main training takes place with around 600 apprentices. Merck KGaA is represented in 66 countries with 227 companies.

The majority of the share capital of the KGaA is held by E. Merck KG, which acts as the general partner, is managed by the Merck family, and sets the strategic guidelines for the group. Approximately 70% of the capital of E. Merck KG is predominantly held by silent partners of the Merck family (217 members; as of October 2009). Of these, 130 form the shareholder assembly, which in turn determines the family council.

The Family Council is the corporate law body of E. Merck KG. It appoints the members of the Shareholder Council and the Chairman of the Executive Board of Merck KGaA, as well as his deputy, and makes decisions of fundamental importance for the company. The chairman of the eleven-member body is Frank Stangenberg-Haverkamp.

The Shareholder Council has a function similar to the supervisory board of a stock corporation. It oversees the management of E. Merck KG and Merck KGaA. Significant transactions of the KGaA require the approval of the Shareholder Council, which also appoints and dismisses the members of the KGaA's management. The Shareholder Council includes both family members and external members such as Rolf Krebs and Theo Siegert. The chairman of the nine-member Shareholder Council is Johannes Baillou. Stangenberg-Haverkamp and Baillou are descendants in the eleventh generation of Friedrich Jacob Merck and, due to their function, are the supreme representatives of the Merck entrepreneurial family.

Merck KGaA is divided into three business sectors: Healthcare (Pharma), Life Science (Laboratory Chemicals), and Electronics (Specialty Chemicals and Semiconductors).

Development of key figures of the Merck Group

in billions of euros	2018	2019	2020	2021	2022	2023
Revenue	14.84	16.15	17.53	19.69	22.23	20.99
Profit before tax	1.7 billion	2.0 billion	3.2 billion	4.3 billion	5.1 billion	4.0 billion
Employees	51,713	57,036	58,096	60,334	64,232	62,908

Share and Shareholders

Merck Kommanditgesellschaft auf Aktien is majority-owned by the family. Through E. Merck KG as general partner, the Merck family holds approximately 70% of the total capital. The remaining 30% of the capital is accounted for by the shares of the limited partners. Since 1995, the shares have been traded on the stock exchange and have been listed on the DAX at the Frankfurt Stock Exchange since June 15, 2007.

The number of publicly traded shares is approximately 129 million.

Business Segments

Healthcare

The Healthcare segment is divided into three businesses: Merck Serono, Allergopharma, and Biosimilars. The Consumer Health business was sold to Procter & Gamble in 2018 for 3.4 billion euros. It had generated sales of 911 million euros in the previous year.

Merck Serono Biopharma

Biopharma, until 2015 Merck Serono, was formed in 2007 with the acquisition of the Swiss biotechnology company Serono and subsequent merger with its own pharmaceutical division Merck Ethicals. Biopharma sells and produces prescription original drugs in the areas of:

• Oncology with the monoclonal antibody (Erbitux / Cetuximab)
• Neurology (Rebif Beta-Interferon, Multiple Sclerosis) and (Mavenclad Cladribine, Multiple Sclerosis), for which an application for approval in the European Union was submitted at the end of June 2016.
• Diabetes (Glucophage, Metformin)
• Thyroid diseases (Euthyrox / Levo-Thyroxine)
• Cardiovascular (Concor / Bisoprolol)
• Inflammatory diseases (Decortin or Decortin H / Prednisone or Prednisolone)
• Fertility (hormone replacement therapy)
• Phenylketonuria (Kuvan / Sapropterin dihydrochloride), until the end of 2015
• Growth hormone disorders (Saizen/Somatropin)

Current research focuses are oncology, neurodegenerative diseases, and rheumatology.

In oncology, Merck is working, for example, on the research and development of therapies that specifically target cancer cells without harming healthy cells. The development projects utilize the potential of immunology, biotechnology, and molecular biology to support the body in its own fight against cancer cells. The goal is effective therapies with few side effects that prolong patient survival and improve their quality of life.

Merck researches in four main areas:

• monoclonal antibodies that are intended to block cancer growth
• immunocytokines that are intended to recognize tumor cells and induce a local immune response
• angiogenesis inhibitors that are intended to "starve" tumors by cutting off their further supply of nutrients.
• Anti-PD-L1 antibodies (Immune checkpoint inhibitor)

Until the end of 2015, one of the most important development substances was the hypoxia-activated molecule Evofosfamide (formerly TH-302)

Consumer Health (Self-medication)

The Consumer Health business produced and distributed non-prescription drugs (OTC medicines) and dietary supplements. Examples include Nasivin, Bion3, the vitamin preparation Multibionta, Cebion, Kohle-Compretten, Femibion, Kidabion, Neurobion, Epamax and Kytta-Salbe. In April 2018, the company announced that the division was sold to Procter & Gamble for 3.4 billion euros. The transaction was completed in the fourth quarter of 2018.

Allergopharma

The Allergopharma business included products for the treatment of allergies. The subsidiary Allergopharma was founded in 1969 and was a full member of the Merck Group. In February 2020, Merck announced that Merck Allergopharma would be sold to Dermapharm Holding SE.

Biosimilars

The Biosimilars business unit comprised the development and manufacture of biosimilar drugs. The Biosimilars business unit was sold to Fresenius Kabi in 2017.

Life Science

The Life Science segment consists of the Merck Millipore business and the Life Science portfolio of the Sigma-Aldrich acquired in 2015. Core brands include Millipore, Milli-Q, Sigma, SAFC, and BioReliance.

Merck Millipore

Merck Millipore was formed in 2010 after the acquisition of the US company Millipore was completed. In this division, all activities of Millipore and large parts of the former Merck division Performance & Life Science Chemicals were merged. Merck Millipore consists of three business units: Bioscience, Lab Solutions, and Process Solutions. The Bioscience business unit focuses on solutions and reagents for protein research and cell biology, cell culture solutions, as well as products and services for the development of biopharmaceutical active ingredients. Laboratory chemicals and other materials for research, science and industry, products and services for sampling and test kits for the pharmaceutical, food and diagnostics industries, as well as products, consumables and services related to high-purity laboratory water for science and industry are the activities of Lab Solutions. Process Solutions focuses on products and services for the production of chemical and biopharmaceutical active ingredients.

Sigma-Aldrich

Sigma-Aldrich was an independent US-based high-tech company with activities in laboratory equipment and high-performance materials.

Electronics

Liquid Crystals

Merck is one of the world's largest manufacturers of liquid crystals, which are needed for the production of liquid crystal displays (LCD). The global market share is over 60%. The company is thus considered a so-called Hidden Champion.

For several years, Merck has also been developing and selling materials for the production of organic light-emitting diodes (OLEDs).

Semiconductor Solutions

Merck is a manufacturer of materials for the semiconductor industry, supplying computer chip manufacturers with materials and solutions for process steps such as patterning/lithography, planarization, and etching gases.

Pigments & Cosmetics

This business area bundles all activities for pigments in paints, printing and plastic applications, in the field of security technology (e.g., anti-counterfeiting), pigments for applications in the food and pharmaceutical sectors, functional materials, as well as cosmetic active ingredients and pigments.

Historic Buildings

• Main Laboratory (Darmstadt)
• Pützerturm
• Administration building of the company Merck

Museum

Since 2004, there has been a company-owned museum at the company's headquarters in Darmstadt. On an area of approximately 400 m², around 350 years of chemical and pharmaceutical history of this oldest chemical-pharmaceutical company in the world are documented.

Literature

• T. L. Wilkinson: Mixing Business With Family – The Merck Group has found the solution to the generation game. In: Wallstreet Journal from November 9, 2009
• P. Brors, T. Kewes: With Risks and Side Effects. In: Handelsblatt from February 6, 2011
• Joachim Scholtyseck, Carsten Burhop, Michael Kißener, Hermann Schäfer: Merck – Von der Apotheke zum Weltkonzern, Verlag C.H.Beck, 1st edition, Munich 2018, ISBN 978-3-406-70038-5.

External links

• Website
• H. D. Tylle: Germany Trip 2009–2011: 1st Station – Merck KGaA, Darmstadt (PDF; 823 kB)