Life science becoming ‘growth engine’ following Sigma-Aldrich buy, Merck

By Dan Stanton contact

- Last updated on GMT

Image: iStock/Vergeles_Andrey
Image: iStock/Vergeles_Andrey
Germany’s Merck expects to achieve cost synergies of €90m ($98m) in 2016 from the integration of Sigma-Aldrich which the firm acquired in November.

Presenting fourth quarter results this week, Merck attributed the 15.5% year-on-year increase to €3.5bn for its net sales primarily to its life sciences division, driven by the $17bn acquisition​ of fine chemical, API and cell culture firm Sigma-Aldrich.

According to the firm, the acquisition – which includes the SAFC and Bioreliance units – added over 10% to its life science revenues for the entire year, despite being part of the business for just 43 days in 2015, and CFO Marcus Kuhnert predicted further financial benefits are to come.

“I would like to reiterate we have a delivered against the number that we have announced to be achieved for 2015,”​ he told investors in a call, and added “for 2016 we aim to achieve at least €90m [more].”

When the firm announced the deal in September 2014​, it estimated to achieve annual synergies of approximately €260m annually, to be fully realised within three years after closing.

“We need to take some more time for realising the synergies in the operations area,”​ Kuhnert continued. He also said the firm needed to be careful “not to disturb the top-line momentum”​ in its integration attempts, and mimimise any impact on its customers.

“So that means, the early levers for synergy realization are more in the area of infrastructure and admin.”

Furthermore, the acquisition, coupled with its existing Millipore business, has helped make “life science become Merck’s growth engine,” ​according to the company.

In a statement, CEO Karl-Ludwig Kley said: “With the acquisition of Sigma-Aldrich, the biggest takeover in our corporate history, Merck has become one of the leading players in the global life science industry.”

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