(Nov 12): Merck KGaA raised its outlook for a third time, helped by the strength of its lab-equipment division and a better-than-expected performance of its multiple sclerosis drug, which is facing generic competition.

Full-year adjusted earnings are now expected to reach as much as €6.4 billion (RM28.98 billion), up from the previous upper-end forecast of €6.3 billion, the company said on Thursday. It also increased its net sales guidance for the year.

The German science group said favourable foreign-exchange effects, a strong third quarter, and its soon-to-be-completed acquisition of Bio-Techne Corp, Merck’s largest deal in more than a decade, drove its upgrade. 

After multiple failed efforts to stave off patent challenges to its blockbuster MS drug Mavenclad, Merck said it now expects no sales at all in the US from November. However, this is slightly better than previous guidance that US Mavenclad sales growth would stop in August. 

Shares rose as much as 3.1% on Thursday in early Frankfurt trading, reaching the highest intraday price since October 2024. The stock is up about 24% this year through Wednesday’s close. 

Chief executive officer Kai Beckmann is seeking to improve performance across Merck’s three businesses: healthcare, life science and electronics. Since he took the top job in May, Beckmann has already carried out two major acquisitions to bolster its pipeline, including the US$11.3 billion (RM45.99 billion) purchase of life-sciences company Bio-Techne, which should complete in December, and UK biotech Silence Therapeutics plc. 

Acquisitions will continue to be “an important element of our strategy” going forward, Beckmann said on a media call, adding that the focus is on technology and innovation rather than simply growth.

Merck is also pursuing workforce reductions as part of a “strategic realignment” of the businesses. Asked about the size of the reductions, chief financial officer Helene von Roeder said they aren’t on the scale recently seen in other industries, declining to be more specific. 

Merck’s “healthy showing” in the life science business and a “standout” performance in the electronics unit, helped it beat expectations in the third quarter, according to Alphavalue’s analyst Abhishek Raval.

Life sciences, Merck’s biggest division, grew in the latest quarter, boosted by process solutions, which supplies drug-making equipment. The business had previously benefitted from increased demand from customers in Asia-Pacific due to worries over supply chain disruptions related to the Middle East crisis, though the company said current customer order trends point to a softer fourth quarter.

In its healthcare unit, organic sales edged higher during the third quarter as Merck’s new rare-disease therapies helped offset stiffer competition for cancer drug Bavencio and Mavenclad. Sales of the latter declined about 25%. 

Electronics, the smallest unit, posted about 13% organic sales growth. Its semiconductor solutions business grew almost 19% organically, accelerating from the previous quarter on demand for materials used in artificial intelligence (AI)-related chip production.  

Asked about a slowdown in data center construction after the US midterm elections, Beckmann said AI growth extends beyond just that build out. “There’s a lot still to happen in AI,” he said, pointing to industrial and edge AI, where applications run in factories, machines and devices. “We’re not yet scratching the surface.”

The German company is unrelated to Merck & Co in the US. The two drugmakers share historical roots but have been separate since World War I.

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