Merck reports earlier-than-expected improvement in semiconductor market

Merck KGaA is seeing a faster-than-expected improvement in its semiconductor materials business and is aiming to accelerate its drug development pipeline, the German pharma and technology company said on Thursday.
It has seen an inflection point in the second quarter for advanced nodes and materials for AI applications, it said, having previously said it expected a recovery in the semiconductor market in the second half of the year.
Merck’s semiconductor solutions business, which makes up 69 per cent of its Electronics business, the smallest of its three divisions, posted a 10.4 per cent rise in second-quarter net sales, beating analysts’ expectations.
Raising its full year guidance for Electronics on Thursday, Merck said it expects “the remaining semiconductor materials market to gradually recover” in the second half of the year.
Merck had already raised group guidance last week when it pre-reported its earnings.
The pharma-tech company also raised guidance for its Healthcare division on Thursday despite recent drug development setbacks.
In June the German diversified group had announced it stopped trials of the head and neck cancer drug after it failed phase 3 trials.
This came after other recent drug development setbacks, including the multiple sclerosis drug evobrutinib in December.
On Thursday the company reported a provision of a “mid double-digit million euro amount” negative impact on the group´s second quarter EBITDA from the failed cancer drug, but still saw its Healthcare division´s net sales grow by 4.3 per cent from the year prior.
“We don’t see an emergency or a crisis to act in healthcare and we will stick to our strategy to accelerate external innovation if the opportunity arises”, said CEO Belen Garijo in a call with journalists on Thursday.
“Certainly the optionality in the pipeline needs to go up,” she said. “So our focus today is to increase our number of assets in phase two and phase three at an accelerated speed.”
She added that, unlike other pharma companies, Merck did not have a “patent cliff” and did not need to worry about the expiration of intellectual property rights for important drugs.
With the focus now on licensing and potential smaller acquisitions in healthcare, Garijo said: “We will communicate these when we reach agreements in coming months”.