Merck KGaA exploring generic drug unit sale

Although Merck KGaA's response to the Marketletter's morning questions about the disposal of its generics business was "no comment," around mid-day January 5, the company confirmed that it is "evaluating the divestiture of the business as one strategic option," although stressing that it is not engaged in initial discussions with any potential buyers.

Merck also confirmed it still plans to make a capital increase of 2.0-2.5 billion euros ($2.64-$3.30 billion) in the first quarter of 2007. The news - or rather the speculation - was welcomed by the markets, where Merck's share price was lifted 6.5% to 5.27 euros on January 4.

According to financial and unnamed company sources quoted in the rumors, the aim is to focus on the commercialization of innovative, original drugs. Merck's generics sales are around 1.8 billion euros ($2.37 billion), putting the company at number four on the world copy drug market, although this sector plays a minor role inside Germany itself.