Even as Covid-19 and the war in Ukraine impacted growth plans of companies worldwide, Darmstadt-based science and technology company Merck has pointed to another geo-political stress-point for companies to factor into their plans this year.  

The existing tension between the United States and China, is a factor that the company’s management was keeping its eye on, said Belén Garijo, Chair of the Executive Board and Merck CEO, as they anticipate and build mitigation plans to serve global customers. She was giving an overview of the company’s growth plans for 2023, and said they remained “cautiously optimistic”, mindful of the  uncertainties and challenges that cannot be ignored.  

Regionalise supply

While the company was advocating for global trade, she said, it was also looking to regionalise supply chains. The pandemic had seen an increase in protectionist measures with countries wanting to serve their citizens first. This was a “wakeup call for everybody”, she said, on the rationale behind increasing regional presence to get closer to customers.  

The year will also see factors that were levers of growth in 2022, turn into headwinds, she said, pointing to currency and Covid-19 products. Sales from the Covid-linked portfolio, for instance, was expected to drop from  €800 million to about €250 million this year, she said.   

The group’s net sales increased 12.9 percent to €22.2 billion, and this was driven by all regions and business sectors, particularly life sciences, the company said. Its three key businesses including process solutions and life science services, healthcare products and semiconductor solutions – accounted for almost 90 per cent of its organic growth in sales. Organically, Merck generated a 6.4 per cent increase in group sales in fiscal 2022, it said, adding that positive foreign exchange effects of 6.1 per cent resulted mainly from the development of the US dollar and Chinese renminbi. 

Challenging year

The company forecasts a challenging year ahead, with a slowing semiconductor market, decreasing Covid-19-related demand and persistently high inflation. Nevertheless, it said, it would meet its mid-term financial target of €25 billion in net sales by 2025.  

As part of strengthening and regionalising supply chains, the company invested in the expansion of Life Science sites in Cork, Ireland, Rockville, Maryland, USA, Molsheim, France, as well as Wuxi, China.  In February 2023, the electronics business saw the groundbreaking of its integrated production facility for specialty gases and semiconductor materials in Kaohsiung, Taiwan, it added.