Merck KGaA (ETR:MRK) Chief Executive Officer Belén Garijo used the company’s presentation at the 44th J.P. Morgan Healthcare Conference to outline what she described as a “next wave of growth,” anchored by three strategic growth pillars: Process Solutions in Life Science, rare diseases in Healthcare, and Semiconductor Solutions in Electronics.
Garijo said the group is positioned in “highly attractive, innovation-driven end markets” and benefits from a multi-industry model and globally diversified footprint. She also emphasized active portfolio management supported by broad-based cash generation, pointing to the company’s long history of acquisitions and divestments.
Three-sector structure and growth pillars
She also referenced recent portfolio actions, including the acquisition of SpringWorks and the divestment of Surface Solutions, as well as a “string of pearls” approach to technology additions such as Mirus Bio, UnitySC, and a chromatography business acquired from GSR late last year.
Guidance and midterm outlook
Management confirmed its 2025 guidance and reiterated an early indication for 2026 that was consistent with comments made on the company’s Q3 call in November. Garijo said Merck continues to see “gradually improving end markets” in both Life Science and Electronics and expects to capitalize on those trends.
For the group overall, Merck presented a midterm outlook centered on:
- Mid-single-digit organic sales growth for the group over the medium term.
- Low double-digit sales growth combined for the three growth pillars, which management said should contribute to more than 80% of future growth.
- Margin expansion targeting an increase of about 100 basis points versus the level implied by the 2025 guide, though management noted this could be “masked” in 2026 by healthcare lifecycle challenges.
Garijo said margin improvement is expected to be supported by mix shift toward the growth drivers, efficiency gains, improving capacity utilization, and continued cost discipline. She also pointed to working capital and reduced capital expenditure intensity following what she described as a period of significant investment in supply chain resilience.
Life Science: new go-to-market model and market recovery
In Life Science, Merck detailed a new organizational design that went live on January 1, structured around three go-to-market approaches: Process Solutions, Advanced Solutions, and Discovery Solutions. Executives said the redesign was driven by customer feedback to simplify interactions and increase customer centricity.
Management’s midterm expectations included mid- to high-single-digit organic growth for Life Science overall. For 2026, the company said it expects growth “more around mid-single digit” as markets continue to recover, with China, early-stage biotech funding, and the U.S. academic environment cited as key variables.
Process Solutions was described as the primary growth engine, with management reiterating an aim of around 10% organic growth over the midterm and citing demand in traditional modalities alongside faster growth in novel modalities such as antibody-drug conjugates. By contrast, executives said they remain more cautious near term on the lab-related businesses, pointing to muted conditions in China, uncertain biotech funding, and cautious purchasing behavior among U.S. academic customers.
Healthcare: Mavenclad headwinds offset by rare diseases and fertility
During the Q&A, management addressed near-term headwinds in Healthcare, including loss of exclusivity for Mavenclad in the U.S. that began late last year. Executives said they expect the U.S. impact to be felt this year and indicated they would quantify it further when providing guidance in March. They also noted that in Europe Mavenclad grew 19% in Q3 2025 and is expected to continue growing there, with loss of regulatory data protection in Europe referenced as August 2027.
Executives said growth in Healthcare is expected to be driven primarily by rare tumors and the rare disease franchise added through SpringWorks. Garijo highlighted three products and provided updates:
- Pimicotinib was approved in China “right before Christmas,” and management said the FDA accepted the U.S. filing. The company said it expects to launch in the U.S. by the end of 2026, while in Q&A management also referenced a potential FDA approval timing “hopefully at the end of this year.”
- Ogsiveo, described as the only approved systemic treatment for desmoid tumors, has been on the market for more than two years. Management cited strong uptake, a continued U.S. launch phase, and encouraging early European launch signals, while maintaining confidence in blockbuster potential despite competition.
- Mirdametinib, indicated for neurofibromatosis, was described as having a strong start following FDA and EMEA approvals last year, with adoption in pediatric and adult markets.
Management said these three products together have a combined peak sales potential of approximately EUR 2.5 billion.
In fertility, executives emphasized Pergoveris as a key growth contributor. They said Pergoveris has delivered a five-year compound annual growth rate of 20% outside the U.S., Japan, and China, and that the company submitted Pergoveris in China last year with an approval expected “within the next couple of months.” Management also described a “lean” development plan in Japan that could support a launch in 2028 or 2029. For the U.S., executives said a priority review voucher was expected to accelerate review; they began the submission process in January and said a potential launch could occur in the early second half of this year, depending on the label.
Electronics: AI-driven semiconductor demand and advanced packaging
In Electronics, Garijo said Semiconductor Solutions now accounts for about 80% of Electronics sales and positions Merck as a beneficiary of AI-related infrastructure expansion. She highlighted an industry shift toward advanced nodes requiring new materials, adding that more than 50% of Merck’s semiconductor portfolio is in advanced nodes compared with 33% for the broader market. She also pointed to advanced packaging as “the next frontier,” noting the company has moved from no sales three years ago to expecting well over EUR 100 million.
Closing the session, Garijo reiterated priorities that include concentrating resources behind the growth pillars, driving margin expansion and cash generation, maintaining a disciplined M&A approach focused on innovation rather than scale, and strengthening customer centricity and innovation across the portfolio.
About Merck KGaA (ETR:MRK)
Merck KGaA operates as a science and technology company in Germany. It operates through Life Science, Healthcare, and Electronics segments. The company's Life Science segment offers tools, chemicals, and equipment for academic labs, biotech, and pharmaceutical manufacturers, as well as industrial sector. This segment provides drug manufacturers with process development expertise and technologies, such as continuous bioprocessing; testing kits and services; reagents and services; testing solutions that analyze air, water, and soil; and testing and tools, as well as products that help test nutritional value and identify quality inconsistencies.
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