Merck KGaA’s revenue from its CDMO arm dropped in the first quarter due to customer destocking, but it still expects business to pick up in the second half of the year due to the timing of customer orders.
“We may have short-term volatility around the destocking trend. But actually, if we look into our midterm growth, we are super-confident that the life science market will return,” CFO Helene von Roeder told the media on Wednesday morning.
The company’s CDMO arm, dubbed its Life Science business, saw its revenue decrease by 13.8% to €2.1 billion ($2.2 billion) in the first quarter of 2024, compared with €2.5 billion ($2.7 billion) in the same period last year. Although Asia-Pacific clients “contributed favorably” to overall CDMO revenue, there was a decrease in demand from North American and European customers.
Dwindling demand for Covid-related services is also contributing to the CDMO’s business downturn, the company said in its Q1 earnings report.
Merck KGaA will continue to “invest strongly” in its Life Science business, von Roeder said. Last month, it revealed it is building a new research facility in Darmstadt, Germany that will house research relevant to its CDMO arm. It is also constructing a biologics facility in South Korea and expects further investments there.
As for potential business opportunities stemming from the Novo-Catalent deal, von Roeder said Merck KGaA’s CDMO business is “pretty small,” so it is not looking to grab market share. “We are very much focused on the few things that we do, especially viral vectors and mRNA business,” she added.