Merck KGaA raises its 2026 guidance again on AI chip materials and rare disease drugs
The Darmstadt science and technology group lifted its targets for the third time this year. Strong demand from AI chipmakers and biomanufacturing offset generic pressure on its multiple sclerosis drug Mavenclad.
Merck KGaA raised its 2026 guidance on Thursday 12 November after a third quarter that beat analyst expectations. The Darmstadt group now expects net sales of EUR 21.5 billion to 21.9 billion, up from EUR 21.0 billion to 21.8 billion, and EBITDA pre of EUR 6.2 billion to 6.4 billion, up from EUR 5.9 billion to 6.3 billion, according to its quarterly release.
It is the third guidance increase this year, Handelsblatt reported. Analysts had on average expected third quarter EBITDA pre of about EUR 1.6 billion; Merck delivered EUR 1.68 billion.
The quarter in figures
Group net sales rose to EUR 5.6 billion from EUR 5.3 billion, an organic increase of 5.1%, with foreign exchange adding another 1.5%. EBITDA pre, the company's main profit measure, was EUR 1.7 billion, organically up 0.4%. Merck said the year earlier quarter had been lifted by two one time effects, each worth a mid double digit million euro amount, and the EBITDA pre margin eased to 29.9% from 31.4%. Earnings per share pre were unchanged at EUR 2.32.
Reported earnings fell much more sharply. Earnings per share dropped to EUR 1.04 from EUR 2.07, according to figures compiled by Dow Jones Newswires and published by MarketScreener. Investing.com said the decline mainly reflected one off gains a year earlier and higher depreciation and amortisation.
Free cash flow rose 22.7% to EUR 1.3 billion, and net financial debt was 10.3% lower than at the start of the year. Asia Pacific was again the largest region, with 34.8% of sales and growth of 12.1%, ahead of Europe at 29.1%.
Where the growth came from
Electronics and AI chips
Electronics grew net sales 13.3% organically to EUR 948 million, and its EBITDA pre rose 18.4% to EUR 279 million. Semiconductor Solutions grew 18.7% organically, driven by advanced memory and logic chips for AI applications, which need more complex architectures and more material per wafer. Optronics, which includes liquid crystals, slipped 0.9% as high memory prices weighed on consumer electronics demand.
Life Science
Life Science sales reached EUR 2.4 billion, up 6.1% organically, with EBITDA pre up 8.7% to EUR 736 million. Process Solutions, which supplies drug manufacturers, grew 10.5%, although Merck said order book trends point to a softer fourth quarter.
Healthcare
Healthcare sales rose 0.9% organically to EUR 2.3 billion. Rare diseases grew 41.5%, led by Gomekli/Ezmekly for nerve tumours in neurofibromatosis type 1, which grew 80.4%. Sales of the multiple sclerosis drug Mavenclad fell 25.1% because of generic competition in the United States, and the new guidance assumes no US Mavenclad sales from November.
Reshaping the portfolio
"Our upgraded full-year guidance reflects our confidence that Merck KGaA, Darmstadt, Germany, will continue to deliver solid performance in 2026," chief executive Kai Beckmann said in the release.
The company is in the middle of a large portfolio shift. It agreed in June to buy US life science tools maker Bio-Techne for an enterprise value of about USD 11.3 billion, and its guidance assumes that deal is consolidated from December. Merck has also signed a definitive agreement to sell its contract development and manufacturing business to Lonza, expected to close in mid 2027, and in October agreed to acquire UK biotech Silence Therapeutics, with closing expected in the first quarter of 2027.
What it means for European founders and investors
Merck's results show how AI demand is reaching deep into the supply chain. Chipmakers need more specialised materials per wafer as designs get more complex, and Merck's figures suggest that suppliers of materials and process technology are benefiting. For deep tech startups in these areas, large incumbents like Merck are both customers and potential acquirers.
The Silence Therapeutics deal and the Bio-Techne acquisition also show a European group paying for innovation in rare diseases and research tools. Biotech founders building assets in targeted specialty medicine should note that large European pharma and life science groups are actively filling their mid stage pipelines. For more on AI driven demand in European industry, see our report on Infineon's record quarter.
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