Merck KGaA, Haleon warn of more inflation challenges in 2023

While 2022 was a doozy for many in the biopharma industry, 2023 isn’t looking any easier, forcing drugmakers large and small to adapt to enduring challenges such as inflation, COVID-19 and the war in Ukraine.

For Darmstadt, Germany’s Merck KGaA, 2023 is shaping up to be another “challenging year,” thanks to a lull in the semiconductor market, decreased demand for COVID-related services and “persistently high inflation,” the company said in its latest earnings report.  

With those hurdles in mind, Merck KGaA anticipates “slight to solid” revenue growth for the year. The company expects profits to decline, Reuters notes.

Things have also been turbulent over at GSK spinoff Haleon, which noted in its full-year earnings briefing that an increase in freight and commodity costs—along with foreign exchange rate losses—dealt a blow to the company’s adjusted gross profit margin.

While the company’s 2022 revenue grew organically by 9% amid a “highly volatile environment,” Haleon expects that pace to slow to 4% to 6% in 2023.

The financial environment this past year has been tough, Haleon chief executive Brian McNamara told Reuters Thursday, citing factors such as double digit inflation on things such as input costs. The CEO expects inflation to continue to rise more in the mid-single digit range this year, the news outlet reports.

At Merck KGaA, this isn’t the first time in recent memory the company has warned of volatile market conditions. Back in May, the company cautioned its financial forecast for 2022 could fall victim to “increased uncertainty and volatility,” courtesy of factors such as COVID-19 lockdowns in China and Russia’s invasion of Ukraine.

While Merck KGaA met its revenue forecast for 2022, the company noted last spring that raw material and energy prices had skyrocketed.