THE MERCK WAY - Merck KGaA

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THE MERCK WAY

TO MANY COMPANIES,
CULTURE IS A LUXURY.
TO US, IT IS THE FOUNDATION
FOR OUR ACTIONS.
Staying true to oneself: the Merck culture. At fi rst glance, products
are often what distinguish a company from its competitors. At Merck
too, pharmaceuticals and chemical products have paved the way
for the company’s success. However, the products and services that
a company offers are not the only thing that’s important. How a
company deals with internal and external challenges, how it achieves
competitive advantage, and how it makes decisions are just as
important. The culture of a company is only brought to life by the
people who live it.
The way we do things at Merck
has evolved from a history dating back nearly 350 years
is supported by the willingness of our employees to achieve
ambitious goals based on a clear strategy and an unmistakable
set of corporate values
is shaped by a family of owners, whose entrepreneurial creed begins
with the sentence “Entrepreneurial success starts with people.”
These principles have created a culture in which every individual can
make a difference. A culture that is based on both mutual respect and
a strong sense of identifi cation. We base decisions on transparent
facts and open dialogue so that those affected will readily support
and implement them. At the same time, everyone knows that seeking
a consensus cannot be allowed to become a hindrance. This combination
of personal scope and team membership is like the DNA
of our company – concealed deep inside and really visible only to
those who are part of it. This culture is both the foundation for our
sustained economic success and the driver of necessary changes.
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IT’S NEVER JUST ABOUT PRODUCTS,
BUT ALWAYS ABOUT PEOPLE TOO.
AND ABOUT CLEAR VALUES.
Cultural diversity: At home all over the world. Although our cultural
roots are in Darmstadt, we are experienced in dealing with different
cultures and know how to respect differences. In order for global
cooperation to succeed, we have committed ourselves to a shared set
of values that are binding on all employees. Without exception. They
are the compass we use to steer our business and social actions in
our dealings, both with customers and business partners, and in the
way we work with each other:
Courage opens the door to the future.
Achievement makes our entrepreneurial success possible.
Responsibility determines our entrepreneurial actions.
Respect is the foundation of any partnership.
Integrity ensures our credibility.
Transparency makes mutual trust possible.
These values enable us to create an environment in which entrepreneurship
can thrive. After all, the more solidly a company’s culture
is based on shared values, the less central control it requires and the
fewer bureaucratic processes get in the way. As much trust as possible,
as much control as necessary. At the same time, we respect cultural
diversity. We don’t see regional, culturally specifi c competencies
as a deterrent to consistent structures, but rather as opportunities
for entrepreneurial success.

WHEN YOU’VE PROSPERED IN BUSINESS
FOR OVER 300 YEARS, YOU MUST HAVE DONE
A FEW THINGS RIGHT.
We’ve made history – but that’s no reason to sit back and relax.
Merck is the world’s oldest pharmaceutical and chemical company
with roots dating back to the year 1668. Since that time, a lot
has happened, we’ve achieved a great deal – and a strong future
lies ahead of us.
By purchasing what would later become the Angel Pharmacy
in Darmstadt – the origins of the still family-owned company –
Friedrich Jacob Merck ventured a new start in 1668.
At the turn of the 18th century, market regulation became tighter
and the sale of medicines by “charlatans, barber surgeons and
mongers” was highly restricted – an opportunity for pharmacists
with entrepreneurial farsightedness.
Emanuel Merck, who took over the pharmacy in 1816, made the
fi rst step from the pharmacy to a global company. He initiated
the move to industrial-scale production. In pharmacy, he laid the
foundations for the transition from a craft to a science.
When Emanuel Merck died in 1855, the fi rm had about 50 employees.
At the turn of the 20th century, the company already had
1,000 employees and its portfolio had grown to 10,000 products.
Driven by the pioneering spirit that characterized the late 19th
century, Merck established numerous subsidiaries abroad, including
Merck & Co. in the United States, which today only shares
the name with us.
The acquisition of Serono of Switzerland made Merck one of the
world’s leading biotech companies. With the purchase of Millipore
of the United States, Merck is now a leading global player in the
life sciences market.
Today, approximately 40,000 people work for Merck. And they’ll
continue doing more than just a few things right.
07

OPPOSITES ATTRACT. SINCE 1668.
Entrepreneurial balance also means thinking contrary thoughts.
Our success is largely founded on concepts that many believe
are irreconcilable: opposites, duality, giving equal weight to two
worlds. This starts with the deliberate decision for the two-pillar
structure of Pharmaceuticals and Chemicals. It continues with the
successful pursuit of tradition and innovation, globally managed
businesses, and local entrepreneurship. It can also be seen in the
way we united the best of both worlds with the integration of
Merck and Serono. And, not least, it includes the duality of being
a public and a family company.
A pioneering spirit in research coupled with the required experience.
Products that improve the lives of many people and sustainably
increase the value of the company. And since we’re not
only researchers and developers, but also reliable partners to our
customers, we can link innovation with market success.
We view profi table business as an opportunity to take on responsibility
toward everyone affected by our entrepreneurial actions.
We take responsibility for our products, our employees, the environment
and the communities in which we live and operate. Not only
ownership, but also business success creates responsibility.
Merck has expressed its commitment to the ten principles of the
United Nations Global Compact: Fair labor relations, human rights
and environmental protection are just a few examples of the principles
of responsible actions by global companies.
In 2007, we entered into a partnership with the World Health
Organization (WHO) to combat the worm disease schistosomiasis
in African school children. Within the scope of this partnership,
Merck is donating 200 million tablets of Cesol® 600 containing
the active ingredient praziquantel over a ten-year period. This
donation, which is worth around US$ 80 million, will permit the
treatment of 27 million children. Schistosomiasis is the most
common tropical disease in Africa after malaria, causing primarily
children to suffer.
The Global Pharma Health Fund e.V. (GPHF), which is supported
exclusively by Merck, is another example. Its Minilab is used
around the world to fi ght the spread of counterfeit medicines.
It’s clear: opting for opposites can be very productive indeed.
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OUR STRATEGY FOR THE FUTURE:
WE KNOW WHAT WE’RE DOING – AND WHY.
Never stop learning. That’s the only way. To this day, we derive
our power to grow from the balance between the old and the new,
between tradition and innovation. The Merck Way – or the secret
as to how a company has managed to remain successful in the
marketplace even after more than 340 years – is based on three
principles:
Sustain: We intend to sustain our local entrepreneurship, strict
customers focus, as well as the loyalty of our employees, which
is exceptionally important to us.
Change: Changes are inevitable as we expand our businesses
globally and respond fl exibly to customer requirements, and as
we modernize the required processes and structure our organization
now and in the future.
Grow: Our growth opportunities result from innovations, from
strengthening our presence in selected markets, and from acquisitions.
Our core competencies are our ability to innovate, our traditionally
high level of quality awareness, our unique corporate culture, and
our mindset of partnership that sharpens our focus on the needs of
customers, consumers and patients.

12
TRUST, QUALITY, SAFETY:
A STRONG BRAND IS PRICELESS.
MERCK – a quality brand that creates and enjoys trust worldwide.
Even if it’s not found in any balance sheet, the Merck brand is still
one of our most important assets. Since Friedrich Jacob Merck laid
the foundation stone in 1668, the name Merck has stood for medicines
and chemical products that have proved invaluable to people
and have created inestimable value for the company.
In the chemicals business, our brands have stood for superior
quality and reliability, innovation and customer centricity for
generations.
In the pharmaceutical market, our brand name has a long tradition,
not only among people taking responsibility for improving their
own health with over-the-counter pharmacy products, but also in
the prescription drugs business. Today Merck stands for innovative
therapies originating from both pharmaceutical chemistry and
biotechnology.
Due to our unique history, two companies operate today in the
same markets under the Merck name. “Our” Merck – so to say the
original one – and the pharmaceutical company Merck & Co. in
the United States. The two companies have agreed on the territorial
usage of the name: The rights to the name in North America belong
to Merck & Co.; whereas we hold the rights in the rest of the world.
We therefore use two corporate brands: “EMD” – the initials of
Emanuel Merck, Darmstadt – for the companies of the Merck Group
in North America, and “Merck” in the rest of the world.

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MANY SUCCESSFUL COMPANIES ADAPT TO
CHANGES IN SOCIETY, RESEARCH AND TECHNOLOGY.
WE INITIATE AND SHAPE THOSE CHANGES.
Good business performance should also mean sustainable business
performance. Merck is a business enterprise. Naturally, we want to
achieve profi ts so that we can help shape our future and that of the
society we live in. We’re aiming for entrepreneurial success based
on lived values and economic value. That is precisely our company
purpose: doing business well by doing good business. It means we
aim to operate both profi tably and sustainably.
We are deliberately focusing on two business sectors, Pharmaceuticals
and Chemicals, because in both sectors, we have the pioneering
knowledge and experience needed to work with customers to
develop new products that sustainably improve the quality of life.
At the same time, operating in two business sectors enables us
to spread the entrepreneurial risk of our owners. Incidentally,
this also gives our customers and employees a sense of security.
Not least, it’s also what makes Merck reliable.
Merck’s market presence is characterized by cutting-edge innovations
in research and development, expertise in manufacturing, and
customer proximity in marketing. Most important, however, are the
ability and willingness of our employees to constantly inquire into,
identify and meet the needs of consumers and patients for even
better quality of life.

TO HEALTHY PEOPLE, MEDICINES ARE FOR THE SICK –
UNTIL THEY GET SICK THEMSELVES.
Our Pharmaceuticals business sector: Health and quality of life.
Merck has always made important and pioneering contributions to
the fi eld of medicine and prides itself on its long tradition in the
discovery and development of new drugs. This applies to branded
prescription drugs such as Erbitux®, Rebif® and Concor® as well
as to high-quality consumer health products for everyday health
protection or the self-treatment of minor ailments. Nasivin® is one
of our best-known consumer health care brands.
Our largest division, Merck Serono, discovers, develops, manufactures
and markets patented prescription drugs. It unites the heritage
and innovative strength of two family-owned companies – Merck
and Serono. In research, we are focusing on three high-growth
therapeutic areas that involve a high degree of specialization –
cancer, neurodegenerative diseases as well as autoimmune and
infl ammatory diseases. In addition, the portfolio includes drugs
to treat cardiovascular diseases, hormone and metabolic disorders,
as well as infertility.
One of Merck Serono’s special strengths is its expertise in developing
and manufacturing both chemically defi ned pharmaceuticals
and biopharmaceuticals. More than half of Merck Serono’s sales are
attributable to biopharmaceuticals.
Merck also has a wealth of experience with over-the-counter products.
The Consumer Health Care division is the only business in the
portfolio that addresses end users directly. Our main distribution
channels are pharmacies, drug stores, as well as retail chains and
mail order in some countries. We are building on the strength of
our well-known brands such as Bion®, and Seven Seas®, as well as
the trust consumers place in them because of their quality, effi cacy
and safety.
17

LIQUID CRYSTALS ARE CHANGING THE WORLD.
AND HOW WE SPEND WEEKENDS WITH FRIENDS.
Our Chemicals business sector: First come... As a specialty chemicals
pioneer in Germany, Merck ranks among the most research-intensive
and global companies in this sector today. We are focusing on
profi table segments within regulated and high entry barrier markets
where government regulations or strict quality requirements make
it very diffi cult for companies to succeed quickly, if at all. Here we
are dedicating our expertise and experience to serve customers.
Together with them, we develop innovative products and solutions
that prove their value in the market. These partnerships, which in
most cases are long-term and based on high levels of trust, give our
customers crucial market advantages and us good business.
Our cooperation with the world’s leading fl at panel manufacturers
in Asia is a perfect example of this. Liquid crystals from Merck are
a key component of fl at panel televisions, notebooks and mobile
telephones. We were a pioneer in making communication visible
and are the uncontested innovation and market leader today. Our
products are likely to be inside the attractive screens supplied by
the makers of the leading brand name consumer electronics around
the world – a fact we’re proud of.
Effect pigments from Merck satisfy a desire for beauty, attractiveness
and distinctiveness. They are used in cosmetics, imparting
a high-end fi nish to product packaging and making special effect
automotive coatings possible. Their special color effects can also
be deployed for anti-counterfeiting protection.
We are also very successful with laboratory and production
chemicals, reagents and analytical products. We have a long history
in this fi eld. We stand for absolute quality and customer focus.
The applications for our products range from research laboratories
to production, from quality control tests to pharmaceutical active
ingredients, and from the pharmaceutical to the food industries.
With the acquisition of Millipore, our new global life science division
Merck Millipore offers a broad range of more than 40,000 products
and services covering the entire value chain in biopharmaceutical
research, development and production. Merck Millipore combines
our long experience in chemicals with Millipore’s leading market
position in membrane separations technology.
Consumers encounter our chemical products nearly every day.
And even if Merck isn’t on the label, we enable you to buy safe
food, admire high-sheen cars, and enjoy high-quality television
images of your favorite sports teams.
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THE FORMULA FOR A BETTER LIFE?
WE’RE WORKING ON IT – EVERY DAY!
Ambitious goals, for example better quality of life. To this end, we’re
not pursuing short-term trends, but are focusing on our strengths in
Pharmaceuticals and Chemicals, including the development of new,
innovative products and solutions as well as cooperative partnerships
with our customers. These interactions are what enable us to
transform good ideas into marketable products.
With an unconditional commitment to quality, over the decades
Merck has built a reputation as a reliable, trustworthy partner.
We’re proud when good ideas lead to new products that allow both
us and our customers to achieve sustainable success. And we’re
especially proud when our work contributes to the greater good
in the form of products and solutions for better quality of life.
Our vision is very simple and clear: Merck secures sustainable
success with innovative products and solutions that help improve
quality of life.

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THERE ARE ONLY A FEW CONSTANTS YOU CAN
RELY ON TODAY. ONE OF THEM IS CHANGE.
Size is not an end in itself – but quality certainly is. That’s why
we want to be recognized as a driver of innovation. We are experts
and the technological front-runner in specialty businesses such
as liquid crystals and biotech medicines. We’re driven by a will to
change. By constantly transforming our knowledge and experience,
we consistently develop innovations and products that have one
important thing in common: the ability to improve quality of life,
and sometimes even to save lives.
Growth isn’t a pure numbers game. It’s a basis for investments.
We want to continue unfolding and developing our entrepreneurial
potential to make the best use of the many new opportunities
the market offers. Our objective is sustainable economic success.
We are aiming for quality growth, where sales increase faster than
costs. This quality growth creates a solid basis of trust that enables
our shareholders, owners, and above all our committed employees
to rely on our core strengths today and tomorrow. And the ability
to change is one of our most important strengths.

THE TWELFTH GENERATION OF THE MERCK
FAMILY IS ALREADY SHAPING THE COMPANY –
AND THAT’S A GOOD THING.
Reliable owners: There’s nothing better than strong roots. Our
ownership structure allows us to unite two often contradictory
entrepreneurial qualities — speed and sustainability.
The businesses of the Merck Group are managed under the umbrella
of Merck KGaA, a corporation with general partners. On October 20,
1995, Merck shares began trading on the Frankfurt stock exchange.
With an issue volume of DM 2.4 billion, this represented the largest
public offering in German history at that time.
Shareholders today hold around 30 % of the total capital of Merck
KGaA, and the Merck family owns an interest of around 70 %
via E. Merck KG, the general partner. As a result, the infl uence of
the Merck family still remains although the company opened to
the capital market with the public listing. Today, it is a successful
combination of two worlds. Merck is operated as a publicly traded
company and is managed as a family-owned one.
The family remains unwavering in its commitment to “its” company.
Merck is more than a strong brand. Merck is also the “good
name” of the family of owners, which is why it has defi ned principles
of entrepreneurial leadership.
These include:
The family partners want Merck to remain an independent
company.
Merck is a pharmaceutical and a chemical company –
this deliberate form of diversifi cation helps to reduce risk.
The partners want Merck to be a company that thrives from
research and development activities.
Merck is aiming for sustainable success and ways to secure its
future, not short-term profi t maximization. That’s because the
owners, most of whom are members of the 12th generation of
partners, believe that thinking in generations is more than just
a metaphor.
The members of the Executive Board are personally liable general
partners. And those with personal liability don’t follow risky,
short-term trends: Instead, they’re automatically driven to focus
on the company’s long-term success.
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WE’RE ON THE RIGHT PATH.
BUT WE STILL HAVE A LONG WAY TO GO.
The Merck Way means taking responsibility, setting quality standards,
and continuing to actively shape the future with new and big
ideas. We’ve been resolutely pursuing this path together with our
customers, business associates and employees since 1668. To this
very day, working in close cooperation with customers, placing
trust in each other, and living shared values have made our unique
success story possible. And this success story continues. On the
preceding pages we have already presented our corporate philosophy
and business model.
Taken together, all these elements and aspects are what makes
Merck unique. We call it the Merck Way. It’s about the creative
power of people and scientifi c curiosity, coupled with the desire
and the will to improve life. It will continue to lead us into an
exciting and successful future. And if we were to use a universally
understandable phrase to summarize the guiding principle that is
fueling our success – that phrase would be:
MERCK. LIVE A BETTER LIFE.

MERCK. The Merck Way
Published September 2010
by Merck KGaA, Corporate Communications,
Frankfurter Straße 250, D-64293 Darmstadt
Phone: +49 6151-72 0
Fax: +49 6151-72 5577
E-Mail: corpcom@merck.de
Internet: www.merck.de
Photographer: Robert Wilson, www.robertjwilson.com
Concept and design: Nissen Carstensen GmbH & Co. KG, www.nissen-carstensen.com
Lithos: data-graphis GmbH, www.data-graphis.de
Printing: ColorDruck Leimen GmbH, www.colordruck.com
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