Generally, we strive to minimize and control our legal risks. To this end, we have taken the necessary precautions to identify threats and defend our rights where necessary. Nevertheless, we are still exposed to risks from litigations or legal proceedings. In particular, these include risks in the areas of product liability, competition and antitrust law, pharmaceutical law, patent law, trademark law, data protection law, tax law, and environmental protection. As a research-based company, we have a valuable portfolio of industrial property rights, patents, and brands that could become the target of attacks and infringements. The outcome of future proceedings or those currently pending is difficult to foresee. For instance, we are currently involved in litigation with Merck & Co. Inc., Rahway, New Jersey (USA) (outside the United States and Canada: MSD), against whom we have filed lawsuits in various countries. This company has also sued us in the United States for trademark infringement, among other things.
Due to long statutes of limitations or in some cases the absence thereof, it is not possible to rule out that we will face third-party claims arising from the same issue despite the conclusion of legal proceedings. Court or official rulings or settlements that we consider as “highly improbable” to “more likely than not” could lead to expenses with a significant to critical impact on our business and earnings. Despite extensive precautionary measures, non-compliance with laws and regulations leading to related consequences can never be completely excluded. In our opinion, the lawsuits described below constitute the most significant legal risks. This should not be seen as an exhaustive list of all legal disputes currently ongoing
Risks in connection with a settlement agreement concluded by the divested Generics group
Citalopram: In connection with the generics business that was divested in 2007, Merck was accused of breaching EU antitrust law through agreements entered into by its former subsidiary Generics (UK) Ltd., United Kingdom, relating to the antidepressant Citalopram patented by Lundbeck A/S, Denmark. The European Commission imposed a fine in June 2013. Appeals against the decision were unsuccessful. Following the payment of the fine of around € 18 million, British health authorities brought legal claims for damages against Merck and other companies in a mid-triple-digit million-euro amount in fiscal 2023 due to alleged infringements of competition law. In addition, there were further claimants from various other jurisdictions who have not yet quantified their claims. In response to the latest developments in the proceedings, the provision was adjusted as of December 31, 2023, and is now recognized in a high single-digit million-euro amount. A cash outflow within the next twelve months is considered possible.
Product liability risks
Operating in the chemical and pharmaceutical industries, we are exposed to product liability risks. Product liability risks can lead to considerable claims for damages, costs to avert damages, and potentially loss of reputation. In view of this, we have taken out standard liability insurance to mitigate such risks. However, it could be that the insurance coverage available is insufficient for individual cases. Although the occurrence of product liability claims in excess of the existing insurance coverage is considered improbable, individual cases could still have a critical effect.