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TAG overview


Macro­economic and Sector-Specific Environment

Based on the World Economic Outlook published by the International Monetary Fund (IMF) on January 26, 2021, the recession in the second quarter of 2020 was followed by a recovery in the global economy from the second half of 2020 onward. However, there is considerable variation between individual countries when it comes to the pace of the continued recovery. Key factors include the comprehensive rollout of vaccines as quickly as possible, the extent to which those vaccines are effective against Covid-19 mutations, and effective containment measures. Government fiscal policy measures could also have a further positive impact. Yet, the IMF does not expect the global economic activity to return to the level forecast prior to the outbreak of the Covid-19 pandemic by 2022.

According to the latest forecasts by the IMF, global gross domestic product (GDP) fell by -3.5% in 2020 (previous year: +2.8%). Activity resumed more quickly after the lockdowns than had been initially anticipated, especially in the advanced economies, although there are general differences in terms of the impact of the pandemic in the individual countries. While economic output in the industrialized nations fell by -4.9% (previous year: +1.6%), the emerging markets and developing economies saw a less pronounced downturn of -2.4% (previous year: +3.6%). GDP in the United States declined by -3.4% (previous year: +2.2%). The eurozone was hit harder by the pandemic, with GDP decreasing by -7.2% (previous year: +1.3%). The downturn in GDP in the emerging economies of Asia was relatively minor at -1.1% (previous year: +5.4%). While the Indian economy contracted by -8.0% (previous year: +4.2%), the rapid recovery of the Chinese economy to record growth of 2.3% (previous year: 6.0%) meant that the overall figure decreased only slightly. As part of the advanced economies, Japan reported a downturn of -5.1% (previous year: +0.3%).

As in the previous year, our organic sales growth was significantly higher than the IMF’s global growth expectations at 6.0%. With the exception of the Middle East and Africa, all regions contributed to this growth in the reporting year. North America accounted for the highest share of Group-wide growth at 42.4%, followed by Europe with 33.4%, Asia-Pacific with 17.8%, and Latin America with 8.2%. The organic downturn in the Middle East and Africa region was reflected in a slightly negative contribution to Group growth of -1.8%.

The overall growth was driven in particular by the Life Science business sector, with Healthcare also making a positive contribution to organic growth. Performance Materials was down on the previous year in terms of organic sales. This illustrates the fact that the growth in the North America and Europe regions is primarily attributable to the Life Science business sector. In the Asia-Pacific region, the growth contributions from the Life Science and Healthcare business sectors were more than enough to offset the downturn in the Performance Materials business sector.

Development in 2020 and 2019



Change 20201


Change 2019






Global pharmaceutical market





Market for multiple sclerosis therapies2





Market for type 2 diabetes therapies2





Market for fertility treatment2





Market for the treatment of colorectal cancer3










Life Science





Market for laboratory products4





Share of biopharmaceuticals in the global pharmaceutical market5





Monoclonal antibody (mAb) pipeline6










Performance Materials





Growth of wafer area for semiconductor chips





Growth of liquid crystal display surface area7





Global sales of cosmetics and care products





Global number of produced light vehicles






Predicted development. Final development rates for 2020 were not available for all industries when this report was prepared.


Growth rates based on market data in local currency, translated at a constant euro exchange rate. The IQVIA market data on the growth of indications are based on current figures, including the third quarter of 2020. Annual growth based on the values for the past 12 months. The type 2 diabetes market excludes the United States, since this market is insignificant to Merck KGaA, Darmstadt, Germany.


Growth rates based on market data stated in US dollars. Market data from EvaluatePharma on the growth of indications are based on published company reports and are subject to exchange rate fluctuations.


The Global Market for Laboratory Products, December 2020, Frost & Sullivan. Acceleration attributed to Covid related tailwinds (Covid-19 testing, research, and vaccines).


Growth rates based on market data in local currency, translated at a constant euro exchange rate. IQVIA market data on the growth of indications are based on current figures, including the third quarter of 2020. Annual growth based on the values for the past 12 months.


EvaluatePharma. Deceleration since 2019 is due to global lockdowns in response to Covid-19 causing a pause in manufacturing and clinical trials. Volatility is expected to persist in the near term as routine healthcare use resumes with lower clinic capacities.


Growth of display area is a pure volume indicator, which is counteracted by a negative price momentum.


In a study from September 2020, the pharmaceutical market research firm IQVIA forecast growth in the global pharmaceutical market of 3.0% in 2020 (previous year: 6.2%). Due to Covid-19, the pharmaceutical market is therefore expected to see lower growth in the reporting year than was originally anticipated at the start of the year. The reduced growth forecast is due to people making fewer visits to physicians, and hence slower growth in the number of new patients. This particularly affected the areas of gastroenterology, oncology, and cardiology, while endocrinology and dermatology were least affected. In particular, the lockdowns and the rules on social distancing have made it harder for patients to access hospitals, leading to reduced demand for these products.

The developments at a regional level are extremely heterogeneous. Latin America reported significant growth of 10.6% (previous year: 11.8%). The EMEA (Europe, Middle East, and Africa) region also enjoyed solid if slower year-on-year growth of 4.4% (previous year: 6.8%). In North America, growth also slowed compared with the previous year, amounting to 3.9% (previous year: 5.3%). In absolute terms, the pharmaceutical market in the United States remains the biggest and most important market by some distance. Market growth in the Asia-Pacific region (excluding China) stagnated at 0.5% (previous year: 5.0%). Individual positive developments, particularly in India, were offset by a sharp downturn in Japan. Despite the downturn of -2.9% in China, which was largely due to the impact of the Covid-19 pandemic, the continued development of the local healthcare system and the shift from spending on generic products as a result of price regulation (e.g. volume-based procurement) in favor of innovative treatments mean that China will remain an attractive market, and we are forecasting a return to substantially positive growth from 2021 onward.

Besides the growth of the pharmaceutical sector as a whole, the development of the biopharmaceutical market is particularly relevant to our business. According to IQVIA, the market volume for biological pharmaceuticals totaled approximately € 316 billion in 2020 (previous year: approximately € 288 billion), thus continuing the recent trend of a continuous increase in market share. These products accounted for 32.3% of the global pharmaceutical market in 2020 (previous year: 30.5%). The most important market for biological pharmaceuticals remains the United States, with a 61.0% share of the global market volume.

The developments in the therapeutic areas of relevance to the Group saw differing trends in the reporting year. The global market for type 2 diabetes excluding the United States followed the positive trend of previous years, achieving growth of 12.4% in 2020 (previous year: 12.8%). The therapeutic area of infertility saw a downturn of -2.5% in the reporting year (previous year: +6.9%). Following a strong upturn in recent years, the market for colorectal cancer also declined by -10.5% in 2020 (previous year: +5.7%). The growth trend in the market for multiple sclerosis patients remains at previous year’s level with 0.9% (previous year: 1.0%).

Life Science

Our Life Science business sector is a leading global supplier of products, tools and services for research laboratories, pharma and biotech production, and industrial and testing laboratories. While Covid-19 is having a pronounced impact on many sectors and the global economy as a whole, the life science market has proven itself to be robust.

According to the market research firm Frost & Sullivan, the market for laboratory products, which is relevant to our Research Solutions and Applied Solutions business units, grew 6.1% in 2020 (previous year: +4.4%). This was primarily due to a surge in demand for products related to Covid-19 testing, research, and vaccination. These developments served to more than offset the temporary reduction in laboratory activity during the lockdowns that were imposed in response to the Covid-19 pandemic. The impact of the closures was most pronounced in the second quarter of 2020, when just 12.2% of the laboratories surveyed by the market research firm Bioinformatics were fully operational. Lab activity picked up steadily throughout the fall and winter (39% of laboratories were fully operational in the fourth quarter of 2020) and is expected to return to pre-pandemic levels in 2021. Market development for 2021 – 2022 is expected to continue growing between 4% and 6%.

In the pharma and biotech production market in which our Process Solutions business unit is active, demand is driven by the development and manufacture of therapeutics and vaccines. According to IQVIA, the end market for biopharmaceuticals grew by 9.9% in 2020 (previous year: 13.9%) to € 316 billion (or 32.3% of the global pharmaceutical market). Monoclonal antibodies, currently the leading area of biopharmaceuticals, continued on their growth path in 2020 with positive development of 10.8% (previous year: 13.3%). The slowdown compared with the previous year is due to the global lockdowns in response to Covid-19, which led to production and clinical trials being suspended. Volatility is expected to persist in the near term as routine healthcare applications start to resume, albeit with reduced hospital capacities. The rapid development of treatment methods and vaccines in connection with Covid-19 is giving the pharma and biotech production a considerable boost. As of January 21, 2021, a total of 1,083 programs for the development and production of billions of vaccine doses were in progress.

Performance Materials

The semiconductor industry is the most important market for our business with materials for the production of integrated circuits (Semiconductor Solutions). In particular, the growth in demand for semiconductor materials depends on the wafer area produced for semiconductors. The silicon wafers required as raw materials are used as an indicator to estimate the demand for semiconductor materials. According to the global industry association, the area of delivered silicon wafers increased by approximately 2.4% in 2020 (previous year: -6.9%). Although the global economy fell into a severe recession in the first half of 2020 as a result of the global lockdowns to protect public health in response to Covid-19, demand for semiconductor chips remained robust. This was due to the strict social distancing rules, which triggered a significant wave of IT spending on the part of companies, governments, and individuals. With entire production facilities, offices, schools, and companies closing their doors temporarily, working from home, home schooling, online shopping and online entertainment suddenly became considerably more important as a means of enabling economic activity to resume, at least in part. To this end, demand for electronics – and hence semiconductor chips – remained robust and even intensified as the digitalization of the world picked up pace. McKinsey estimates that the global digital transformation has accelerated by around five years as a result of the Covid-19 lockdowns. As a consequence, the production capacities of semiconductor manufacturers remained largely constant with sustained high utilization rates throughout 2020, meaning that the development of the semiconductor and electronics industry was entirely decoupled from the wider GDP trend. As social distancing rules look set to remain in place or be intensified in order to prevent a renewed rise in new infections from the fourth quarter of 2020 onward, demand for laptops/PCs, servers, communication infrastructure, storage capacity, and similar products will be high, especially in 2021.

With its Liquid Crystals business, we are the leading producer of liquid crystal mixtures for the display industry. According to surveys by market researchers at Omdia (formerly IHS), growth in the display surface area was negative at around -2.0% in 2020 (previous year: +4.2%). This was primarily due to the low level of demand for televisions and mobile phones as a result of the weaker consumer demand in connection with Covid-19, as well as the trade dispute between the United States and China. Liquid crystals will continue to play a key role in the display industry in the future. OLED technology, for which we are also one of the leading material suppliers, is becoming increasingly important in high-end display applications.

The markets for automotive coatings and cosmetics are crucial to our Surface Solutions business. Global automobile production fell by -16.7% in 2020 (previous year: -5.6%). Factory closures in response to Covid-19, supply chain interruptions and a slump in consumer demand are the main reasons for this development. In China, one of the most important markets, the recovery has already progressed well, whereas in Europe and North America the markets are not yet on the pre-Covid-19 level.

The market for cosmetics and care products fell by -2.5% overall in 2020 (previous year: +2.0%). Our relevant market of color cosmetics declined by as much as -8.4% in 2020 due to Covid-19-related effects such as lockdowns and social distancing. The trade conflicts between the United States and China and uncertainties in connection with Brexit also served to slow market growth further.