Merck KGaA

Merck KGaA's share price peaked in early 2022, then suffered a prolonged drawdown driven mainly by post‑pandemic normalization in Life Science and a cyclical downturn in Electronics, before stabilizing in 2024–2025 and trading recently at 128.15. Over five years the narrative shifted from high‑growth beneficiary of Covid and semiconductor cycles to a more measured defensive compounder with cyclical headwinds, but with intact long‑term structural growth drivers in biotech and chips.

2019–2020: Pre‑Covid and Pandemic Shock

In 2019, Merck KGaA was positioned as a diversified science and technology group across Healthcare, Life Science, and Electronics (then Performance Materials), with a focus on de‑levering after prior acquisitions and integrating its electronics materials portfolio. The stock was seen largely as a defensive DAX component with stable cash flows and moderate growth, not a high‑beta cyclical.

In early 2020, Covid‑19 created an initial market‑wide selloff that also hit Merck, but Life Science quickly benefited from surging demand for bioprocessing and lab supplies used in vaccine and therapeutics development. As pandemic demand ramped, investors increasingly framed Merck as a structural beneficiary of biopharma R&D and manufacturing, and the stock began to re‑rate as a quality growth compounder rather than just a defensive pharma name.

2021: Capital Markets Day and "Big 3" Growth Story

In September 2021, management laid out an ambitious plan to lift group sales to around €25 billion by 2025, targeting >6% average organic growth, with roughly 80% of incremental sales from three "Big 3" engines: Process Solutions (Life Science), new Healthcare products, and Semiconductor Solutions (Electronics). The Electronics unit launched its "Level Up" growth program, raising its organic growth ambition to 3–6% per year, with Semiconductor Solutions expected to contribute about 80% of that segment's growth.

This strategy, combined with strong pandemic‑boosted results in bioprocessing and robust semiconductor materials demand, drove the stock into a pronounced uptrend into late 2021 and early 2022, culminating in a clear peak in early 2022. Investor perception during this phase was that Merck had transformed into a multi‑year high‑quality growth platform, with Life Science and Electronics both seen as levered to powerful secular trends in biologics and chip miniaturization.

Early 2022–Mid‑2023: Peak and Downtrend After Pandemic and Chip Boom

Around early 2022, Merck's share price reached a visible high as investors priced in sustained elevated growth from Covid‑related bioprocess demand and a tight semiconductor cycle. From mid‑2022, the stock began a persistent downward trend, ultimately falling more than 40% from that peak as macro uncertainty and sector‑specific headwinds emerged.

Two forces dominated the narrative:

• Electronics: weakening demand and delayed capex in the chip industry hit the Semiconductor Solutions business, undermining the earlier "Level Up" optimism.
• Life Science: pandemic‑related demand normalized and rising costs squeezed margins, leading investors to question how much of the Covid uplift was sustainable.

As these issues became apparent, the market narrative shifted from "secular growth winner" to "de‑rating quality compounder facing cyclical payback," and the stock underperformed a strongly recovering DAX, which gained over 79% since 2020 while Merck was only about 6% up over that period. Technically, the chart moved from a clear prior uptrend into a multi‑quarter downtrend with lower highs and lower lows, punctuated by failed bounce attempts as guidance and sentiment reset.

2024: Difficult Year and Deep Underperformance

By 2024, Merck experienced a particularly difficult stock‑market year, with the share price declining about 31%, significantly lagging the broader index. The main drivers were weakening demand in the Electronics division, especially in semiconductor materials, and rising costs plus margin pressure in Life Science, which kept earnings momentum soft despite a still‑solid fundamental position.

Investor perception hardened into a more cautious stance: Merck was seen as a structurally attractive but temporarily impaired compounder whose near‑term earnings were hostage to a weak chip cycle and bioprocess digestion. On the chart, this took the form of an extended downtrend from the 2022 high, with 2024 marked by further downside and attempts to base that repeatedly failed, creating the bulk of the >40% peak‑to‑trough drawdown.

2025–Early 2026: Stabilization, Investment Cycle, and Re‑Emerging Growth

Heading into 2025, commentary highlighted that analysts expected a recovery supported by rising biotech investment, an anticipated resurgence in the chip industry, and a more predictable pharma regulatory backdrop. Merck's long‑term growth drivers remained intact, with its biotech division and late‑stage oncology and immunology pipeline seen as key contributors, with several potential drugs in advanced clinical stages.

In May 2025, Merck announced a strategic collaboration with a French biotech start‑up on RNA‑based therapies and a €3 billion multi‑year investment program to expand production capacity for chip chemicals and biotech products in Germany and the US, reinforcing the capital‑deployment leg of the "Big 3" strategy. The proposed 2024 dividend of €2.20 per share and updated ESG goals, including climate‑neutrality by 2040, underlined a commitment to shareholder returns and sustainability.

Through 2025 the operational narrative increasingly blended cyclical recovery with structural investment: Electronics was set up to benefit from a chip upturn, while Life Science leaned into AI‑driven drug development and lab automation. Investor sentiment gradually shifted toward "early recovery in a high‑quality structural growth name," with the stock moving from a steep downtrend into a more sideways‑to‑stabilizing technical phase, including base‑building and tests of prior support and resistance as expectations normalized.

By early 2026, with the share at 128.15, the five‑year picture is one of a name that ran hard into a 2022 peak on pandemic and semiconductor tailwinds, then endured a deep de‑rating and cyclical downturn, and now trades as a defensive science‑and‑technology compounder leveraged to an anticipated biotech and chip upcycle, supported by substantial capacity investments and a clearer long‑term strategic roadmap.