By Ludwig Burger

FRANKFURT (Reuters) -Germany’s Merck KGaA on Thursday predicted 2023 earnings would slip, warning of a decline at its electronic chemicals unit and citing a drop in COVID-related demand for its lab supplies from drug and vaccine makers.

For 2023 earnings before interest, taxes, depreciation and amortisation (EBITDA), adjusted for one-offs, the company “assumes a moderate decline to an about stable development”, before any currency swings, it said in a statement.

Negative foreign exchange effects would likely be an additional drag of between 1% and 4%, according to the maker of pharmaceuticals, lab equipment and specialty chemicals.

“Overall, Merck assumes that 2023 will be a challenging year. The slowing semiconductor market, decreasing Covid-19-related demand and persistently high inflation will contribute to this,” it said in a statement.

Merck joins pharmaceutical companies such as Pfizer (NYSE:), Moderna (NASDAQ:), Gilead (NASDAQ:) and Roche, who are facing a plunge in pandemic-related product sales after making billions from them over the past two years.

Merck Chief Executive Belen Garijo upheld the German group’s goal of 25 billion euros ($26.6 billion) in sales in by 2025, up from 22.2 billion last year, citing new product development and a diversified business.

Analysts have said that two important trial results, expected at the end of the year, could boost longer-term earnings prospects at Merck’s drug business.

One is on a next-generation multiple sclerosis drug candidate, where Merck is ahead in a development race with Novartis, Sanofi (NASDAQ:) and Roche, and the other on an experimental head and neck cancer drug known as xevinapant.

($1 = 0.9401 euros)