GEORGE FREY AP Business Writer FRANKFURT (AP) — German drug and chemical maker Merck KGaA saw net income fall 28 percent in the third quarter despite higher sales, as it spent more on product development and took a one-time charge related to its 2007 acquisition of Serono. Sales grew at its pharmaceutical business, with cancer drug Erbitux up 33 percent, while its chemicals business was recovering, the company said Monday. Merck, based in Darmstadt, said net income of euro144 million ($216 million) compared with euro200 million ($300 million) in the July-September period of 2008. Revenue rose nearly 3 percent to euro1.94 billion from euro1.9 billion in 2008. The company confirmed its sales outlook within its previously forecast range, saying it should see the Merck Serono drug division's revenue rise 6 percent for 2009 and consumer health care revenue rise 5 percent. Meanwhile, the liquid crystals division's revenue is expected to rise 20 percent, compared with the 20 percent to 30 percent decline the company had previously forecast. Liquid crystals are used in computer and television screens. The company said the performance chemicals and life-science chemicals divisions' revenue would remain unchanged. "The third-quarter figures are showing improvement compared to the first half of 2009," Karl-Ludwig Kley, Merck's chief executive said in the company's report. "Even in our chemical businesses, which were substantially impacted by the economic crisis, we see a clear trend toward recovery. We now can say with confidence that Merck will deliver what it promised earlier in the year," Kley said. Shares fell 3 percent to euro68 in Frankfurt morning trade. "We rate Merck 'market perform' with a price target of euro71," Bernstein analysts wrote in a morning note. "... However ... We are probably more negative than consensus on the outlook for Merck's liquid crystal business." Research and development costs climbed by 17 percent to euro333 million in the third quarter. Merck said its pharmaceuticals and chemicals divisions were developing new products such as a drug to treat multiple sclerosis and a fast and simple water purity test. The company said the largest share of the R&D increase was due to the number of late-stage clinical trials. Meanwhile, the company also booked expenses during the third quarter like a euro147 million charge related to the 2007 acquisition of Serono, and a euro52 million provision for currency risk and potential losses in Venezuela. In terms of business units, Merck's Serono division reported a near 6 percent rise in revenue for the quarter to euro1.3 billion. Revenue from the cancer drug Erbitux jumped 33 percent. The consumer health care division saw revenue rise 11 percent to euro123 million for the quarter. The liquid crystals division's revenue was euro211 million, 12 percent lower than in the year-ago quarter. However, Merck said it sees rising sales of LCD televisions in especially in China and the U.S. Revenue at the performance and life science chemicals division was down about 2 percent at euro297 million. The company said pigment production and revenue, for example, was returning back to "normal" levels. Merck of Germany is unrelated to the U.S. company of the same name.