This paper narrows the performance gap between small, specialized models and significantly larger general-purpose models through domain adaptation via continual pre-training and merging. We address the scarcity of specialized non-English data by constructing a high-quality German medical corpus (FineMed-de) from FineWeb2. This corpus is used to continually pre-train and merge three well-known LLMs (ranging from
7B to
24B parameters), creating the DeFineMed model family. A comprehensive evaluation confirms that specialization dramatically enhances
7B model performance on German medical benchmarks. Furthermore, the pairwise win-rate analysis of the Qwen2.5-based models demonstrates an approximately
3.5-fold increase in the win-rate against the much larger Mistral-Small-24B-Instruct through domain adaptation. This evidence positions specialized
7B models as a competitive, resource-efficient solution for complex medical instruction-following tasks. While model merging successfully restores instruction-following abilities, a subsequent failure mode analysis reveals inherent trade-offs, including the introduction of language mixing and increased verbosity, highlighting the need for more targeted fine-tuning in future work. This research provides a robust, compliant methodology for developing specialized LLMs, serving as the foundation for practical use in German-speaking healthcare contexts.