Merck Forms Follow-On Biologics Business; Emphasizes Emerging Markets

Whitehouse Station (Dec. 9, 2008)-At its annual business briefing held last week, Merck & Co. outlined its short- and long-term strategy for growth. Its strategy is focused on increased penetration in emerging markets, the establishment of a business for developing follow-on biologics or biosimilars, and a new commercial model for product life-cycle management.

"Next year will continue to be a period of fundamental transformation that establishes Merck as a different competitor for the next decade,” said Merck Chairman, President and Chief Executive Officer Richard T. Clark, in a company press release.  “We look to emerge leaner and more responsive to our customers' needs and with a pipeline that offers significant potential, thanks to the scientific innovation that will continue to be the hallmark of our company.  This new Merck will be built for the new era that our industry has entered, and it will be built for long-term success,” said Mr. Clark.

Key initiatives include regional business development from emerging markets and a strong push into the market for follow-on biologics. Merck says it is on track to achieve a goal of  $2 billion in emerging-market sales by 2010. In addition, the company says it is making  investments in key emerging markets, including China and India, with the goal of attaining a leadership position in those markets over the long term.  Merck is also creating a new division, Merck BioVentures, which is designed to leverage its position in glyco-engineering technology for both follow-on and novel biologics. Merck gained a position in glycol-engineering through its acquisition of GlycoFi in 2006.

“Merck BioVentures is uniquely positioned for success as a result of the humanized GlycoFi yeast platform which has the potential to provide us with a competitive advantage at a time when the patents on many marketed biologic therapeutics are set to expire," said Peter Kim, executive vice president and president of Merck Research Laboratories, in a company release.

Merck's first follow-on biologic program, MK-2578 for anemia, is in clinical development, and the company plans to launch MK-2578 in 2012.  In addition, the company says it anticipates having at least five follow-on biologic candidates in late-stage development by 2012.

New commercial model
Kenneth C. Frazier, executive vice president and president, global human health, emphasized Merck’s commitment to life-cycle management for its established products and the use of new commercial models.  The strategy involves marketing technologies to complement a new, more customer-centered approach, and moves away from the traditional frequency-based sales and marketing approach. The model also seeks to  create efficiencies by eliminating redundancies in core functions and across the sales organization. He pointed to the success of a pilot that tested the company's new customized approach to serving medical professionals in the United States.

"We believe that the pilot demonstrates our ability to maintain business performance and build trust and value with a more efficient approach, and we are on track to fully implement this model early in 2009 throughout the US," Frazier said. "In addition, outside of the United States, we are also undertaking significant changes and will continue implementing innovative models.  In Europe and Japan, where Merck is already implementing new models, the company is growing faster than the market, and is positioned for further growth." He said that Merck has a goal of being one of the top five companies by market share in targeted emerging markets.

Focus on the pipeline
Merck also provide an update on its pipeline. The company has 47 active clinical programs in its major research franchises: bone, respiratory, immunology and endocrine; cardiovascular; diabetes and obesity; infectious diseases; neuroscience; oncology and vaccines. Merck's pipeline includes nine candidates in Phase III, 15 in Phase II and 23 in Phase I. 

In 2009, the company anticipates filling three new drug applications for the following: MK-0974, telcagepant, an investigational compound for treating migraines; MK-7418, rolofylline, an investigational compound for treating acute heart failure; and MK-0653C, ezetimibe combined with atorvastatin, an investigational medication for treating dyslipidemia, which is being developed by the Merck-Schering Plough joint venture.