Merck

The new Merck: Developing markets, vaccines and biologics are focus for growth

The new Merck was launched in November 2009, following its reverse takeover of Schering-Plough for $41 billion.

The new industry giant will challenge Pfizer in terms of sales and sheer scale, and the merger has been interpreted as Merck's response to increasingly tough trading conditions.  As with all 'mega-mergers' the union must produce improved profitablity and R&D productivity in the long term, and not simply help to cut costs.

In March, analysts Datamonitor forecast that the merger should return Merck to positive sales growth and provide a raft of new pipeline and marketed products.

Datamonitor calculated that a standalone Merck's prescription pharma portfolio would see sales decline for 2008-13 at a compound annual growth rate (CAGR) of -0.3%.

Generic competition against drugs like Singulair, Cozaar/Hyzaar, Fosamax and Zocor would be largely to blame for this decline.

Despite new launches such as Isentress and Janumet, expiring products would have left Merck's 2013 sales $435 million below those of 2008.

Schering-Plough, by contrast, has a 2008-13 sales CAGR of 4.5% and is the fastest-growing big US player.

Thus the merger means Merck's 2008-13 sales CAGR will rise to +1.7%, concluded Datamonitor.

Led by chief executive Richard Clark, the new Merck wants to focus on growth in developing markets, vaccines and biologics.

Its five divisions are global human health (GHH), consumer health care, animal health, Merck Research Laboratories (MRL) and Merck Manufacturing.

2009 performance

The merger helped boost the company’s full year sales by 13% to $27.4 billion.

The gain associated with the acquisition of Schering-Plough was $7.53 billion. There was an additional increase in revenue of $400 million from the sale of animal healthcare Merial.
 
Merck’s biggest seller Singulair (montelukast sodium), indicated for treatment of asthma, saw sales of $4.7 billion, an increase of 7%.
 
Full year worldwide sales for anti-hypertensives Cozaar and Hyzaar were $3.6 billion, remaining static from 2008. Both are susceptible to major loses in 2010-2011 due to steep generic cliffs.
 
Merck is continuing its Merger Restructuring Programme that it estimates will make ongoing savings of $3.5 billion by 2012. As part of the first phase, Merck expects to reduce its total 100,000 strong workforce by approximately 15% across all areas of the combined company worldwide by the end of 2012.
 
The company also plans to cut approximately 2,500 vacant positions. The reductions will primarily come from cutting duplicated positions in sales, administrative and headquarters organisations, as well as from consolidating some manufacturing facilities and R&D operations.