Is Merck starting to shed its diversified brands?

Merck building

Merck & Co. ($MRK) is reported to have put a block of old products up for sale in India, reigniting speculation it is moving ahead with plans to divest its legacy drug business. 

The Economic Times has suggested Merck's MSD India unit is trying to find buyers for a block of older, primary care products to focus on a few higher-growth products such as its diabetes drug Januvia and cancer therapy Keytruda, as well as its vaccine portfolio.

MSD India and Merck's corporate headquarters in the U.S. did not respond to requests for comment on the plans. However, if confirmed, the sale suggests the group may be moving ahead with a plan to hive off its older products--at least in some markets.

Rumors that Merck wants to sell its off-patent drugs--what it calls "diversified brands"--first emerged in 2014, around the same time that the company also decided to jettison its consumer health business. At the time, analysts suggested a block sale of the entire division could bring in around $15 billion.

The consumer health unit was sold to Bayer later that year for $14.2 billion, with the proceeds helping to fuel a string of pipeline-expanding deals. Since then, investors have repeatedly raised the matter of a diversified brands sale in Merck's quarterly results briefings.

Last month, Merck CEO Kenneth Frazier fended off questions about its plans for the division once again, saying: "As we look across our entire business we continue to challenge ourselves to determine whether specific assets including--diversified brands--would have more value outside Merck or as part of our business." 

"We are really focused on prioritization," he added.

This year has already seen Merck dissolve a joint venture with India's Sun Pharmaceutical Industries to develop and market branded generic drugs for emerging markets, while in 2015 it bowed out of a similar JV with China's Simcere Pharmaceutical.  

Other recent streamlining decisions have included the termination of a vaccines partnership with Sanofi ($SNY) in Europe, the sale of its ophthalmology business to Santen, and an exit from a longstanding gastrointestinal partnership with AstraZeneca ($AZN). 

That ties in with a current trend among Big Pharma companies to sell and trade businesses that lie outside their core focus, something which has also been evident in the Indian market. The ET notes that last year Belgian drugmaker UCB sold off a batch of old products to Dr. Reddy's Laboratories ($RDY), adding that AZ has also slimmed down its branded generic presence there.

- read the article from the Economic Times

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