Merck KGaA rolls out big plans for expansion in Africa

Merck KGaA CEO Karl-Ludwig Kley

Merck KGaA has been turning to emerging markets to deliver a much-needed boost to business, targeting China and Latin America as areas ripe for growth. Now the German pharma is turning its sails toward Africa, planning to expand its presence on the continent over the next 5 years as part of its comeback story.

Merck KGaA wants to double its workforce and sales in Africa by 2020, drawing on the region's "entrepreneurial spirit and innovation power" to drive growth, the company said in a statement. The Darmstadt, Germany-based company has about 400 employees in 10 African countries and will increase this number to about 1,000. The drugmaker's sales on the continent will climb to €500 million ($534 million) by 2020 from €200 million in 2015, with business in South Africa and surrounding countries such as Kenya, Angola and Mozambique pitching in, the company said.

While the sales number is not large, there is potential for significant growth on the continent. Africa's population is growing by leaps and bounds and its middle class continues to expand, CEO Karl Ludwig-Kley said in a statement. Merck KGaA plans to cash in on this trend, offering more OTC drugs and focusing on conditions such as diabetes. "With our portfolio of healthcare and life science products, we are perfectly positioned to help address the needs of the people of Africa," Kley said.

Merck KGaA is already making moves in the region. The company recently sank €5 million ($5.34 million) into a plant in a remote Algerian village to make diabetes and high blood pressure meds and teamed up with an Algerian lab, Novapharm, to flesh out its technology.

Stefan Oschmann

But Merck KGaA is also setting its sights on other emerging markets to boost revenues. Uta Kemmerich-Keil, CEO of the company's consumer health unit, said in September that Merck would continue to expand in Latin America to grow its OTC business. And China is already "growing strongly and is delivering a substantial contribution" to the company, Kley said. The company last year kicked off work on a new plant in Shanghai that will be its second-largest facility in the world.

Still, emerging markets are only one part of Merck KGaA's rebound strategy under its newly appointed CEO, Stefan Oschmann, who will take over for Kley in April 2016. Merck is revving up immuno-oncology R&D to protect against rivals for its top-seller, Rebif. The MS drug faces competition from meds including Biogen's ($BIIB) Tecfidera and Novartis' ($NVS) Gilenya.

And in September, the company said that it would try again with experimental MS drug cladribine despite regulatory and clinical setbacks, which could give it more padding as it contends with oral rivals to Rebif.

- here's Merck KGaA's statement (PDF)

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