Merck KGaA investment hits its growth areas, allergy meds and emerging markets

A slimmed-down Merck KGaA shook up its management structure in September to focus on emerging markets, biosimilars and its allergy business. Today, it announced a €40 million investment that moves it along on two of those three.

Allergopharma, now a wholly owned Merck ($MRK) unit, will expand its allergy drug production for China and other emerging markets with a $55 million plant it will build near Hamburg, Germany. Allergopharma, which primarily manufactures hypoallergenic, high-dose products (allergoids) taken preseasonally or perennially, will make meds for conditions like hay fever or allergic asthma. The 6,000-square-meter (64,600-square-foot) facility, which is being built at the current Allergopharma complex in Reinbek, is slated to be complete in 2016.

"We want to fully exploit the potential of our business, whether in emerging markets or in rapidly growing and highly promising areas such as the global allergy market," said Stefan Oschmann, who was promoted in September to a new position overseeing prescription and consumer drugs, biosimilars and allergy medications, which previously were segregated under separate management.

The Darmstadt, Germany-based company says the allergy drug market is growing between 5% and 10% a year because more people are developing allergies and more people are taking medications to fight them. It expects growth to be particularly strong in emerging markets.

The expansion is part of an ongoing restructuring at Merck Serono, which has laid off hundreds of workers and shut down sites in a global overhaul of R&D and manufacturing. It also emphasizes the importance it has placed on its pharma operations, as sales have softened in other parts of company, which is privately held and controlled by members of the Merck family.

This is the second new plant the company has announced in the past month. In November, the drugmaker said that Merck Serono would build an €80 million ($107.67 million) plant in Shanghai to produce the diabetes drugs Glucophage, Concor and Euthyrox as well as treatments for heart and thyroid conditions. The China plant will be Merck Serono's second largest in the world.

Merck Serono is also the unit handling its biosimilars program. Last year it struck a deal to develop biosimilar antibody treatments with India's Dr. Reddy's Laboratories. With a host of blockbuster biotech products losing their patents, drugmakers have been piling into the business, although acceptance of biosimilars has been slow in Europe, where they are already being sold.

- here's the announcement