Anyone who follows the drug business knows that pharma companies big and not-so-much are aiming for growth in emerging markets. But Merck KGaA has a twist on that strategy: The German company sees the U.S. as one of them.
Merck lost its U.S. unit to expropriation during World War I. Now, that unit--Merck & Co. ($MRK)--is firmly ensconced in the ranks of Big Pharma. Merck KGaA hasn't been so fortunate; while it has a solid presence in the E.U. and decent penetration in various global markets, its U.S. drug sales are less than half those in Europe. In fact, its U.S. sales are about a half-billion euros less than those in emerging markets, at about €1.33 billion and €1.88 billion, respectively.
Pharma chief Stefan Oschmann sees that shortfall as an opportunity, Bloomberg reports. "For us, the U.S. is an emerging market," he told the news service. "We have huge growth potential in the U.S."
Right now, Oschmann acknowledges, Merck's U.S. product portfolio is "weak." Its top-earning drugs, the cancer treatment Erbitux and multiple sclerosis treatment Rebif, are sold via alliances with Big Pharma companies. Now, the company wants to sell its own drugs, and that means introducing new products.
That will be a long haul. Merck's pipeline is suffering from a series of big failures, and as Bloomberg notes, its next big candidate won't be up for approval till 2016. Meanwhile, the company is in the midst of a major restructuring, with job cuts and site closures on the agenda. It has already cut loose hundreds of workers in Geneva, where its once-independent biotech unit Serono grew up, and vacated Serono's former headquarters there. And it's slashing jobs at home in Germany, with 1,100 positions slated for the ax; in all, the company aims to cut about €385 million from its annual expenses by 2018.
The cuts are improving quarterly numbers, giving Merck some leeway on restocking its pipeline. Oschmann mentioned more investment in early-stage R&D and more licensing activity, plus bolt-on acquisitions. When and if it has its own products to roll out in the U.S., it will be willing and able to drive sales on its own. "We're not weak in terms of our organization there," he said.
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