Merck KGaA targets specific diseases in specific countries as it scouts for buyouts

Merck KGaA went through a serious downsizing after its key multiple sclerosis drug candidate failed two years ago, slashing a couple of thousand jobs and closing its Swiss R&D operation and some plants. But having rebounded faster than it expected, the German drugmaker is making some serious noise about being a more significant force. Ahead of reporting earnings in March, its execs are talking about plans to build its sales in places like Japan while buying up some assets to jump-start its flagging R&D operations.

Belén Garijo--Courtesy of Merck KgaA

Belén Garijo, who heads the company's prescription drug unit, told Bloomberg that it sees a big upside by carefully targeting drugs it has for specific conditions in particular countries. "We're rightly prioritizing our focus on medications with the best benefit to patients," Garijo told the news service. "Bringing the right focus is actually an obsession."

Take its cancer drug Erbitux, approved in 2003 and one of the last drugs the company got approved. It should do well in Asia, Garijo said, and particularly in Japan for head and neck cancer since smoking rates are high. In China, the drugmaker is thinking infertility drugs, a business it was rumored to want to sell in 2010. With China easing its one-child rule, he says a drug like Gonal-F should be the ticket to bigger sales.

The company said last November it would spend €80 million ($107.67 million) to build a new manufacturing plant in Shanghai to push its agenda there. Its Allergopharma unit will build a €40 million ($55 million) plant in Germany with a focus on making products for China. Merck Serono is also focusing on growth in the Middle East. It has partnered with an Abu Dhabi-based manufacturer, Neopharma, to turn out branded drugs for the region. The first drug to emerge will be Euthyrox (levothyroxine), a thyroid drug, later this year, with Glucophage following in 2014.

While Garijo was talking up the potential of existing products, CEO Karl-Ludwig Kley was out talking about spending billions to boost the company's pipeline. "We can easily invest a high single-digit billion amount, without endangering our good rating," Kley told Germany's Handelsblatt, according to a report from Reuters.

As FierceBiotech points out, the drugmaker could use some new candidates since its setback from the failure of its once-high-profile MS therapy. Stimuvax, a cancer vaccine, also came up short in Phase III, although Merck will test it in a subgroup of patients. Garijo told Bloomberg his company is also developing a "super Erbitux" from a product it licensed from Symphogen.

With its cost-cutting efforts paying off, the drugmaker is feeling good about its future. It reports earnings March 6, and last November the Darmstadt-based company upped its forecast, projecting earnings (before interest, taxes, depreciation and amortization) of €3.2 billion to €3.25 billion, or up to $4.37 billion. Previously, it had forecast €3.1 billion to €3.2 billion.

- read the Bloomberg story
- get more from Reuters
- here's FierceBiotech's take

Special Report: Top 10 Drugmakers in Emerging Markets - Merck KGaA