Merck KGaA overhauls pharma management to boost growth

Merck KGaA is rejigging its pharmaceuticals management. Hoping some integration will amp up growth in the drugs business, the Darmstadt, Germany-based company has promoted pharma chief Stefan Oschmann to a new job overseeing prescription and consumer drugs, biosimilars and allergy fighters, previously segregated under separate management.

The move underscores Merck's ambitions for its allergy business, Allergopharma, now a wholly owned unit, and for biosimilars development. It's also 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. And it shows how important pharma is to the German company, whose liquid crystals business has been faltering.

"We have reached a critical juncture with accelerated profit growth at our biopharmaceutical division and a successful refocusing of our consumer health division," Oschmann said in a statement. "[W]ith today's management and organizational changes we will be able to fully leverage the growth potential in our pharmaceutical businesses" by focusing on emerging markets, allergy, and biosimilars, he said.

Merck Serono inked a deal last year to develop biosimilar antibody treatments with India's Dr. Reddy's Laboratories. With a host of blockbuster biotech products either off patent or soon to be--plus a new regulatory pathway for biosims in the U.S.--drugmakers have been piling into the business. But the going has proven to be tougher than expected, especially as the reality of costly Phase III trials has sunk in. Companies already steeped in biotech expertise--such as Merck Serono--will likely have an advantage, but R&D costs will be high regardless.

As for the allergy business, Merck Serono snapped up the share of Allergopharma it didn't already own in December 2012 and replaced longtime CEO Joachim Ganzer with Uta Kemmerich-Keil, who had been Merck KGaA's point person on M&A--and led the buyout of Swiss-based Serono. At the time, Kemmerich-Keil said Merck was planning to "invest significantly" in developing allergy products and strengthening the unit's business beyond Europe.

Meanwhile, Oschmann has tagged the U.S. as an emerging market, at least in Merck's case. The company's U.S. sales amounted to €1.33 billion last year, less than the €1.88 billion racked up in emerging markets as usually defined. "We have huge growth potential in the U.S.," Oschmann told Bloomberg in July. But he acknowledged that the company has to come up with some new drugs first. Not so in China, for one; the company hooked up with Bristol-Myers Squibb ($BMY) earlier this year to jointly market diabetes products there.

To replace Oschmann at the head of its biopharmaceuticals division, Merck Serono, the company turned to its COO, Belén Garijo. Thierry Hulot, who's been running the biosimilars business, will take over as head of global manufacturing and supply, and Dr. Annalisa Jenkins becomes head of global R&D.

- see the release from Merck

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