M&A, Pharma

Emboldened by recent R&D successes, Merck KGaA looks at selling off $1B-plus consumer division

Encouraged by two notable drug approvals after a long Siberian winter of failures and setbacks, Merck KGaA has very publicly posted a ‘for sale’ sign in front of its consumer health division.

Backed by a variety of brands, the German Merck says it reaped more than a billion dollars in revenue from the division. But following the OK on the checkpoint cancer drug Bavencio as well as cladribine — its MS laggard now approved in Europe — Merck KGaA is far more whipped up by the potential of its pipeline, looking to drive home a new rep for clinical success which they find far more exciting than the consumer work.

The consumer group recorded sales of €860 million in 2016.

It’s all about the competition for resources for the German Merck, which has to prioritize what it can focus on.

Belén Garijo

“We expect increasing internal constraints to fund the business to reach the required scale. Fully anticipating this, we are preparing strategic options,” said Belén Garijo, CEO of healthcare at Merck KGaA.

Those options include a full or partial sale as well as partnerships, the company says, in a clear attempt to polish and display its wares in an active drug bourse.

Merck KGaA has had to deal with numerous attempts to reorganize and overcome some embarrassing earlier failures. It tried, twice, with the cancer vaccine Stimuvax. And cladribine was slapped back by regulators unhappy with the Phase III program that was originally designed for it.

Pfizer, though, helped change more than a few minds with its record $850 million upfront to partner on Bavencio. That deal also included $2 billion in milestones. And now the company appears ready to let the dead bury the dead and move ahead on R&D.

Image: German Merck plant in Meyzieu, France Shutterstock

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