Investor day prep at Merck includes a new strategy to pick up the pace on M&A — report
Merck’s recent deals to buy up two bolt-on biotechs — Tilos and Peloton — weren’t an aberration. Instead, both acquisitions mark a new strategy to beef up its dominant cancer drug operations centered on Keytruda while looking to address growing concerns that too many of its eggs are in the one I/O basket for their PD-1 program. And Merck is going after more small- and mid-sized buyouts to calm those fears.
That’s the bottom line from a new story in today’s Wall Street Journal, which quotes sources saying that the pharma giant will spell out this approach in its upcoming investors’ day on Thursday — the first in 5 years.
Analysts have been quick to cheer on Merck’s R&D chief Roger Perlmutter, whose arrival at the giant operation 6 years ago coincided with the rise of Keytruda as it began a clinical march toward its current position as the lead drug in its field. For rival Bristol-Myers Squibb, dropping into second place meant changing gears and going after Celgene. But Merck’s success led to a long, largely dormant position on the M&A front.
Merck has other drugs to boast about, including a rival to Pfizer’s bestselling Prevnar 13 that is in late-stage development on the vaccine’s side of the business. But it’s not nearly enough to satisfy analysts that Merck is positioned to survive a substantial hit in I/O, where Keytruda revenue has swelled to a remarkable $7 billion.
Behind Keytruda and Bristol-Myers Squibb’s Opdivo are 4 other approved PD-1/L1s in the US, along with a tsunami of programs in China and among other biopharmas. Both Amgen and Novartis have their own PD-1s in the pipeline, largely so they can control their own combo programs. BeiGene is fielding one that they believe has best-in-class potential. And a host of companies are turning out me-toos with remarkable consistency.
All that could commoditize Merck’s market in a short period of time.
Perlmutter was never big on bold, risky acquisitions. At Amgen, before Ken Frazier brought him back to Merck, Perlmutter was well known for selectively targeting biotechs which he openly admired for their science and leadership. Picking up the pace now may not come naturally for someone like the R&D chief, not much of a wheeler-dealer, but with decades of experience and a global BD team with uncommon reach, it shouldn’t prove impossible.