UPDATE: Merck In Talks For China Partnership
July 27 2010 - 10:39AM
Dow Jones News
Merck & Co. (MRK) said Tuesday it was in talks with China's
Sinopharm Group Co. (SHTDF, 1099.HK) for a venture to market
vaccines and potentially Merck drugs, which would represent Merck's
first significant partnership in the huge, growing market.
Merck and other Western drug companies are rushing to grab
market share in emerging markets such as China and India. Rivals
including Pfizer Inc. (PFE) and GlaxoSmithKline PLC (GSK) believe
much of the industry's growth in coming years will be in these
countries, as expanding middle classes gain better access to health
care, and changes in lifestyle increase the prevalence of certain
chronic diseases such as diabetes.
Merck and Sinopharm announced Tuesday they signed a "statement
of mutual intent," which Merck spokesman Ian McConnell described as
a commitment to discuss possible business arrangements.
For now, the focus of the talks is on the commercialization of
certain vaccines in China, including Merck's vaccine against the
human papillomavirus, or HPV, which is designed to protect against
cervical cancer and other diseases. The vaccine, sold under the
brand Gardasil in Western markets, isn't yet approved in China,
McConnell said.
Sinopharm's operations include China's largest
bio-pharmaceutical manufacturing company and largest pharmaceutical
distribution company, according to a press release. Merck has
existing, in-house operations in China.
The companies also will discuss the potential for promoting and
marketing Merck's pharmaceutical products in China.
Other companies have taken steps to expand share in emerging
markets. Abbott Laboratories (ABT) recently agreed to acquire the
generic-drugs unit of India's Piramal Healthcare Ltd. for $3.7
billion. Eli Lilly & Co. (LLY) has doubled its sales force in
China and its venture-capital arm is investing $100 million largely
in Chinese life-sciences companies.
Separately, Merck and Sanofi-Aventis SA (SNY, SAN.FR) said
Tuesday they will name Raul E. Kohan as chief executive for their
proposed animal-health joint venture.
Kohan is now president of Intervet/Schering-Plough, Merck's
animal-health business, which will be wrapped together with
Sanofi's similar Merial business to create the new Merial-Intervet
animal-health joint venture.
Sanofi and Merck said in March they would combine their two
units, creating the world's biggest animal-health business, with
more than $5 billion of revenue and roughly 29% of the global
animal-health market. The venture is expected to get regulatory
clearance by early next year.
Kohan joined Schering-Plough, which was bought by Merck last
fall, in 1984 and has since held positions of increasing
responsibility. He "brings a wealth of animal health and global
pharmaceutical industry experience" to the position, said Merck
Chairman and Chief Executive Richard T. Clark.
Jose Barella, executive chairman of Merial, will continue in his
role until the deal closes. The companies didn't say what his
position would be after that.
Merck shares fell 2 cents to $35.25 in recent trading. Sanofi's
American depositary shares fell 36 cents to $29.46.
-Peter Loftus, Dow Jones Newswires; +1-215-656-8289;
peter.loftus@dowjones.com
(Nathan Becker contributed to this article)
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