Dive Brief:
- Divestiture and partnering initiatives were hot topics during Darmstadt, Germany-based Merck KGaA’s full-year 2016 earnings call on Mar. 9.
- Company CEO Stefan Oschmann confirmed his company is seeking a buyer for its biosimilars unit, suggesting progress on the company's pipeline has made biosimilar development less attractive.
- For the year, German Merck reported a 17% increase in 2016 net sales year over year, although overall healthcare sales fell and revenue from the multiple sclerosis drug Rebif (interferon beta-1a) ticked down.
Dive Insight:
Speaking on the earnings call, Oschmann said his company is in advanced discussions to sell off its biosimilars unit, which is headlined by a copycat version of AbbVie's top-selling Humira (adalimumab).
In addition, Merck KGaA has had an alliance with the Indian giant Dr. Reddy's to develop biosimilars for multiple cancer drugs.
According to the firm's annual report, Merck KGaA expects a divestment to close sometime in 2017.
During the earnings call, Oschmann said the planned sale should be seen in the context of portfolio prioritization. "In a way [Merck KGaA] getting into biosimilars was a plan B," Oschmann said.
Merck began its work on biosimilars at a time when its pipeline looked much less attractive, he explained further. "The fact that we are now focusing on our innovative pipeline, we ourselves interpret this as a sign of confidence."
As more blockbuster biologics lose patent protection, biosimilars have become a hot area of development. But Merck KGaA would face strong competition from already established players such as Novartis' Sandoz unit, Amgen, Pfizer and Samsung Bioepis.
Divesting the unit would also save some cash, as the company has been investing in Phase 3 work for its Humira biosimilar.
As for other partnering, Oschmann also noted the company's willingness to partner on its BTK inhibitors, one currently in testing for hematological malignancies and the other in rheumatoid arthritis.
"We are willing to entertain partnering discussions, but we will also feel in a position of strength to command and commercialize some of the compounds ourselves," Oschmann said.
Merck KGaA recently inked a $230 million deal with Vertex Pharmaceuticals to secure rights to four cancer drug candidates. The focus in the nearer term, though, is the company's checkpoint inhibitor avelumab, which it is co-developing with Pfizer.