Merck & Co. is reorganizing its main pharmaceutical business in a bid to better prepare for a patent “cliff” threatening a large chunk of its future revenue.
The big drugmaker on Monday said it’s splitting in two the “Human Health” organization that involves its branded pharmaceutical products and vaccines. One part of that division will be a standalone, cancer-focused unit. The other will be a separate “specialty, pharma and infectious disease” unit.
According to Merck, the new oncology division will be led by Jannie Oosthuizen, who’s been overseeing the company’s U.S. human health unit. Brian Foard, who’s been running the specialty care business at Sanofi, has been tapped as the president of Merck’s own specialty division. Both will report directly to Merck CEO Robert Davis.
Merck is currently preparing to lose exclusivity for its biggest moneymaker, the cancer immunotherapy Keytruda. That drug accounted for nearly half of the company’s $65 billion in sales last year, and will lose patent protection in the U.S. in 2028. But Merck has been adamant it will rebound and eventually grow sales to $70 billion annually next decade.
That optimism is the result of groundwork Merck has been laying for years. The company used a combination of dealmaking and internal research to put together what it referred to in its latest earnings report as the “broadest and widest pipeline” it’s had in a long time. Among those therapies are a cholesterol-lowering pill and an antibody-drug conjugate for cancer that could both soon get to market, as well as important medications for flu and inflammatory bowel disease inherited through multibillion-dollar buyouts.
In its Monday statement, Merck noted how it’s currently conducting about 80 Phase 3 trials and expects more than 20 new “growth drivers” to emerge over the next several years. Nearly all of them have “blockbuster potential,” the company asserted.
The new structure Merck is adopting is meant to help aid with those coming launches. In the company’s statement, Davis said the rearrangement is an example of Merck “sharpening our focus” and “creating long-term value for our stakeholders.”
Merck’s shares have gained about 33% over the last year or so amid a broader recovery in the biopharmaceutical sector.
