Merck and Schering-Plough to merge

Written byAlla Katsnelson

| 2 min read

In yet another merger between two major pharmaceutical companies, Merck will acquire Schering-Plough for $41.1 billion, the two companies linkurl:announced;http://www.merck.com/newsroom/press_releases/corporate/2009_0309.html this morning (March 9). The deal is projected to be completed in the fourth quarter of this year. The newly formed company will keep Merck's name and its headquarters in Whitehouse Station, NJ, and Merck's CEO, Richard C. Clarke, will remain head of the combined entity. This is the third large-scale drug company merger in the works this year. In January, Pfizer acquired Wyeth in a $68 billion deal, and Roche is currently in talks to acquire biotech pioneer Genentech. How will the shrinking number of pharma companies affect biotech, for which pharma provides the most frequent exit strategy? "I think in the end this is all going to affect biotech positively," Ren Benjamin, senior biotechnology analyst at Rodman & Renshaw, told The Scientist. "These are all creative acquisitions that bolster and make gigantic powerhouses in the pharma industry, but the underlying problems" -- that is, shrinking pipelines and patent expirations -- "still remain." Such mergers will provide big drugmakers with significant cost cutting, "but at the end of the day, these pharmaceutical behemoths will still need to bolster their pipelines," he said. "And that's where I think biotech comes in to fill that void." The newest merger will result in a strengthened product pipeline in areas such as cardiovascular and respiratory disease and oncology, and should eventually yield $3.5 billion annually in cost savings, the companies said in a joint statement. Merck is also set to be hit by patent expiries of some of its top sellers in the next decade, while Schering-Plough is not -- another motivation for Merck, Richard Purkiss, a drug sector analyst at Atlantic Securities in London, told the linkurl:New York Times.;http://www.nytimes.com/2009/03/10/business/10drug.html?hp Complicating the deal, however, is the fact that one of Schering Plough's top products, the autoimmune drug Remicade, is marketed jointly with Johnson & Johnson. "J&J could come to the table and bid for Schering Plough," David Moskowitz, an analyst at Caris and Co., told linkurl:Bloomberg News.;http://www.youtube.com/watch?v=y0f3QwEsobc
**__Related stories:__***linkurl:How to save biotech;http://www.the-scientist.com/news/display/55425/
[17th February 2009]*linkurl:Sluggish economy hits biotech;http://www.the-scientist.com/blog/display/54816/
[2nd July 2008]*linkurl:Merck's fall from grace;http://www.the-scientist.com/article/display/23391/
[May 2006]

Merck and Schering-Plough to merge

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