Edited from: “Combined company positioned for sustainable growth through scientific innovation and a stronger, more diversified product portfolio”, company website
In August 2009, Schering-Plough approved the merger with Merck & Co. It is believed that by combining the two companies it will create a “strong global health care leader”. Under the name “Merck”, the combined company will be headed by Merck chairman, president and chief executive officer, Richard Clark and have headquarters in Whitehouse Station, New Jersey, US.
“We are creating a strong, global healthcare leader built for sustainable growth and success,” says Clark.
“The combined company will benefit from a formidable R&D pipeline, a significantly broader portfolio of medicines and an expanded presence in key international markets, particularly in high-growth emerging markets. The efficiencies we gain will allow us to invest in strategic opportunities, while creating meaningful value for shareholders,” Clark continues.
Fred Hassan, chairman and chief executive officer of Schering-Plough, says:
“Over the last six years, Schering-Plough colleagues have transformed our company into a strong competitor in the global pharmaceutical industry. We have built a strong, diverse business and a robust pipeline that offers hope to patients who are waiting for new medicines. I am proud of what we have accomplished,”
“We are joining forces with Merck, our long-term partner in our cholesterol joint venture, to create a dynamic new leader in the pharmaceutical industry. By harnessing the strengths of both companies, the combined entity will be well-positioned to further deliver on our shared goal of discovering new therapies for patients to help them live healthier, happier lives,” Hassan continues.
Strategic points of the merger
Complementary product portfolios and pipelines focused on key therapeutic areas
The combination will broaden Merck’s portfolio of medicines, by leveraging the combined company’s expanded product offerings. Merck expects to benefit from additional revenue growth opportunities.
For example, the combined company will have expanded opportunities for life-cycle management through the introduction of potential new combinations and formulations of existing products.
In addition, Merck and Schering-Plough together have high-potential early- ,mid- and late-stage pipeline candidates. The transaction will double the number of potential medicines Merck has in Phase III development, bringing the total to 18.
The combined company will have a more diverse portfolio across important therapeutic areas, including cardiovascular, respiratory, oncology, neuroscience, infectious disease, immunology, women’s health and other areas.
In cardiovascular, the transaction reinforces Merck’s 50-year commitment to the cardiovascular therapeutic area. The consolidation of the cholesterol drugs Zetia (ezetimibe) and Vytorin (ezetimibe/simvastatin) into Merck's cardiovascular portfolio will simplify the combined company’s approach to the cardiovascular market and create new opportunities to leverage the cholesterol franchise through new medicine combinations.
In respiratory, the combination with Schering-Plough expands Merck’s strong respiratory franchise with multiple complementary products, including those for the treatment of asthma and allergic rhinitis.
In oncology, Schering-Plough’s current oncology products will enable Merck to expand its presence in this area and provide the necessary foundation to take advantage of the combined company’s pipeline.
In neuroscience, Schering-Plough’s R&D capabilities in this area complement Merck’s ongoing neuroscience development efforts, which include both migraine and sleep product candidates.
In addition to the two companies’ currently market neuroscience products, Schering-Plough brings several late-stage candidates, including Saphris (asenapine), an antipsychotic drug for the treatment of schizophrenia and bipolar disorder, and Bridion (suggamadex), a novel anesthesia reversal agent.
In infectious disease, Schering-Plough and Merck have complementary efforts in infectious disease. The combined company will leverage the scientific and commercial strengths of both Schering-Plough and Merck in the treatment of human immunodeficiency virus (HIV) and hepatitis C virus (HCV). Schering-Plough's portfolio of HCV candidates, including boceprevir, and is said to be well-aligned with Merck's programmes in this critical disease area.
In immunology, Schering-Plough brings distribution rights outside the US to Remicade (infliximab), its well-established biologic product for inflammatory/immunological diseases, and Simponi (golimumab), which was filed in Europe in March 2008, as well as a number of other products in development.
In women’s health, Merck expects to benefit from a solid portfolio of women’s health products and a broad range of contraceptive options and biologic and small molecule fertility drugs, which will allow it to strengthen relationships with women’s healthcare providers.
In other areas, Schering-Plough brings to the combined company a Animal Health business with strength in vaccines and small molecules, as well as consumer health brands such as Claritin, Coppertone, Dr. Scholl’s and Miralax.
Merck and Schering-Plough both state that they have a proven track record of breakthrough research and scientific discovery. The combined company is believed to have a product pipeline with greater depth and breadth, and “numerous promising drug” candidates.
With greater resources, the combined company will have the financial flexibility to invest in these candidates as well as external R&D opportunities and to build on the strong legacies of both companies.
Financial Benefits of the Transaction
Strong financial profile
The combined 2008 revenues of the two companies totalled $47bn. Post-transaction, it is expected that the combined company will have a strong balance sheet with a cash and investments balance of approximately $8bn. Merck believes it will maintain its current credit ratings. In addition, the combined company’s broad product portfolio is expected to generate robust cash flow.
Substantial Cost Savings
Merck expects to achieve substantial cost savings of approximately $3.5bn annually beyond 2011. These cost savings are expected to come from all areas across the combined company and from the full integration of the Merck/Schering-Plough Pharmaceuticals cholesterol joint venture. These cost savings are in addition to the previously announced ongoing cost reduction initiatives at both companies.
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Financial highlights: Schering Plough, year ended 31 December
|
|
2008 |
2007 |
2006 |
2005 |
2004 |
|
Sales ($ m) |
18,502 |
12,690 |
10,594 |
9,508 |
8,272 |
|
Net Profit ($ m) |
1,795 |
-1,473 |
1,143 |
269 |
-947 |
|
Total Assets ($ m) |
-- |
29,156 |
16,071 |
15,469 |
15,911 |
|
Diluted earnings per share ($) |
1.01 |
1.04 |
0.71 |
0.12 |
-0.67 |
|
Number of Employees |
55,000 |
50,000 |
32,000 |
32,600 |
-- |
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