Global pharma industry is facing stiff challenges due to (1) dwindling research pipelines and (2) patent expiry of top selling drugs over the next few years. US-based Merck & Co on Monday said it is acquiring Schering Plough for $41.1 bn in a cash-and-stock deal to create a $42-bn drug major. The deal comes just six weeks after Pfizer Inc gobbled up Wyeth for a record $68 bn. The acquisition gives Merck full rights to cholesterol pills Zetia and Vytorin and experimental treatments for blood clots, asthma and schizophrenia.
Implications in India
According to the MD and sector expert of ChrysCapital—Sanjiv Kaul, the impact of the deal will be limited in India as both companies have limited presence in the industry. The Merck MSD-Fulford India (Schering-Plough owns 54% of Fulford) combine will have annual sales revenue of Rs 200-250 crore in sales and it will be ranked among the top 50 companies in India with a combined work force of 1,200 employees. Fulford is a listed company and it is possible that Merck MSD may have to make an open offer to the former’s shareholders. When contacted, the spokeswoman for Merck’s Indian operations said: ”At this time, it is premature to discuss any specific plans with respect to the local market.”
Some pharma analysts believe that an open offer is not mandatory. “Both Merck and Schering Plough are US-based companies. The product range of Merck India and Fulford do not overlap. Merck MSD’s current market range in India covers its cardiovascular, vaccines, metabolics and critical care segments, while Fulford has strong presence in the dermatology segment. Fulford clocked sales of Rs 187 crore in 2008. Merck MSD’s sales figures in India are not available as it’s not listed. The firm had launched operations in India in 2005 and pharma analysts say its Inian revenues are less than Rs 50 crore.
In the end, industry will be left with a few big players,” said Mr Kaul. Merck chairman and CEO Richard T Clark said, “The combined company will benefit from a formidable research and development pipeline, a significantly broader portfolio of medicines and an expanded presence in key international markets, particularly in highgrowth emerging markets.”
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