Merck's key internal changes 'have paid off'Merck's key internal changes 'have paid off'
By Christopher Bowe in New York
Published: June 14 2004 22:01
Ray Gilmartin, chairman and chief executive of Merck, said key internal changes, often ignored by Wall Street, have paid off - giving it 19 drug licensing deals so far this year and boosting its ability to fill its pipeline.
The US drugmaker has made licensing drugs from other groups an aggressive priority.
Mr Gilmartin said Merck had to view potential licensing opportunities - agreeing with another group to help develop and sell a new drug - as a better balance between the scientific and financial parts of the company.
Though Merck is intensely proud of its own laboratory expertise, he said it must look beyond its own walls for new drugs. Merck's licensing and alliance deals have grown from 10 in 1999 to 47 last year.
"We've been a lot easier to do business with," Mr Gilmartin told the FT in an interview. "We were not well organised internally to deal with it."
Mr Gilmartin defended Merck's pipeline of potential new drugs. His comments come as some analysts became concerned after two high-profile, late-stage experimental drugs - one for depression, another for diabetes - failed late last year.
Critics accused Merck's research of being arrogant, and executives for not seeking a merger deal that could bring growth.
In addition, Merck's sales and profit growth is under pressure - particularly as its biggest drug Zocor, for cholesterol, with $5bn in annual sales, faces patent expiry in two years.
But Timothy Anderson, analyst at Prudential, said yesterday Merck's pipeline was far from bare, and expectations might be too low. "Merck's R&D engine often gets described as being broken and unproductive, yet there could be more phase III drug launches [seven] over the next two years than any other drug company we cover."
Mr Gilmartin said his biggest job was to find new drugs for Merck, not to buy other companies.