Frankfurt With several new developments and a new, more focused research strategy, the Darmstadt-based Merck Group wants to keep its pharmaceuticals division on a long-term growth path. “We want to launch five new active ingredients on the market around the second half of the decade, which will represent the next wave of innovation in our healthcare business,” announced the new head of Merck’s health division, Peter Guenter, in an interview with Handelsblatt.
From Guenter’s point of view, all five product candidates have the potential to be the first and also one of the leading active ingredients in a new therapy class. The first two development substances, the active ingredient evobrutinib for relapsing multiple sclerosis and the cancer drug Xevinapant, he estimates, could hit the market by 2025. And for Xevinapant in particular, Merck sees potential as a best seller if it is approved.
The group of five hopefuls also includes two other potential cancer drugs and a novel substance against the autoimmune disease lupus erythematosus, which are still in the earlier phases of clinical development. Merck presented details of the projects at an analyst conference on Monday.
With an expected pharmaceutical sales of a good seven billion euros this year, the Darmstadt-based company is one of the medium-sized pharmaceutical manufacturers, and it is currently ranked 26th in the industry worldwide. The division each contributes around a third to total Merck sales and earnings. The business is currently developing solidly and is expected to grow by eight to nine percent after adjusting for currency effects.
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In the next few years, too, they want to grow faster than the market, says Guenter. Above all, increasing revenues from newer developments such as the cancer drug Bavencio and the drug Mavenclad against multiple sclerosis (MS) should contribute to this.
Drastic cleanup of the research pipeline
Regardless of this, it is important for the Darmstadt-based pharmaceutical, biotech and specialty chemicals group to open up new perspectives for its own pharmaceutical research. On the one hand, the important growth driver Mavenclad may lose its patent protection by the middle of the decade. On the other hand, several flops in product development have recently raised doubts about the long-term prospects of the division.
Investors and the Merck management gradually had to say goodbye to some high expectations, in particular to the cancer drugs Bavencio and Bintrafusp-Alfa. The active ingredient Bintrafusp, which was temporarily traded as the most promising pharmaceutical project by Merck, has now been almost completely buried after three failed studies, and a large-scale alliance with the British pharmaceutical company Glaxo-Smithkline (GSK) was recently dissolved.
Under the leadership of Guenter, who took over the management of the Merck health division at the beginning of the year as the successor to the new CEO Belén Garijo, the Darmstadt-based company quietly carried out a relatively drastic streamlining of its research pipeline. Of the 33 clinical projects that were pursued last October, only 16 remain.
The new Merck pharmaceuticals manager does not want this decimation to be understood as an indicator of a possible reduced strength in the Merck pharmaceuticals pipeline. “It doesn’t make sense to just look at the number of projects. Ultimately, it depends on the qualities and the probability of success in the clinical studies. “
As Guenter makes clear, with the reorganization, however, Merck has said goodbye to so-called platform strategies, i.e. the idea of developing individual active ingredients in a large number of areas of application (indications) at the same time. The models for such concepts are mega blockbusters such as the rheumatism drug Humira from Abbvie or the lung cancer drug Keyruda from the US group Merck & Co (which has no connection with Merck / Darmstadt). Thanks to additional approvals in numerous other indications, they are generating double-digit billions in sales.
Acquisitions are conceivable, according to the pharma boss
Merck pursued similar ambitions with its new developments Bavencio, Bintrafusp and Evobrutinib. A success could theoretically have taken the pharmaceuticals business of the Darmstadt-based group to a whole new level. But this hope has now been dashed.
Bavencio has so far only been approved against a rare form of skin cancer, as well as against bladder cancer and certain types of kidney cancer. Bintrafusp has almost completely failed. Evobrutinib will only be tested against MS, but no longer against other autoimmune diseases.
It was not least these experiences that prompted the change in strategy to a stronger focus. Guenter formulates the new line as follows: “We focus on areas in which we are leaders. In other words, we want to concentrate our research where we already have a strong position and knowledge base. These include cancers of the neck and head area and multiple sclerosis. “
Merck has the financial strength to advance its research projects and will continue to invest around a quarter of its sales in research in the future. “But we have to be selective and make sure we are making well-calculated bets. This means that we will only go into expensive phase three studies with an active ingredient if we have very good results on effectiveness from the decisive proof-of-concept studies. ”
Regardless of this, the new pharma boss is striving to widen the range of products and research to a certain extent. “Our focus is on organic growth, but of course we can also imagine expanding our development program through additional license agreements or small to medium-sized acquisitions.”
The Darmstadt-based group now also wants to widen the clinical program a little after the adjustment. He plans to start 14 new clinical studies in 2022.
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