Merck, with large presence in NC, unveils plans to create spin-off

Merck, a major New Jersey-based pharma company with a large presence in the Triangle, has unveiled plans to spin-off products from its Women’s Health, trusted Legacy Brands, and Biosimilars businesses into a new, yet-to-be-named, independent, publicly traded company.

The company says the spinoff will allow both management teams to drive increased responsiveness to the particular needs of their patients and customers through “focused and fit-for-purpose” operating models.

“Over the past several years, we have purposefully shifted the focus of our efforts and resources to our best opportunities for growth,” said Kenneth C. Frazier, chairman and chief executive officer, Merck, in a statement. “This has led to the exceptional results we are reporting today. Given the opportunities now in front of us, we believe we can benefit from even greater focus. At the same time, we believe additional resources and focus will help ensure that our expansive portfolio, including many trusted and medically important products, reach their full potential.

“We have therefore made the decision to separate into two growth companies: Merck and NewCo. By optimizing our human health portfolio, Merck can move closer to its aspiration of being the premier research-intensive biopharmaceutical company, while also properly prioritizing a set of products at NewCo that are important to public health and the patients who rely on them, and which present real opportunities for growth.”

Spinoff create two independent companies

The transaction allows Merck to retain its portfolio of key growth drivers in oncology, vaccines, hospital and animal health. Products included KEYTRUDA (pembrolizumab), Lynparza (olaparib), Lenvima (lenvatinib mesylate), GARDASIL (Human Papillomavirus Vaccine, Recombinant), BRIDION (sugammadex), ZERBAXA (ceftolozane and tazobactam), and BRAVECTO (fluralaner), as well as its leading diabetes business and other key products, Merck will continue to benefit from broad commercial scale and remains committed to ensuring continued access to its innovative medicines across the globe.

The new spinoff, meanwhile, will reduce Merck’s human health manufacturing footprint by approximately 25 percent and the number of human health products it manufactures and markets by approximately 50 percent.

It will focus on sustainable growth in women’s health led by the growing and patent-protected NEXPLANON (etonogestrel implant) franchise and fueled by its leading contraceptive and fertility businesses. Its porfolio will also include RENFLEXIS (infliximab-abda) and BRENZYS (etanercept) in immunology and ONTRUZANT (trastuzumab-dttb) in oncology, and is well-positioned to be a partner in the commercialization of biosimilars worldwide. NewCo will have a large portfolio of highly profitable and trusted brands consisting of dermatology, pain, respiratory, select cardiovascular products including ZETIA (ezetimibe) and VYTORIN (ezetimibe/simvastatin), as well as the rest of Merck’s Diversified Brands, with strong cash flows that will support investments in future growth opportunities.

The new company will have a global footprint with approximately 75 percent of sales generated from ex-U.S. markets, significant scale and geographic reach, world-class commercial capabilities, and approximately 10,000 to 11,000 employees. NewCo is expected to be headquartered in New Jersey.

Investment in NC

Merck has had a presence in the region since it first opened its manufacturing center in Durham back in 2004. Later, it added a plant in Wilson. Last year, it announced plan to expand its facilities here in the region, investing around $650 million and creating more than 400 jobs over the next five years in Durham and Wilson.

The project will be funded, in part, by a Job Development Investment Grant, which was approved by the state’s Economic Investment Committee yesterday. Over the 12 years, it’s expected to grow the state’s economy by $3.1 billion.

According to reports, the company has already invested a total of $1.6 billion invested in Durham.