Merck & Co Pharmaceutical Company SWOT Analysis Report
Summary
- Merck & Co. accrued sales of $1.1bn in 2009 in BRIC markets equivalent to a market share of 1.8%. The company’s operations in these countries had a CAGR of 15.4% during 2005–09.
- Brazil was Merck & Co.’s largest BRIC market in 2009 with sales of $400m amounting 38.3% of the company’s sales in BRICs. The market indicated an 8.1% year-on-year decline in sales.
- The genitourinary system and the sex hormones were Merck & Co.’s largest drug class and had sales of $213m sales, 20.4% of the company’s BRIC sales in 2009. Proscar with $45m sales was the leading brand in the genitourinary drug class.
- The anti-infective Zienam was the top selling brand for Merck & Co. in the BRIC markets with sales of $84m in 2009.
- Merck & Co.’s initiative to expand its vaccines division through collaboration with the Wellcome group in India and Sinopharm in China will accelerate its growth in the emerging markets.
Company overview
Merck
& Co is a US based pharmaceutical company which was established in 1891. In
2009, it merged with Schering-Plough in a $41bn reverse agreement according to
which the combined entity retained the Merck & Co. brand. The company’s
business units include prescription products, vaccines, consumer products and
products for animal health. Table
56 gives an overview of Merck & Co.
Extract to:
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Table 56: Overview of Merck & Co.
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Headquarters
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US
|
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Global sales
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$39bn
|
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BRIC sales
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$1.1bn
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Market share (% of total global sales in BRIC)
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2.7
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Major therapeutic focus
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Genitourinary system & sex hormones
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Source: IMS Health, copyright ©, reprinted with permission
Therapeutic focus
The
genitourinary products and sex hormones drug class was the largest therapeutic
category in Merck & Co.’s BRIC operations amounting to 20.4% of sales. The
drug class delivered sales of $213m in 2009 with Proscar, Cerazette and
Mercilon being the leading brands for Merck & Co. in the category. Drugs
for cardiovascular disorders accrued sales of $188m in 2009 equal to 18% of
Merck & Co.’s BRIC sales with brands including Cozaar and Zocor leading the
segment.
Geographic focus
Merck
& Co. had sales of $400m in Brazil in 2009 which was the largest BRIC
market for Merck & Co. Genitourinary system and sex hormones was the
largest drug class for Merck & Co. in the country. China was the main
driver of Merck & Co.’s BRIC sales generating $353m in 2009. The market has
demonstrated consistently strong growth during 2005–09 as indicated by the CAGR
of 22.3% and year on year growth of 16.8%.
Table 57: Merck & Co.’s sales distribution across BRIC
countries, 2009
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Country
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Sales 2009 ($m)
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Sales growth, 2008–09 (%)
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Sales share, 2009 (%)
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CAGR, 2005–09 (%)
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Brazil
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400
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-8.1
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38.3
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8.0
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China
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353
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16.8
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33.8
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22.3
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Russia
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261
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-3.4
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24.9
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22.5
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India
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31
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-3.9
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3.0
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8.3
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Total
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1,045
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0.5
|
100.0
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15.4
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Source: IMS Health, copyright ©, reprinted with permission
Marketed focus
Table 58: Leading brands of Merck & Co. in the BRIC market,
2009
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Brands
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Sales 2009 ($m)
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Sales growth, 2008–09 (%)
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Sales share, 2009 (%)
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CAGR, 2005–09 (%)
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Zienam
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84
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3.2
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8.1
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18.2
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Singulair
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49
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16.8
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4.7
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34.1
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Proscar
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45
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11.6
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4.3
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10.5
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Aerius
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44
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8.8
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4.2
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33.1
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Cozaar
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40
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10.9
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3.8
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6.9
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Zocor
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40
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8.9
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3.8
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10.2
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Remicade
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40
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63.5
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3.8
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182.0
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Nasonex
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38
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6.0
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3.7
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35.5
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Temodal M-CO
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37
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29.4
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3.5
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63.4
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Cerazette
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31
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7.0
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3.0
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25.6
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Top 10
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448
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13.4
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42.9
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23.9
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Others
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597
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-7.4
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57.1
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10.5
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Total
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1,045
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0.5
|
100.0
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15.4
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Source: IMS Health, copyright ©, reprinted with permission
R&D
Merck
& Co.’s R&D division focuses on therapeutic areas including
cardiovascular, infectious disease, oncology, dermatology, respiratory,
immunology, diabetes and obesity, neuroscience, ophthalmology, endocrinology
and women’s health. Merck & Co. invests $4–5bn every year on research,
approximately 16% of the company’s revenues. Merck & Co. has also
integrated Schering Plough’s R&D structure into its global research
operations. As of July 2010, Merck & Co. had over 40 products in therapeutic
areas in its pipeline.
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Table 59: Merck & Co. late stage R&D pipeline
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Molecule
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Indication
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Zenhale
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Asthma
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Laropiprant/niacin/simvastin
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Atherosclerosis
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Anacetrapib
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Atherosclerosis
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HPV vaccine
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Cervical cancer
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Nomac/E2
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Contraception
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Sitagliptin/pioglitazone
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Diabetes
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Corifollitropin alfa
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Fertility
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Saflutan
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Glaucoma
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Boceprevir
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Hepatitis C
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Telcagepant
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Migraine
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Preladenant
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Parkinson’s disease
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Vorapaxar
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Thrombosis
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Source: Company reports
Growth strategy
The
BRIC markets accounted for 2.8% of Merck & Co.’s total revenue in 2009.
Merck & Co. anticipates increasing the contribution from emerging markets
to its overall revenues to 25% over the next five years. To meet this target,
the company is expanding its sales force, launching new products and
collaborating with local companies. Merck & Co. has increased its sales
force by 90% since 2007 to about 3,000 as of 1H10. Merck & Co.’s
prescription brands including Januvia (Diabetes), Nuvaring (Contraception),
Zocor and Claritin (Cardiovascular disorders) are among the top selling
products in emerging markets.
Merck
& Co. is reducing its work force worldwide but is investing in R&D in
China. Merck & Co. has also announced the construction of a new
manufacturing plant in Hangzhou, China. The new plant will package solid dosage
forms and sterile products for the Chinese market.
Partnerships and alliances
In
a bid to strengthen its position in the Chinese market Merck & Co. has
signed an agreement with Sinopharm (China National Pharmaceutical Group
Corporation) to form a joint venture for registering, manufacturing and
marketing adult and pediatric vaccines in China. Through this joint venture
Merck & Co. plans to market its vaccines and develop new vaccines using
Sinopharm’s R&D platform. Sinopharm is one of the leading state owned
pharma and healthcare products companies in China specializing both in chemical
as well as traditional Chinese medicines and vaccines.
The
Wellcome trust and Merck & Co. have formed a joint venture called MSD Wellcome
trust Hilleman Laboratories to develop affordable vaccines for patients in
low-income countries. This joint venture is the first of its kind where the two
organizations will have an equal share in funding and decision making rights.
The organizations together will invest $130m over seven years and will be based
in India. The joint venture will operate like a business but with a non-profit
model. Combining Wellcome group’s R&D and Merck & Co.’s innovative
strategy, Merck & Co. anticipates growth in the emerging markets with a
strong presence in India.
Mergers and acquisitions
Merck
& Co. acquired its rival Schering-plough for $41bn in 2009 in an attempt to
diversify its product portfolio, broaden its pipeline and add new products to
its marketed portfolio to less the impact of the patent cliff. With this
acquisition, Merck & Co. expanded its cardiovascular, respiratory and
cancer prescription product franchises, and acquired consumer health and animal
health businesses.
SWOT
Table 60: SWOT analysis – Merck & Co.
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Strengths
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Weaknesses
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Merck & Co. is the seventh largest pharmaceutical company in
the world with a focus on cardiovascular drugs, vaccines and oncology
products.
|
Merck & Co. was the first to enter the DPP-4 (dipeptidyl
peptidase-4) inhibitor class of anti-diabetics with Januvia but the class is
now crowded with other brands including Novartis’ Galvus and Bristol-Myers Squibb’s
Onglyza.
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The Schering-Plough merger enhanced Merck & Co. 's marketed
portfolio and R&D pipeline especially in the areas of immunology,
genitourinary, oncology and CNS.
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Opportunities
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Threats
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Merck & Co.’s collaborations with domestic companies in India
and China to develop vaccines for emerging markets.
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Sales erosion of Cozaar and Singulair brands due to patent
expiration and subsequent generic incursion.
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Robust late stage pipeline with drugs including boceprevir
(hepatitis C), Staphylococcus injection and vorapaxar (thrombosis).
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Merck & Co.'s human papillomavirus (HPV) Gardasil is in
controversy for causing deaths. The vaccine is suspended in India.
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New product approvals including Sycrest, Brinavess, Elonva and
Dulera.
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