Merck to Spin Off Company That Will Include Its Biosimilar Marketing in 2021

On February 5, Merck announced that it will create a new spinoff that will include its biosimilar business with Samsung Bioepis as well as its legacy pharmaceuticals (e.g., Zetia®, Vytorin®, and other widely diversified brands). In its press release, Merck emphasized that the as-yet unnamed new company will also have a strong focus on women’s health.

Merck CEO Kenneth Frazier

Merck has an agreement with Samsung Bioepis to market the latter’s infliximab biosimilar Renflexis®, trastuzumab biosimilar Ontruzant®, and its etanercept biosimilar Brenzys®, which is available outside the US only.

This new firm will take the lessons learned from its commercialization experience with Samsung Bioepis to help it expand: The Merck spinoff will “pursue opportunities to partner with biopharmaceutical innovators looking to commercialize their products by leveraging [the new company’s] scale and presence in fast-growing international markets.” Merck expects that 75% of the revenues of the spinoff will come from the global markets.

The three Merck biosimilars reached global sales of $300 million, as reported by the Wall Street Journal. Interestingly, Merck earned $411 million in 2019 from sales of Remicade in the EU (which it markets as part of an agreement with Johnson & Johnson). This is down from $582 million for the previous year. Our call to Merck regarding whether Remicade marketing will be under the new entity was not immediately returned.

According to Chairman and Chief Executive Officer, Kenneth C. Frazier, this move will allow the parent company to focus its “key pillars of oncology, vaccines, hospital. and animal health,” including its highly profitable Keytruda® cancer brand and innovative research and development. Once the new organization is created in the first half of 2021, it will be based in New Jersey.

“Over the past several years, we have purposefully shifted the focus of our efforts and resources to our best opportunities for growth.” Mr. Frazier continued, “Given the opportunities now in front of us, we believe we can benefit from even greater focus.”