With a decrease in R&D productivity, increase in the cost of late-phase drug development and a greater competition for licensing opportunities, the stakes are high for the major players in the pharmaceutical industry.
Like the majority of industries in today’s economy, the pharmaceutical industry faces a range of business challenges. The number of new drug approvals in 2007 was the lowest in almost a quarter-century and 2008 was only slightly higher. A continuing increase in patent expirations would result in a projected US$ 50 billion loss in revenue by 2011.
With a decrease in R&D productivity, increase in the cost of late-phase drug development and a greater competition for licensing opportunities, the stakes are high for the major players in the pharmaceutical industry. While Merck is optimistic—three new product FDA filings are anticipated this year with nine Phase III programmes continuing (including one product being developed by the Merck / Schering Plough joint venture)—we know that finding a game-winning strategy that is innovative from both scientific and business perspective is critical to our future success. We believe that the best way to address these challenges is through redefining our approach to drug discovery and development. Global collaborations are a key component of this new strategy.
The benefits of partnering are not new to Merck. For years we have recognised that biotechnology companies, smaller drug companies and universities are generating promising scientific leads. We have reached out to researchers all over the world in our quest for novel science. Our regional network of worldwide licensing scientific experts are currently meeting with companies around the world to look at their discoveries—from early stage to late stage (Phase III)—that have the potential to address unmet medical needs.
In the last five years, Merck has entered into approximately 250 significant new alliances. In 2008, approximately 65 per cent of our revenue was derived from our alliance products and patents. GARDASIL™, a cervical cancer vaccine that helps guard against four types of HPV, is just one example of what happens when we combine our innovation and expertise with that of our partners.
External Basic Research – Embracing partnerships
A key element of Merck’s global research strategy is External Basic Research (EBR), a newly created research team that was formed last year to focus explicitly on external sources of science and innovation. EBR’s mission is to develop and implement a strategy to expand the scope and size of Merck’s early pipeline with science from multiple sources. The group has already developed an impressive portfolio of external partnerships and is delivering compounds for the Merck pipeline. EBR is an integral part of the basic research team within Merck Research Laboratories (MRL) and is aligned with MRL franchise strategies and pipeline priorities.
Headed by Dr. Catherine Strader, EBR comprises a team of senior and accomplished Merck scientists who are focussed on external science. Together they are developing close long-term strategic relationships with Merck’s collaborators. Each day, EBR scientists work with our partners to address strategic and tactical issues and move the collaborations towards our shared goals.
Through EBR, our partners are linked to Merck’s strong internal science base and have access to all appropriate MRL resources across all therapeutic and technology areas. The EBR team applies Merck’s industry-leading drug development expertise to ensure that drug candidates are IND-ready as quickly and carefully as possible. It is this scientific leadership that we expect will deliver 25 per cent of Merck’s early pipeline from external partnerships within the next three to five years.
From validated targets, new technologies and biomarkers to product candidates for the early pipeline, EBR’s current collaborations span all stages of drug discovery and early development. Building a balanced portfolio of partnerships is a key part of the EBR strategy, as well as bringing in external expertise from our academic, biotech and contract collaborations in order to achieve the best results for each programme. Our partners benefit through access to scientific synergies, increased opportunities to collaborate and financial rewards for creativity and innovation. In turn, Merck is strengthening its pipeline, using a flexible scientific base and rapid access to emerging science.
A global footprint
The External Basic Research group recognises that outstanding science comes from sources worldwide. They manage partnerships in more than 20 countries—eight of those countries are in Asia.
Merck has a history of close working relationships with our Asian partners and has great respect for the state-of-the-art chemistry, manufacturing and R&D infrastructure available there. We have worked with WuXi AppTec and other contract partners to accelerate our chemistry programmes efficiently and cost- effectively, further enhancing Merck’s long-term competitive position among the industry leaders in drug discovery.
Another type of innovative deal we have entered into in Asia is the early stage risk-sharing partnership. Merck has signed agreements with four separate companies headquartered in India, an emerging market recognised for its research capabilities, to share the risks and the potential rewards of drug development. Advinus is working with us to develop clinically validated drug candidates for metabolic disorders. Based on selected oncology targets provided by Merck, our partner Piramal Life Sciences, is conducting a drug discovery programme through proof-of-concept in oncology. In the antibiotic and anti-fungal area, Ranbaxy is working with us to focus on two target programmes with the ability to expand. And Orchid, the most recent of the four partnerships, is working with us to develop novel agents for treatment of bacterial and fungal infections.
What we want most for our partners and potential partners to know about Merck is that we are dedicated in finding the best science—wherever it is. Through combining our strengths and sharing our successes, Merck is focussed on integrating innovative external science with our innovative internal science and together delivering a pipeline that meets unmet medical needs for patients worldwide.