Merck & Co. announced Wednesday that it plans to spin-off products from its women's health, legacy brands and biosimilars businesses into a new independent company, with the transaction expected to be completed in the first half of 2021. Merck noted that it will retain its portfolio of key growth drivers in oncology, including Keytruda (pembrolizumab) and Lynparza (olaparib), as well as vaccines, hospital and animal health.
"Over the past several years, we have purposefully shifted the focus of our efforts and resources to our best opportunities for growth," remarked CEO Kenneth Frazier. "Given the opportunities now in front of us, we believe we can benefit from even greater focus," the executive added, with Merck suggesting that the split will allow both companies to "achieve faster growth and greater value for all stakeholders."
According to Merck, the spin-off will lead to operating efficiencies in excess of $1.5 billion by 2024, due to "simplified operating models." The drugmaker indicated that the spin-off will reduce its human health manufacturing footprint by approximately 25% and the number of human health products it produces and markets by around 50%.
Merck said it expects to receive between $8 billion and $9 billion through a special tax-free dividend from the new company, which will be headquartered in New Jersey, with staff numbers of approximately 10,000 to 11,000. The drugmaker noted that growth at the new firm will be driven by the Nexplanon (etonogestrel implant) franchise and its contraceptive and fertility businesses, while its biosimilars portfolio, which is partnered with Samsung Bioepis, will be led by Renflexis (infliximab-abda), Brenzys (etanercept) and Ontruzant (trastuzumab-dttb). The new company will also have a number of diversified brands across the dermatology, pain, respiratory and cardiovascular segments, including Zetia (ezetimibe) and Vytorin (ezetimibe/simvastatin).
Merck indicated that the products to be spun-off are expected to generate revenue of approximately $6.5 billion in 2020, with forecasts of low-single-digit growth. The new company will be headed by Kevin Ali, who most recently led Merck's enterprise portfolio strategy initiative, while Carrie Cox, who formerly served as chairman of Array BioPharma, will be named as chairman of the new firm.
Separately on Wednesday, Merck announced that fourth-quarter sales climbed 8% year-over-year to $11.9 billion, with profit jumping 29% to $2.4 billion.
To read more Top Story articles, click here.