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2015 set to be a transitional year for Merck KGaA's health unit

Weak pharma sales reported by the firm today

Merck KGaA HQ Darmstadt 

The importance of Merck KGaA's immuno-oncology deal with Pfizer was evident as the company reported weak pharma sales this morning.

Favourable exchange rates flattered the Merck Serono healthcare unit, helping to transform near-flat organic growth into a 7% increase to €1.7bn ($1.9bn) as oral competitors continued to drag down sales of its injectable multiple sclerosis (MS) drug Rebif (interferon beta-1a).

Rebif sales fell nearly 16% to €430m as the MS market continues to switch towards oral therapies such as Biogen Idec's Tecfidera (dimethyl glutamate) and Novartis' Gilenya (fingolimod).

With other drugs such as colorectal cancer therapy Erbitux (cetuximab) also in decline, Merck is facing a challenging 2015 and is banking on its $2.85bn deal with Pfizer - signed last November - to help it bounce back from 2016 onwards.

Under the terms of that agreement, Merck will secure a new revenue stream via a co-promotion of cancer therapy Xalkori (crizotinib). Meanwhile Pfizer will help accelerate the international development of PD-1 inhibitor avelumab (MSB0010718C), which has started a phase III trial in non-small cell lung cancer (NSCLC) and is also in earlier-stage trials in ovarian and gastric cancer, amongst others.

Merck is preparing to present several new trials of avelumab at the American Society of Clinical Oncology (ASCO) meeting that gets underway next week. 

The company is playing catch-up in the anti-PD1 category with Merck & Co's - whose Keytruda (pembrolizumab) has been cleared for melanoma - and Bristol-Myers Squibb that has secured approvals for its Opdivo (nivolumab) candidate in both melanoma and NSCLC. Merck and Pfizer could be first to market with a cancer immunotherapy in ovarian cancer.

2015 will be "a year of investments," according to Merck's chief executive Karl-Ludwig Kley, who noted "up to five further [avelumab] trials that could be pivotal for product registrations are to start this year, also in gastric and bladder cancer."

Overall, Merck expects sales of its healthcare unit to be in line with 2014 with group sales coming in at €12.3-12.5bn.

Article by
Phil Taylor

19th May 2015

From: Sales

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