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This month in 1917: A tale of two Mercks

US enters World War I severing ties between Merck & Co and its German parent
A tale of two Mercks

There's a lot to get your head around for anyone entering the pharma industry. From the number of acronyms and abbreviations that permeate each activity to the complex market access process and the perpetual bewilderment over what value-based pricing actually means.

One of the most confusing things, however, based on personal experience, is the curious tale of two distinct, separate companies that somehow share the same name: Merck.

Well, to be specific, one is either called Merck KGaA or EMD Group depending on what country you're in while the other goes by the monikers MSD or Merck & Co, again depending on geographical circumstance.

But why would two major companies working in the same industry share the same name? Well, it's not a matter of coincidence.

To discover the reason, you have to go back to the early 20th century, during a time when Europe was in the midst of what was to become known as World War I.

Alongside the physical fighting on the battleground between the Allies – led by the UK, France and Russia – and the Central Powers – led by Germany and Austria-Hungary – political battles were occurring across the region, collapsing governments, tearing up nations and setting the scene for more conflict further down the line.

In 1914, at the outset of The Great War, there was just one Merck group, which had a history that could be traced back to 1654 when Angel Pharmacy was founded in Darmstadt, Germany, by Samuel Bockler.

Fourteen years later in 1668, a familiar name entered the scene, with the decision by local pharmacist Friedrich Jacob Merck to purchase the Angel Pharmacy.

After Friedrich's death, his family took over running of the business, which continued to grow as the idea of medicinal treatment evolved over the 18th and 19th centuries.

It was under the leadership of Emanuel Merck in the early 19th century that the company really began to show its potential, building up a chemical and pharmaceutical factory that produced raw materials for pharmaceutical and other preparations.

By 1860 the company, then known as E. Merck, manufactured more than 800 different substances and ambitions grew beyond Europe, with a New York branch opening in 1887.

Shortly afterwards in 1891 George Merck moved from Germany to New York to oversee the operations of this US division, which changed its name to Merck & Co that year.

In the following years, Merck & Co operated as its own business in the US, although still part of the E. Merck family based in Germany. With the onset of war in Europe in 1914 though, the relationship between the two nations became strained and the wheels were put in motion for a complete split.

At the start of the conflict the US, with a population consisting of immigrants from all sides of the war, remained neutral. But on April 6, 1917 – influenced by the Germans' use of unrestricted submarine warfare – President Woodrow Wilson declared the country's formal participation on the side of the Allies.

With this declaration the US Government also announced the seizure of several companies with German connections, including Merck & Co.

Following the seizure announcement, US Federal Judge A Mitchell Palmer put the stock of Merck in the US up for auction. George Merck and partners founded McKenna Corporation to participate in the bidding and, in 1919, was successful in buying back his company and fully separating from E. Merck in Germany.

The split impacted both companies, with E. Merck also feeling the effects of the economic crisis in Europe and implementing cuts to the business. For US-based Merck & Co, fortunes were more favourable, with George Merck's son George W. Merck taking over control and inspiring the company to become one of the leading healthcare companies in the US over the next few decades.

From 1939 to 1945 war again affected the fates of the Mercks, with both sides using factories to support the war effort and each company seeing employees serve.

It was the post-war period when the modern pharmaceutical era began to emerge, however, and both Merck & Co and E. Merck took advantage of the transformation of medicine.

The business structure of each company changed too, and in 1953 – one year after George W. Merck appeared on the cover of Time magazine – Merck & Co merged with the firm Sharpe and Dohme to create the now familiar MSD brand, by which the company is known outside the US and Canada.

E. Merck went on to assume the Merck KGaA name outside the US and Canada, as well as choosing to go by EMD (E. Merck Darmstadt) in the home of its former subsidiary.

Various acquisitions have since led to changes in the full EMD moniker, although the company now operates as EMD Group in the US and Canada, comprising the biopharma business EMD Serono and the life science tools business EMD Millipore.

While they'll no doubt continue to cause periodic confusion, the Mercks retain a fascinating backstory.

Article by
Tom Meek

PMGroup editor

14th April 2014


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