Monday, July 11, 2011

Merck Serono Re-Shuffle:Deckchairs on the Titanic?

Okay, so the Titanic analogy is a bit unfair. But it just kept springing to mind, reading about Merck Serono's latest two Big Pharma hires, Annalisa Jenkins (ex-BMS) and Belen Garijo (ex-Sanofi) who will, respectively, drive a new R&D organizational structure and re-shuffle the group's global commercial and marketing organization. The Merck Serono ship isn't exactly going full-steam ahead: oral MS drug cladribine, the post-Rebif hopeful with peak sales once slated at $1.5 billion, was officially scrapped June 22, after both European and U.S regulators had turned up their noses (mostly at a potential link to cancer). Cladribine's trip-up followed a string of other development setbacks and most probably prompted the departure of pharma CEO Elmar Schnee in December 2010.

Enter the Big Pharma blood to sort things out. (One thing Big Pharma execs should by now be highly-trained in is how to cut costs and try to boost R&D productivity). Stefan Oschmann, previously head of Merck & Co. Inc.'s emerging markets business, joined in January as President of Merck Serono (and also heads the company's consumer health division). After six months assessing the damage, he's now hiring in the troops to sort things out.

Belen Garijo, previously SVP Global Operations Region Europe and Sanofi Aventis, will take on a newly-created COO role and "define a highly competitive commercial and marketing strategy to strengthen Merck Serono's product brands and lead its global business to profitable growth across all therapeutic areas," says the release. Make what we've got work harder, in other words. And no doubt she'll also leverage some of the synergy-extracting experience gleaned from latterly leading the integration of Genzyme at Sanofi, as well as draw on Oschmann's emerging markets background.

Jenkins' appointment as Global Head of Drug Development & Medical marks the first step of a R&D overhaul that, certainly at first glance, appears familiar to anyone following Bigger Pharma's attempts to invigorate their innovation engines: the creation of a pre- and post-POC divide, with Jenkins heading post-POC development including life-cycle and regulatory functions, and Bernhard Kirschbaum, until now head of all R&D, looking after Global Research & Early Development to proof-of-concept. (This isn't the first time Merck has split R&D: earlier in his six-year career at Merck, Kirschbaum ran pre-clinical and global technologies, reflecting an older-fashioned R&D dividing line).

Yes, and the new R&D operation is going to be all about fostering agility, creativity and entrepreneurship, to allow more efficient use of resources, etc. etc....We've heard many similar stories before. What's more, if Eisai's R&D experience is anything to go by, Merck Serono's mid-cap credentials -- it has just 2500 R&D employees -- needn't rule it out of creating small, biotech-like autonomous units either, a la GSK's DPUs.

As yet, there are scant details on offer of Merck Serono's makeover: Oschmann isn't talking until at least the end of the year, we are told; perhaps understandable given that Jenkins and Garijo don't start until September.

But Oschmann likely knows the broad outlines of what he needs done, and has hired the appropriate troops to execute on the plan. Cost-cuts and efficiency drives will almost certainly feature strongly, as will in-licensing, especially to salvage the MS franchise. Line extensions for 13-year old, three-times-a-week injectable MS therapy Rebif (interferon beta-1a) continue (the company recently submitted an application to EMA for Rebif in early-stage MS) but are unlikely to be enough, particularly with MS competition from the likes of Biogen's Tysabri, Novartis' oral Gilenya and, perhaps soon, Sanofi/Genzyme's Lemtrada (though recent Phase III results for that drug were mixed).

Merck has done two neuro-degenerative diseases focused deals this year so far; expect that rate to increase. If it doesn't, maybe that deckchair analogy will creep back in after all, even though the company is somewhat protected from the full force of the elements by its 70% family ownership and its minority non-pharma operations.

image by flickrer Steve Parkinson used under creative commons


TimboM said...

After all the aggressive moves to acquire Schering and finally succeeding to acquire Serono, after all the move acquire Millipore.....Merck KGaA finds itself exactly where it was 10 years ago - a conservatively run, boring chemical company with a fading pharmaceutical legacy. The irony is that the family's ownership structure only prevents what nobody wants to do anyway. Without possibilty of acquisition, what's in it for the shareholders now?

Marketing Business said...

After all the aggressive moves to acquire Schering and Serono to acquire to succeed in the end, after all, the transition to the acquisition of Millipore ..... Merck KGaA is exactly what it was 10 years ago - performing a conservative chemical company with a pharmaceutical boring legacy fade. The irony is that the structure of the family property only ensures that nobody wants anyway. Without the ability to take the lead, what's in it for the shareholders now?