Germany's Merck looks for deals to lift U.S. drug sales

YAVNE, Israel Tue Nov 26, 2013 11:37am EST

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YAVNE, Israel (Reuters) - German healthcare group Merck KGaA (MRCG.DE) is looking for acquisitions and collaborations with start-ups to grow its drugs business in the United States, a senior Merck official said.

The drug and chemicals maker gets some 20 percent of pharmaceutical revenue from the United States, compared with an average of about 50 percent at most global pharma firms.

"That's where we want to be," Stefan Oschmann, who heads up Merck's pharmaceutical business, told reporters during a visit to the Merck Serono bio incubator near Tel Aviv on Tuesday.

He declined to give a timetable as to when the company would like to achieve this goal.

Through its EMD Serono unit near Boston, Merck sells a number of products in the United States including multiple sclerosis drug Rebif as well as fertility treatments.

"It's not that we're not present but we need new products for the U.S. market," Oschmann told Reuters. "If you want to be successful in the U.S. market you have to introduce products and that's what we are working on."

In the past few years, Merck has had some setbacks in which seven projects in late-stage Phase III clinical trials either failed or were halted, forcing the company to rebuild through licensing deals and investing more in research and development.

"Will that be enough to be a major player in the United States? We shall see. So, we are open to collaborations and we are open to acquisitions in this area," Oschmann said.

Merck Serono, the company's biopharmaceutical division, has a number of relationships in the United States with small biotech startups, including with San Francisco's Threshold Pharmaceuticals on late-stage pancreatic cancer drug TH-302, which is in Phase III trials.

Merck Serono also has a licensing deal with Oncothyreon (ONTY.O) for the treatment of lung cancer.

Oschmann said 80 percent of Merck's global research and development is in oncology, where the company has high hopes.

It is already having success with its main cancer drug Erbitux, which accounted for some 8 percent of the group's 10.7 billion euros ($14.5 billion) in 2012 sales.

Merck, which focuses on prescription medicines, consumer health, life science tools and liquid crystals, also said it wanted to grow its number of cooperations in Israel. Two more biotech companies, Metabomed and Chan Bio, joined its Yavne bio incubator on Tuesday. The bio incubator already housed Neviah Genomics, a joint venture with Compugen (CGEN.O) (CGEN.TA).

Last week, Merck raised its stake in Israel's Qlight Nanotech, but did not disclose financial details. Earlier this month, Merck Serono and Israel's Kadimastem (KDST.TA) signed a deal aimed at advancing their stem cell-based drug screening collaboration initiated in 2012.

(Removes reference to United States in paragraph 7. The seven clinical trials included other countries)

(Editing by Mark Potter and Tom Pfeiffer)

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