By Bill Berkrot and Ransdell Pierson
NEW YORK (Reuters) - Fred Hassan, former head of Schering-Plough Corp, said Merck & Co (MRK.N: Quote, Profile, Research, Stock Buzz) is likely to prevail over Johnson & Johnson (JNJ.N: Quote, Profile, Research, Stock Buzz) in its battle to retain overseas rights to the blockbuster arthritis drug Remicade.
"Personally, I feel good that Merck will be able to keep Remicade," Hassan said on Thursday at the Reuters Health Summit in New York, just four weeks after completing the $41 billion sale of his company to Merck.
Schering-Plough garnered $2 billion a year in overseas sales of Remicade under a long-term marketing pact with J&J. The deal required Schering-Plough to hand back the sales rights if it underwent a change of control.
But that requirement became clouded when the Schering-Plough/Merck deal was structured as a reverse merger -- which technically means Schering-Plough bought the larger company even though the combined company retained the Merck name and Merck's CEO.
J&J objected to the reverse-merger logic. An arbitrator is expected to decide the high-stakes matter.
"We had very good external advice; the case is good," Hassan said.
A victory for Merck would also allow it to retain rights to a newer once-monthly Schering-Plough arthritis drug called Simponi, which it had also sold overseas through its longstanding marketing deal with J&J.
Merck would not be greatly shaken even if it should lose rights to Remicade and Simponi, Hassan said.
"An advantage of a merger like this is that you have such a diversity (of products) that individual events should not have a huge effect on the overall company."
Hassan, who turned around drugmaker Pharmacia before selling it to Pfizer Inc (PFE.N: Quote, Profile, Research, Stock Buzz) in 2003 and then put Schering-Plough back on its feet, said he does not expect many other mergers between large drugmakers.
"A lot of the big consolidations have already occurred. There aren't that many large companies left, so you can't expect a lot more there," he said, just weeks after Pfizer completed its own $67 billion purchase of Wyeth.
"But I see a lot happening in the medium-size companies, especially in the biotech area," he said, noting that many smaller companies are on shaky financial ground and need to combine their cash and products.
Healthcare companies in Europe and Japan "have been sheltered" from merger activity in recent years, and are therefore overdue, he said. "You'll see a lot more consolidation there."
After leading two large drugmakers, and playing senior roles at other companies, Hassan is seeking more variety.
"I'm looking right now in the near term at the small company space," he said, in healthcare and elsewhere. Continued...
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