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Summit News

Hassan sees Merck retaining Remicade

NEW YORK (Reuters) - Fred Hassan, former head of Schering-Plough Corp, said Merck & Co MRK.N is likely to prevail over Johnson & Johnson JNJ.N in its battle to retain overseas rights to the blockbuster arthritis drug Remicade.

A view of the Merck & Co. campus in Linden, New Jersey March 9, 2009. ÊREUTERS/Jeff Zelevansky

“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 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.

“I think a lot of smaller companies have great science, they have great ideas, great dreams, great ambitions. They may not have that management ingredient that can make them a lot better, and my own sense is if I can be of more help, there may be a lot more good products can come to society. So that’s my focus at this stage,” Hassan said.

Hassan, who recently joined the boards of media giant Time Warner Inc TWX.N and privately held eyecare company Bausch & Lomb, said he would like to advise several companies as he contemplates his next move.

“One can get as much fulfillment looking at a number of companies and helping people with what they’re trying to do as opposed to just running it as a CEO,” he said.

“I really do plan to try to be more of a management support wherever I am, whether in a board situation or as an adviser.

“I’m seen primarily as a pharma person but in fact my background is pretty diverse. I’ve overseen agricultural companies, I’ve overseen chemical companies, I’ve overseen device companies, so hopefully I’ll get a chance to be more of a generalist.”

Reporting by Ransdell Pierson and Bill Berkrot; editing by John Wallace and Matthew Lewis

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