The German pharmaceutical chemical group Merck KGaA has announced that it has undertaken the development of a reorganization plan which has the main objective of reducing costs. According to CEO Karl-Ludwig Kleym in a press release, this plan will have an impact on employment levels and will involve all the countries in which the company is present and every business area. The company currently employs around 40,000 people in 60 countries.
For now, the company has not provided any numerical data, merely emphasizing that in the next two years Merck KGaA will face major challenges and will see increasing competition for its drugs. Again on the basis of the CEO's statements, the company already has a vision of what will have to be done but intends to deal with the trade unions of each country concerned to develop pragmatic and shared solutions.
The company has also changed its organizational structure and a new head of finance, Matthias Zachert, has arrived at the top, while Merck KGaA has wrested from its American rival Merck and Co. a manager with proven experience, Stefan Oschmann, who will now lead the division pharmaceutical.
This decision reflects at least in part the problems that have arisen with the halting of the development of cladribine, a new orally active anti-sclerosis on which the company has pinned a lot of hopes. The drug was rejected by the EMA and the FDA due to fears about its safety.
On the other hand, one of the company's leading drugs which is also one of the most widely used products for the treatment of multiple sclerosis, Rebif, now faces competition from fingolimod, Novartis' new orally active anti-multiple sclerosis. Not to mention the imminent arrival of other new anti multiple sclerosis that Biogen, Sanofi and Teva are developing (BG-12, teriflunomide and laquinimod) and that in 1 -2 years could already enter the market in the first countries. Finally, in a couple of years there could be the possible genericization of Glatiramer acetate which would make this sector even more prone to competition.
As far as the other drugs are concerned, no big news is foreseeable in the short term. Even the use of cetuximab in lung cancer, already rejected by the EMA in 2009, according to analysts has only a 50% probability of being approved. The Serono pipeline, which Merck KGaA bought in 2007 for 18.5 billion dollars, has fallen short of expectations, leaving the German company with the structural costs.
In addition, the company is still too dependent on results in Europe, where 44% of Merck KGaA's pharmaceutical sales come from. The point is that by now in the Old Continent it has become very difficult for pharmaceutical companies to grow, given the very strong push by the various regulatory authorities to contain costs.
The problems with medicines have also been joined by those of the consumer electronics division, which specializes in the production of liquid crystals for TV and PC screens, whose demand is declining given the near-recession state of the world economy. Perhaps the next Olympics will lift the health of the industry a bit, as people usually buy more TVs at these times.
Merck KGaA is a chemical and pharmaceutical company headquartered in Germany. Founded in 1668 in Darmstadt, it is one of the oldest chemical-pharmaceutical companies still operating today. Private until 1995, Merck KGaA is today a public company, albeit a family one
