Ed Silverman Peter Loftus at Pharmalot, looking back at the Merck/Schering-Plough merger. It has not gone quite like the initial plan:
First, a little history. In November 2008, Schering-Plough Chief Executive Fred Hassan told analysts and investors gathered at the company’s Kenilworth, N.J., headquarters it was developing “five stars” with big sales potential. They were: 1) rheumatoid-arthritis treatment golimumab (with Johnson & Johnson JNJ -1.50%), 2) the antipsychotic Saphris 3) Bridion 4) the anticlotting drug vorapaxar and 5) a hepatitis C treatment called boceprevir.
It was within weeks of Hassan’s stargazing that Merck began courting Schering-Plough, leading to the Merck takeover in 2009. Merck touted the five stars among other Schering drugs, as well as the deal’s potential for big cost cuts.
The five stars did make it to market (in the case of Bridion outside the U.S.). But none has significantly moved the needle for Merck, whose annual sales have fallen each year since 2011—to $42.2 billion last year—hurt by patent expirations for older drugs. . .
Well, a lot of people will tell you that this sort of salesmanship was Hassan’s strong point. And drug development is, as we all have had chances to notice, unpredictable. But doesn’t everyone sound so confident when they announce these mergers? Isn’t the future just laid out there to be marched into and conquered? You don’t hear anyone going on about how gosh, you just never know in this business, it might work out and it might not. No, the bold leadership of Company A has stepped up and seized the opportunities provided by Company B, and all manner of things will be well in consequence.
Silverman Loftus shows, in the Merck/SP case, the bright spot has been Keytruda (pembrolizumab), which was considered to be a roundoff error in the deal compared to all those other big, promising compounds. It’s not like Schering-Plough thought a lot of it, either (if they had, you can bet that Hassan would have put a sixth star up there immediately). Keytruda was originally from Organon, and when S-P bought them in 2007, it wasn’t even mentioned in the press release or the articles written at the time.
So it’s a pretty safe bet that Merck’s management would have been nonplussed to hear that Keytruda would turn out to be the best thing that they got out of the deal. And they would probably have had to hold on to the back of a chair or something if you’d shown them what was in store for Fred Hassan’s “five stars”. As The Clash used to put it, the future is unwritten.