New Merck ($MRK) CEO Kenneth Frazier (photo) has promised that his company will make "tough" research spending decisions when developing innovative products and quickly halt development of less promising drugs.
"The only way you can sustain a business like this is through innovation; that doesn't mean you can just throw money at things," Frazier said at the Goldman Sachs Group investor conference in New York, according to Bloomberg. "Historically, our successes haven't required us to think as tough about resource allocation."
Like other drugmakers, Merck working to develop new drugs as it faces generic competition to key products, such as blood-pressure pills, Cozaar and Hyzaar, which had combined 2009 sales of $3.6 billion, Bloomberg notes. Generic rivals to these drugs came to the market last year.
One of the products Merck is working on is its closely watched cholesterol drug anacetrapib. The company announced promising study results with the drug in November. Widely billed as a potential blockbuster, investigators in charge of the trial cited "jaw dropping" results, with a striking 138 percent increase in good cholesterol and a 40 percent drop in bad cholesterol among patients already taking statins.
And this week, Merck got a boost when it gained a small lead against Vertex ($VRTX) for regulatory approval of a new hepatitis C treatment. Merck says that regulators in the U.S. as well as Europe have accepted its applications for boceprevir. And the FDA plans on an expedited six-month review.
Frazier also said his emerging market plan will focus on partnerships with companies over acquisitions, which have become too expensive. "We think it's hard to make money if you have to buy assets at the top of the market," Frazier said. "We like partnerships because we get the local expertise. If you buy somebody and then you put them as part of your company, you lose the local expertise, the local presence."
Last fall, for example, Merck announced a new research deal with a leading Chinese genomics research institute that will help it tap into what may soon emerge as one of its biggest market opportunities. Shenzhen-based BGI plans to collaborate with Merck to identify a new generation of personalized therapies.
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