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| Merck R&D chief Roger Perlmutter |
Fresh off signing a blockbuster deal for hepatitis C drug developer Idenix Pharmaceuticals ($IDIX), Merck ($MRK) R&D chief Roger Perlmutter said his company won't shy away from buying big into biotech, provided there are promising medicines at stake.
Speaking at the Goldman Sachs healthcare conference in California on Thursday, Perlmutter said Merck's $3.9 billion splash was, in essence, an attempt to lock up a three-drug combination with the potential to cure hep C in all genotypes with limited side effects, all in just four weeks.
Many in the industry balked at the roughly 240% premium Merck paid for the privilege, but the Idenix deal was carefully designed to augment Merck's existing position in hep C and give it a chance to play a leading role in a huge market, Perlmutter said. "It's not as if I just decided to go shopping last weekend."
And the sophomore head of Merck Research Labs won't hesitate to pull the trigger on more big deals down the line, but only if they present a similar opportunity. Merck has the scale and science such that it doesn't need to go chasing biotechs for their drug-development technologies, Perlmutter said. Instead, the pharma giant is on the hunt for deals that both impact a real medical need and present a commercial opportunity.
"I wouldn't do it for platform; I would do it for products," Perlmutter said. "... I am looking for areas where we can generate products that have unambiguous, promotable advantages.
"If your head of sales and marketing says that, that's 'So what,' of course. But when your head of R&D says that, people are surprised," he said.
That focus on ROI typifies Perlmutter's tenure at Merck, which began with something of a housecleaning. There are a lot of ways to do drug development, but you have to pick one, Perlmutter said, and Merck, "in a fit of ecumenicalism," was simultaneously running multiple R&D governance systems at the same time when first he took over last year.
Since then, however, the Amgen ($AMGN) veteran has spurred his new company to shed its hyper-bureaucratic approach to product development and about 8,500 jobs along with it. The resulting reprioritization has seen Merck put all its weight behind its most promising late-stage assets, including the much-lauded cancer immunotherapy MK-3475 and, now, a promising hep C combo courtesy of Idenix.
- listen to Perlmutter's presentation (reg. req.)