Merck & Co. looks to overhaul research unit: report

According to people familiar with the matter, Merck & Co. plans to restructure its R&D unit and create international innovation hubs designed to gain access to promising external biotechnology and pharmaceutical research that the company could license or acquire, The Wall Street Journal reported. A spokesman for Merck confirmed that the drugmaker plans to establish a "scientific presence" in or near Boston, the San Francisco Bay area, London and Shanghai to identify both early- and late-stage opportunities, adding that "this is consistent with our strategy of actively seeking external scientific innovation to bolster our pipeline with candidates that provide unambiguous promotable advantage."

Sources said the president of Merck Research Laboratories, Roger Perlmutter, who took over the role in April, has discussed the plan at internal meetings with employees, as has the unit's respiratory and immunology franchise head Rupert Vessey. The Wall Street Journal reported that the company posted at least two job openings to head business development and licensing at the "innovation hubs" in Boston and San Francisco, and that it has since indicated that the Boston opening has been filled.

The decision to create regional hubs would mirror similar measures implemented by other drugmakers, the newspaper said. Pfizer increased its research presence in Boston, Cambridge, UK, and La Jolla, California, while reducing the size of its primary R&D centre in Connecticut, and Johnson & Johnson announced plans in 2012 for four regional innovation centres to identify early-stage acquisitions, partnerships and investment opportunities. GlaxoSmithKline also recently disclosed its intention to open R&D offices in the Boston area and in San Diego to manage external collaborations and identify new partnership opportunities.

Meanwhile, Merck is trimming its own pipeline and has identified a number of experimental drugs that it wants to divest, The Wall Street Journal said, citing a source and the contents of an internal planning document. According to the document, Merck has identified experimental glaucoma treatments, some antipsychotics and a male fertility drug as divestment targets. A company spokesman refused to comment on the drugmaker's divestiture plans.

In June, Perlmutter revealed that Merck planned to reduce its R&D workforce as part of a larger restructuring initiative. The drugmaker later announced that it was eliminating about 8500 positions under a proposal to "sharpen" its commercial and R&D focus. The company acknowledged that together with previously announced job cuts of 12 000 to 13 000, it would be reducing its global workforce by 20 percent by 2015. Merck has also made a number of recent changes to management, including hiring Iain Dukes, who previously headed external R&D at Amgen, as senior vice president of licensing and external science.

For related analysis, read Spotlight On: Scrutiny increases on Merck & Co.'s R&D capabilities as company receives three analyst downgrades, as well as ViewPoints: Merck & Co. moves to reinvigorate its slowing R&D momentum.

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