Merck Group

Merck

Type	Publicly traded KGaA
Traded as	FWB: MRK
Industry	Chemicals pharmaceuticals
Founded	1668 (1668)
Founder	Friedrich Jacob Merck
Headquarters	Darmstadt, Germany
Area served	Worldwide
Key people	Stefan Oschmann (CEO and Chairman of the executive board), Wolfgang Büchele (Chairman of the supervisory board)
Products	Liquid crystals, life science and performance chemicals, over-the-counter medicines, small molecules and biopharmaceuticals
Revenue	€15,023.5 million (2016)[1]
Profit	€1,628.6 million (2016)[1]
Total assets	$42.13 billion (2016)[2]
Number of employees	Ca. 50,000 (2016)[3]
Website	www.merckgroup.com

The Merck Group, branded and commonly known as Merck, is a German multinational chemical, pharmaceutical and life sciences company headquartered in Darmstadt, with around 50,000 employees in around 70 countries. Merck was founded in 1668 and is the world's oldest operating chemical and pharmaceutical company, as well as one of the largest pharmaceutical companies in the world.^[4][5]

Merck operates in Europe, Africa, Asia, Oceania and the Americas. It has major research and development centres in Darmstadt, Boston, Tokyo and Beijing. Merck pioneered the commercial manufacture of morphine in the 19th century and for a time held a virtual monopoly on cocaine.

Merck was privately owned until going public on the Frankfurt Stock Exchange in 1995, and is listed on the DAX index of Germany's top companies. The Merck family still controls a majority 70.3% of the company's shares. The Merck Group includes around 250 companies in 180 countries; the current main parent company of the group, since 1995, is named Merck KGaA, and is itself mainly owned by the former main parent company, E. Merck oHG, which now operates as a holding company.

The American pharmaceutical company Merck & Co. was established as a subsidiary of Merck in 1891, but was nationalized by the United States in 1917, before being privatized again. It is known as MSD (Merck Sharp and Dohme) outside of North America. The original Merck of Darmstadt holds the rights to the name Merck in all countries except the U.S. and Canada, where it is known as EMD (Emanuel Merck, Darmstadt). In 2015 Merck adopted a new uniform brand identity for all its subsidiaries, and the company has stressed its intention to protect the brand of "the real Merck" globally and initiated litigation against its former subsidiary over use of the name.^[6]

History

The Angel Pharmacy in Darmstadt which was owned by the Merck family from 1668; the beginning of the Merck company

The roots of Merck reach back as far as the 17th century in Germany. In 1668, Friedrich Jacob Merck, an apothecary, assumed ownership of the Engel-Apotheke ("Angel Pharmacy") in Darmstadt, Germany.

In 1816, Emanuel Merck, a descendant of the original founder, took over the pharmacy. Thanks to his scientific education he was successful in isolating and characterizing several different alkaloids in the pharmacy's laboratory, and by doing so also invented a number of drugs. He began the manufacture of these substances "in bulk" in 1827, touting them as a "Cabinet of Pharmaceutical and Chemical Innovations". He and his successors gradually built up a chemical-pharmaceutical factory that produced — in addition to raw materials for pharmaceutical preparations — a multitude of other chemicals and (from 1890) medicines.^[7]

In 1891, Georg(e) Merck established himself in the United States and set up Merck & Co. in New York. Merck & Co. was confiscated following the First World War and set up as an independent company in the United States.^[8][9] Today, the US company, which operates as Merck Sharp and Dohme (MSD) outside the U.S. and Canada, has about 86,000 employees (December 2011) in 120 countries. It is one of the top 5 pharmaceutical companies worldwide, larger than its German ancestor, which employs around 40,700 people in 67 countries (December 2011). While Merck in Darmstadt is the legal successor of the original Merck and retains the rights to the name "Merck" in all countries except the U.S. and Canada, it is sometimes known as the "German Merck" or "Merck Darmstadt" in North America. The company was formerly also referred to as "E. Merck" (Emanuel Merck).

In 1973, Merck Ltd. acquired BDH Chemicals^[10] from the Glaxo Group.

Merck visitor centre in Darmstadt, which stood from the early 1980s to around 2015

In the early 1980s Merck Group built a visitor center at its Dartmstadt headquarters that featured a pyramid, the design of which was controversial.^[11]

Merck was legally named E. Merck oHG until 1995. In 1995 it was listed on the Frankfurt Stock Exchange and became a KGaA, legally named Merck KGaA.

On March 13, 2006, Merck announced a takeover bid for Schering AG, the world's largest producer of oral contraceptives. On March 23, 2006, Bayer AG made a supported offer for Schering and Merck decided to drop out of the bidding for the company.^[12] Schering is not to be confused with Schering-Plough which was once part of Schering AG but was acquired by Merck & Co. in 2009. In September 2006 the company announced a takeover bid of $13.2 billion for Serono SA, Switzerland's largest biotech firm. The deal included a buy-out of the Bertarelli family's 64.5% stake in Serono to be followed by a public tender offer for the remaining shares starting in November 2006.^[13][14] The combined company has an R&D budget of approximately $1.1 billion and sales of approximately $4.6 billion. Its approximately $2 billion in sales of biologics would make it 7th among pharmaceutical/biotech companies. The new entity, Merck Serono, began operations in 2007.

Merck chemical production plant in Gernsheim

In 2010 Merck took over Billerica (MA) based Millipore Corporation for EUR 5.3 billion (US$7.2 billion).^[15][16] It is now a division of Merck's business unit chemicals - Merck Millipore. With the acquisition of Millipore, Merck is consolidating its US holdings and shutting down the Gibbstown facility and warehouse. Gibbstown operations will be transferred to the new Philadelphia office and Millipore headquarters.^[17]

Merck Korea received the "Leading Investor Award" at the 5th Korea-EU Industrial Cooperation Day in 2011.

In December 2013, the company bought AZ Electronic Materials SA (AZEM) for about $2.6 billion in cash to increase its offering of specialty chemicals to the electronics industry.^[18]

In September 2014 Merck halted the clinical development of two drug candidates in development with Oxygen Biotherapeutics. One drug candidate suffered a lack of success in patient recruitment, with its MUC1 antigen-specific cancer immunotherapy drug, tecemotide (L-BLP25), missing its Phase I/II endpoint of increasing overall survival in patients with Stage III non-small cell lung cancer.^[19] Later in September it was announced that the company would acquire Sigma-Aldrich for $17 billion.^[20] After the acquisition was completed in 2015, Merck has around 50,000 employees.^[3] In November 2014, Merck and Pfizer agreed a deal for the latter to sell the former sharing rights to develop an experimental immunotherapy drug for a fee of $850 million.^[21]

In October 2015, Merck revealed it would return the rights of the Kuvan drug to BioMarin Pharmaceutical Inc.. The drug is effective in the treatment of the rare genetic disorder PKU, however Merck is moving away from genetics into cancer treatment, immunology and neurology.^[22] In October, it was announced that Karl-Ludwig Kley, CEO of Merck since April 2007, would retire in April 2016, and be succeeded by Stefan Oschmann, who has been a member of the executive board since 2011.^[23]

Merck headquarters in Darmstadt

The company started building new facilities for its R&D operations and a new visitor center at its Darmstadt site in the early 2010s by 2015 had torn down the site's pyramid as part of the renovations.^[24]

In April 2017, the company announced it had completed the acquisition of food safety testing company, BioControl Systems Inc..^[25]

Name

Former logo of Merck KGaA used until October 13, 2015

Merck in Darmstadt is the sole legal successor of the original Merck and retains the rights to the trademark "Merck" in all countries except the U.S. and Canada. In recent branding campaigns, the company has referred to itself as "the original Merck" and "the real Merck." The company was legally known as E. Merck oHG until 1995, when Merck KGaA became the main parent company and the former a holding company. Both oHG and KGaA are generic business entity type designations and not used in everyday speech or branding.

In 2015 Merck adopted a new logo and said it will be "much more aggressive" about protecting the brand of "the real Merck."^[6] It has initiated litigation in several countries against its former subsidiary Merck & Co. (MSD) over infringing use of the Merck name. In 2016, the High Court of Justice in the United Kingdom ruled that MSD had breached an agreement with its former parent company and that only Merck of Darmstadt is entitled to use the Merck name in the United Kingdom; the judge also held that MSD's use of "Merck" as part of branding on its global websites were directed to the UK and infringed Merck's trade mark rights in the UK.^[26] In response, MSD has initiated counter-litigation in the United States.^[27]

Price fixing settlement

Generics UK (Merck's former British subsidiary, the global Generics business being sold on October 2, 2007) paid a £12M out-of-court settlement with the Department of Health over involvement in an alleged price and supply fixing cartel.^[28]

The NHS alleges various drugs companies exploited the oligopolistic market conditions, forcing the NHS to pay inflated prices. NHS fraud investigators believe there was a conspiracy to limit the supply of 30 of its most commonly prescribed drugs, including a class of penicillin antibiotics and to a generic version of best-selling ulcer treatment Zantac.^[29] The NHS has so far filed claims in relation to just three drugs, seeking damages of more than £150m, while the Serious Fraud Office (SFO) is conducting a parallel investigation into the price-fixing allegations limited to the supply of blood-thinning pill warfarin and penicillin-based antibiotics. Homes and offices of executives at six firms, including Ranbaxy, Generics UK, Norton Healthcare, Goldshield and Regent-GM were raided by the SFO in May 2002.

Acquisition history

The following is an illustration of the company's mergers, acquisitions, spin-offs and historical predecessors:

Healthcare

After Wilhelm Adam Sertürner's isolation of morphine from opium in 1805, Merck pioneered (from 1827) the commercial manufacture of morphine for an expanding global market. From 1884 onwards, Merck also played role in the production and marketing of cocaine. Sigmund Freud, author of Über Coca (1884), was an enthusiastic collaborator in Merck's cocaine research, though the methodological sophistication of his self-experimentation studies has been challenged. Attention was directed at vitamins as a new product category, and Vigantol was introduced in 1927, followed by Cebion in 1934.

Following the defeat of Germany in World War II, Merck was granted permission by the military government to produce drugs, pesticides, food preservatives, reagents, and fine chemicals for laboratory use. Soon afterwards the boom commonly known as the "Wirtschaftswunder" (economic miracle) set in. For Merck this meant two-digit sales-growth figures for many years. Products of this time included corticoid preparations — for example Fortecortin, which is still used today — the cold remedy Nasivin or the hormone preparations Gestafortin and Menova.

Merck currently employs over 2500 people in its 4 R&D hubs via. Boston, Darmstadt, Beijing and Tokyo.^[30] In the year 2013, Merck invested over €1183 million in its R&D operations.^[30] The focus of Merck's current pharmaceutical R&D is on oncology and cardio-metabolic care. In the former therapeutic area, its first marketed product is Erbitux (cetuximab), for which it has marketing rights worldwide, apart from North America. (Cetuximab was discovered by Imclone Systems, and is marketed in North America by Bristol-Myers Squibb.) Other products from Merck include Metformin, Bisoprolol, Levothyroxine and Digitoxin. Merck's clinical research strategy consists of a partnership with Quintiles in which the latter helps the former in the clinical development of all its compounds.^[31]

Chemistry

In the chemicals sector, work started on effect pigments in 1957. An example for these pigments are alumina effect pigments sold under brand name Xirallic^®[32] Ten years later the company initiated its involvement in liquid crystals, leading to its market leading role today. Liquid crystals account for the bulk of Merck's profits at present. Currently they're the world leader in producing liquid crystals for Flat-TV's and monitors.^[33]

In the area of analytical chemistry, Merck plays a leading role in the development of chromatographic methods and materials.

Life Science

Merck Millipore

The Merck Millipore business was created in July 2010 following the completed acquisition of the US company Millipore. This division comprises all Millipore activities and major segments of the former Merck division Performance & Life Science Chemicals. Merck Millipore has three business units: Bioscience, Lab Solutions and Process Solutions. The Bioscience business unit is dedicated to solutions and reagents for protein research and cell biology, cell culture solutions, as well as to products and services for the development of biopharmaceutical agents. The scope of activities of Lab Solutions includes laboratory chemicals and other materials for research, science and industry, products and services for sampling, and test kits for the pharmaceutical, foods and diagnostics industries, along with products, consumables and services surrounding highly purified laboratory water for science and industry. Process Solutions focuses on products and services for the production of chemical and biopharmaceutical agents.

Performance materials

Liquid crystals

Merck is a pioneer in the field of LCD technology and the world’s largest producer of liquid crystals, which are required for the manufacture of LC/TFT displays. The global market share is over 60%. As a result, the company is considered to be a so-called hidden champion. In March 2005 Merck acquired Covion Organic Semiconductors GmbH, a part of the Avecia Group. The company, originally a split-off from the Hoechst AG, and headquartered in the Höchst Industrial Park, produces organic light-emitting materials for OLEDs. Now renamed in Merck OLED Materials GmbH, the company is an essential element in the liquid crystal segment. Merck paid 50 million Euros for the acquisition, which included a research and development unit in the polymer electronics sector, and which is located in Manchester.

On April 2, 2007, Merck announced the liquidation of OLED Materials GmbH, with assets to be transferred to Merck KGaA. 100 employees were integrated into the liquid crystal division. The Liquid Crystals sector also includes materials for photovoltaics and the lighting industry.^[34]

Pigments and cosmetics

This business unit pools all activities for pigments in lacquering, printing and plastic applications, in the field of security technology (for instance counterfeiting protection), pigments for applications in the food and pharmaceutical areas, functional materials, and active substances and pigments for cosmetics.

References

External links

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