February 9, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Merck & Co. and China-based Simcere Pharmaceutical Group have dissolved their joint venture, according to a news report today.
In 2011, Merck announced it had inked a framework agreement to establish a joint venture with Simcere. The partnership was intended to combine resources and expertise for the development and commercialization of branded pharmaceutical products for cardiovascular and metabolic diseases.
The joint venture was to offer a combined portfolio of medicines from both companies. Those included ZOCOR (simvastin), COZAAR (losartan) and RENITEC (enalapril) from Merck. From Simcere would be XINTA (levamlodipine) and SHUFUTAN (rosuvastatin). The companies would also attempt to increase access in China to sitagliptin, a DPP-IV inhibitor used to treat type 2 diabetes.
“This partnership between Simcere and Merck is not only strategically significant for both organizations, but also a landmark event for Jiangsu’s biopharmaceutical industry,” said Zhijun Luo, secretary of China’s Jiangsu Provincial Committee in a statement at the time. “Biopharmaceuticals is an emerging industry of strategic importance for Jiangsu Province and this partnership will bring additional momentum to the development of this industry. It will help Jiangsu in providing more quality pharmaceuticals to China and the world.”
The joint venture, dubbed SMSD, will continue to operate under Simcere’s management. According to a statement, SMSD will “focus on local innovative and mature products, serving the local market.”
Although there are few details of why Merck pulled out of the detail, a joint statement does indicate that an explosion in the online market for drugs in China is one factor. It is not yet known if Merck will stay in the deal in a passive manner, or if it will still contribute some of its drugs.
SMSD began operations in 2012 and at that time had 400 employees. It expected to have approximately 800 employees by the end of that year. There were also plans to build a manufacturing plant, although that has yet to begin.
The joint statement said that “in order to pursue further development and better meet challenges posed by the rapidly changing external environment, SMSD will undergo a strategy transformation.”
Merck had a 51 percent stake in SMSD, with Simcere holding the remaining 49 percent. The statement also indicated that Merck is reassessing its strategy in China as the market evolves. “The market place has seen significant changes, and e-channels continue to expand,” the statement read. “Pharmaceutical companies are seeking transformation and reform, with a focus on their priorities areas.”
Merck reported sales in China for 2014 of about $1.2 billion, an increase of 13 percent from $1.1 billion in 2013.
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