Merck's Vaccines: Why the Company's Down, but Definitely Not Out
Given it's late-stage pharma failures, Merck now finds itself importantly dependent on its vaccine pipeline--the majority of its phase III projects. Its commitment to innovation and willingness to self-fund large programs created major vaccines with drug-like potential, and little competition, itself a hallmark of the business to which Merck, and few other companies, has remained loyal. But the costs and risks of the program raise questions as to its long-term viability at a time when Merck's profits are under increasing pressure.
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Pharma companies are bullish about biologics, seeing them as at least a partial solution for the pipeline troubles and reimbursement challenges bedeviling the industry. The major question is how best to bring these new biologics capabilities in-house--either piecemeal through a series of smaller acquisitions and licensing deals or in one fell swoop through the acquisition of a player with soup-to-nuts capabilities. Both strategies require delicate post-merger management skills, but many feel acquiring an end-to-end player is a faster, less risky solution to filling the biologics gap. But because few end-to-end biologics players are left for acquisition, in the future it seems likely that Big Pharma will be forced to make a serial acquisition strategy work.
Among our stop stories from 2005: Safety and the FDA: decision by indecision; ahe Plan B kerfuffle; acquisition as the new exit strategy for private biotechs; TLRs-the hottest drug target; pricing revives vaccines; Pfizer's challenges and Genentech's triumphs. Among the predictions for the big stories of 2006: Medicare's impact, the oncology bubble, biogenerics and genomics' revival--via diagnostics.
GlaxoSmithKline has some catching up to do in the race for what promises to be the world's biggest dollar-volume vaccine market. The company's human papilloma virus vaccine, Cervarix, is a year behind Merck's Gardasil in clinical development. The outcome of the race is by no means a foregone conclusion, however; development strategies, and how the social-conservative card plays out--will decide the winner in the newest vaccine market.