Merck & Co to establish a separate publicly-traded company for biosimilar drugs and women’s health

Merck & Co announced on Wednesday that it plans on expanding its focus on Keytruda (cancer drug) and other vaccines that have a higher potential of driving growth. Biosimilar drugs, women’s health, and older products, the company added, will be turned into a separate company (publicly traded) in the upcoming months.

At the time of writing, the total assets of the new company will be equivalent to around 15% of the overall Merck’s sales and almost 50% of Merck’s drugs that are used to treat people. Merck also highlighted that it intends to keep the animal health business. The segment dealing in various drugs that are commonly used in hospitals, for example, for acute care such as Biridion, will also be retained. Biridion is widely used to neutralize the effects of anesthesia.

Merck’s Keytruda Missed Analysts’ Estimate For Quarterly Sales

Following the announcement, the U.S drugmaker was seen trading around $85.12 in the stock market that marked a 3.7% decline for the day. Merck & Co also declared its Keytruda sales to have missed the analysts’ estimate in the recent quarter on Wednesday.

Ken Frazier, the current chief executive of Merck commented on the news and remarked that the company wishes to widen its focus on oncology and other growth driving segments. Keytruda immunotherapy by Merck, he added, has turned into a priority drug across the globe in the niche of oncology, including for advanced lung cancer that the chief executive sees as the largest commercial opportunity for the immunotherapy.

Keytruda’s sales were reported to have climbed by a massive 45% in the recent quarter. At $3.11 billion, however, sales were still recorded lower than the experts’ forecast of $3.23 billion.

Merck Anticipated Over $1.5 Billion In Cost Savings By 2024

The new company is expected to set up by 2021’s first half, following which, Merck anticipates more than $1.5 billion in cost savings by 2024. On Wednesday, Merck also revealed its quarterly profit (adjusted) at $1.16 per share that marginally beat the experts’ forecast.

Including the 3.7% decline on Wednesday, Merck & Co has lost around 7% in the stock market in 2020 so far. Its performance in 2019, however, was significantly optimistic. The company recorded an around 20% increase in 2019, with the stock-keeping above the opening level in January 2019 throughout the year.