(C) Fresenius SE & Co. KG 2017 - Merck biosimilars saleMerck’s Biosimilars Handover to Fresenius:
Manufacturing at Lac Léman and Export of Injectables to the U.S.

April 2017. Fresenius and Merck KGaA announced that Fresenius Kabi will acquire Merck's biosimilars business, which comprises the entire development pipeline and an experienced team of more than 70 employees located in Aubonne and Vevey at Lac Léman (CH). The product pipeline has a focus on oncology and autoimmune  (Fresenius) or inflammatory (Merck) diseases. Fresenius Kabi expects first sales towards the end of 2019 and estimates to ramp-up the business to high triple-digit million sales from 2023 onwards based on the current product development schedule. Fresenius Kabi has agreed to pay single digit percentage royalties to Merck based on sales.

The purchase price will be up to €670m. Thereof, €170m (€185m; £145m) will be paid in cash upon closing. Approximately €500m are milestone payments strictly tied to achievements of development targets. Analytical testing, clinical studies, quality requirements specific to biosimilars as well as marketing and sales activities are expected to result in increased costs for Fresenius Kabi. These costs are expected to occur in uneven tranches. The total expected cash-out and self-imposed investment ceiling is estimated to be up to EUR1.4 billion until projected EBITDA break-even in 2022. From 2023 onwards, the acquisition is expected to be significantly accretive to Group net income  1) and Group EPS  1). The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in H2/2017. The total investment in the biosimilars business will be mainly cash flow financed.

With the acquisition Fresenius will enter the biosimilars market. In a discussion with analysts, Stephan Sturm, CEO of Fresenius SE 2) said that his company is not going to venture into drug discovery: “the biotech experience is behind us”. Merck will allocate one biosimilars suite to Fresenius and provide its biologics manufacturing know how with the associated services at its Swiss sites.(C) B2Bioworld 2008 Corsier cornerstone ceremony Karl-Ludwig Kley

Merck KGaA  3) has been developing a biosimilar version of Adalimumab (MSB 11022) against chronique plaque psoriasis (originator: AbbVie). Recently, the company reported having recruited the first patient for its investigational drug. In order to bring it to market of developing countries 4) it entered strategic alliances with Dr.Reddy, India, and Bionovis, Brazil. The deal will save Merck much needed R&D resources which it quantified for its biosimilars investments at €130m in 2016 alone.

Photo: Cornerstone ceremony with Wolf-Ludwig Kley, CEO Merck KGaA and members of management at the biopharma manufacturing site, Corsier-sur-Vevey (CH) in November 2008.


References

  1. Group net income and EPS attributable to shareholders of Fresenius SE & Co. KGaA
  2. Fresenius SE & Co. KGaA: cquisition of Akorn, Inc. and Merck KGaA’s Biosimilars Business. Webcast, 25-04-2017
  3. Merck KGaA Annual Report 2016, 04-04-2017
  4. Merck: Getting closer to biosimilars markets in Asia and Latin America. B2Bioworld September 2015

Sources: Fresenius SE / Merck KGaA, additional reporting B2Bioworld

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