Merck Gives Consumer Health Care Division Direct Line To CEO
This article was originally published in The Tan Sheet
Executive Summary
Merck is searching for an executive to lead its new consumer health care division to international growth once its $41.1 billion merger with Schering-Plough closes
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Merck is searching for an executive to lead its new consumer health care division to international growth once its $41.1 billion merger with Schering-Plough closes. Schering-Plough Consumer Health Care Chairman Stanley Barshay will head the division on an interim basis until Merck finds a permanent leader, the firm says in an Aug. 31 release announcing a structure that goes into effect with the merger's completion, projected by the year's end. Consumer health will be one of five primary divisions, including global human health, animal health, Merck Research Laboratories and Merck manufacturing. Each division leader also will serve on the company's new executive committee, Merck says. CEO Richard Clark said the combined firm "will plan an increased emphasis on growing the consumer business." In particular, he said, Merck wants to expand Schering's consumer health business to markets outside the United States. The head of the consumer business will report directly to Clark - an arrangement that likely reflects the importance Merck places on nonprescription products. Schering's consumer business diversifies Merck's portfolio at a time when the firm faces patent losses, and offers Merck a platform to switch prescription drugs OTC (1 (Also see "Schering-Plough Merger Offers Merck OTC Business, Zegerid Switch Rights" - Pink Sheet, 16 Mar, 2009.)). A Merck exec in July said the firm might look at switching Singulair (montelukast) for an allergic rhinitis indication. However, with the product also indicated for asthma, FDA approval for a switch could be unlikely (2 (Also see "Singulair Switch Among Merck's OTC Possibilities" - Pink Sheet, 27 Jul, 2009.)). The merger brings to Merck multiple leading OTC drugs and products, including Schering's non-sedating antihistamine Claritin , sales of which fell 12 percent to $405 million in the previous fiscal year due to private-label competition. Schering's portfolio also includes the laxative MiraLAX , sun care products (including Coppertone ), which sold $239 million in fiscal 2008, and Dr. Scholl's foot care products, which sold $357 million in the same year. Overall, Schering's consumer health division sales were $1.28 billion in 2008 - a 1 percent increase over the previous year, according to the firm. Following the merger Merck will conduct an internal and external search for the best person to lead Schering's consumer health care division. However, a spokeswoman would not say whether Merck is considering for the post either Barshay or Brent Saunders, former president of Schering's consumer health care who now leads the firm's merger integration team. Not only was Saunders not named to run consumer health, but he does not have a specified position in the merged company either. Also missing in action is Tom Koestler, a Schering executive VP who heads the firm's Research Institute. A Merck spokeswoman says Koestler will remain as a consultant for six months following the closing of the merger. Merck notes in the release that about 40 percent of Schering's senior leaders will continue in executive roles at the combined company, but the firm will "complement our joint talent" by "adding leaders from outside the two companies with specific experience in key areas." Merck Tries To Assure Reverse Merger Is Legit Merck's emphasis on the number of Schering leaders who will stay with the new company may be an effort to convince regulators that its complicated "reverse merger" actually represents Schering taking over Merck. In its bid for Schering, Merck insisted the surviving company would be Schering even though it would be named Merck, and the new firm could retain the lucrative rights to the anti-TNF arthritis treatment Remicade (infliximab) and its follow-on Simponi (golimumab) (3 (Also see "J&J Options In Face Of Merck’s Schering Bid Include OTC Deal" - Pink Sheet, 16 Mar, 2009.)). Schering partnered with Johnson & Johnson to market the drugs with the agreement that J&J would gain total ownership if control of Schering changed. J&J did not buy Schering's and Merck's "reverse merger" spin and filed for arbitration to decide the control of the two drugs (4 'The Tan Sheet' June 1, 2009). By appointing Schering executives to head two of the five divisions and including three current Schering board members on the new company's board, Merck likely hopes to convince the court that Schering did not change hands and is the rightful owner of the drugs. In addition to Barshay, Schering's Raul Kohan will head the animal health unit. The three board members include C. Robert Kidder, Patricia Russo and Craig Thompson. Merck noted that other Schering executives also will retain their positions. In the R&D organization, these include Greg Szpunar, head of pharmaceutical science and drug supply; Peter Aurup, clinical research operations chief; Tom Haverty, who oversees bioventures and early biologics clinical research; and David Nicholson, worldwide licensing head. Similarly, the Schering personnel who head four research sites will remain in their positions: Ton Rijnders in Oss, The Netherlands; Chris Hill in Newhouse, Scotland; Rob Kastelein in Palo Alto, Calif., and John Piwinski in Cambridge, Mass. Another Schering executive, Richard Bowles, will be the newly created chief compliance officer. Currently, Bowles is Schering's senior VP for global quality operations. From 2002 to 2007 part of Bowles' job entailed implementing manufacturing improvements after the drug maker entered into a consent decree with the Department of Justice and the New Jersey attorney general regarding manufacturing problems at facilities in New Jersey and Puerto Rico. He is hardly an unknown quantity at Merck, however. Before joining Schering, Bowles worked for Merck between 1974 and 2001, mostly in manufacturing. Certain positions remain unfilled, including two new posts - medical officer and the head of biologics - and the head of vaccines following Margie McGlynn's unexpected retirement in August. - Elizabeth Crawford ( 5 [email protected] ) and Ed Silverman ( 6 [email protected] ) |