Merck's stock has been on a downward spiral over the last few months. And it's no wonder: with the constant drumbeat of
news and analysis over Vytorin, it's been hard for investors to think about anything else.
But if Merck can come back from Vioxx, it can engineer a comeback from Vytorin. How? Behind the scenes, the company is getting
out in front by cherry picking the most promising compounds to pave its way toward future profits. Merck tendered three major
late-stage deals last year alone: with NovaCardia for a heart failure drug; with Ariad for an oncology compound; and with
Dynavax for a hepatitis B vaccine. What's more, at press time the cholesterol-lowering drug Cordaptive—a could-be blockbuster—was
before FDA awaiting approval. That makes Merck's Phase III pipeline one of the strongest in the biz. The company is also locking
up blue blood partners in early research, such as the Dana-Farber Cancer Institute, which recently signed a deal with Merck
to identify oncology drug targets.
So with the ferocious competition for compounds, how has Merck managed to stand out from the pack? To understand, Barbara
Yanni, vice president and chief licensing officer, says you only have to look as far as the company's formula for business
development: hire scientists to talk the science and comb the earth for compounds. It sounds expensive and a little chaotic,
but the proof that it's working, in this case, is in the pipeline.
Yanni, who is responsible for constructing the terms of licensing deals and partnerships, has been at Merck for more than
two decades, after starting in the industry as a tax lawyer. Yanni sat down with Pharm Exec to discuss the company's growing number of deals, and what she feels is Merck's scientific advantage.
You hear often that the old Merck was "internally focused." When did that change?
To some extent, I think it was exaggerated how internally focused Merck was. I mean, 10 or even five years ago, what company
would you have said was "externally focused"? Even in the 80s, some of Merck's products were from outside. Prilosec, for
example, came from the Astra deal, and Pepcid was from Yamanouchi in Japan.
Merck's Power Pipeline
But I do think Merck's attitude has changed. Dr. Peter Kim [president of Merck Research Laboratories], who came from outside
Merck, was a big part of that.
How did Dr. Kim change Merck?
You can see his influence in deals like the one with Sirna. Sirna's business model was to do different deals in different
therapeutic areas. We started to talk with them about a license in a particular category. But Dr. Kim's view was that if it
worked, it would work in a lot of therapeutic areas. The platform had the potential to really change drug discovery and drug
development. And if that could happen, he wanted Merck to be a part of it.
So Dr. Kim had this vision—and he was able to convey that vision to Merck's Board of Directors. He was very articulate, and
convinced them to move from just a license to a full acquisition of the company.
Merck's Alliances: A Decade of Growth