After the Sirna deal, other companies rushed in to snatch up the other major players in RNAi. Are there other areas where
you see that happening?
You might see the same thing in, say, cancer, after a target is discovered. If suddenly a company announces they've entered
Phase II with a certain mechanism, that can catch attention and move a mechanism up or down in terms of a company's priorities.
It also shows how licensing is influenced by what happens on the outside of the company. Science is constantly changing. And
in a way, licensing just follows that. We're just the piece that you see—there are all kinds of other things going on in the
research labs. For example, you might have read about our deal with the Swiss company Addex on a particular mechanism in schizophrenia;
but there are other things Merck is doing in neuroscience that you don't really hear about because they are still early-stage.
Licensing and M&A have become just another form of R&D in the industry. How do the two functions overlap at Merck?
Dr. Kim tells all the scientists that it's their job to know what's going on in a therapeutic area, and to get the best programs—whether
they come from our own basic research invention or from outside Merck. And they take that very seriously.
As a result, scientists view the licensing group as partners, as the instrument of how these people are going to carry out
their vision. The basic research scientist will say, "I was at the American Diabetes Association and I saw this great poster.
You should call this company and see if they'll talk to us."
How does the company facilitate those conversations?
When it comes to licensing, there are two basic groups: external scientific affairs—there's 50 or more of these people—and
our so-called scouts. All of these people are scientists. Most came from inside the Merck research labs, so they know each
other. It's a scientist-to-scientist relationship. It's just that the people who are in the licensing group have this additional
skill of knowing how to contact people and how the process works.
One of the strengths of the way Merck does business is that all partnership activities are all handled under one umbrella
group: scouting and evaluating, working with the therapeutic area experts for due diligence, and then the structuring of the
deal and the commercial terms. The licensing group shows the opportunity to the therapeutic area group; if they're interested
they do due diligence. If the opportunity is still interesting, it comes to my group to talk about terms.
Is there anything that makes the Merck business development function unique from other companies?
The fact that we have a scientific scouting organization is unusual. We get feedback from partners and potential partners
who were impressed with Merck when they met the scientists—and that's what sparked a strong interest in working with Merck.
We've had a scout in Japan for many years, but we beefed up the rest of the organization about three years ago. The scouts
are assigned geographically so they can get to know the companies in their region. In addition to our scout in Japan, we have
four scouts covering Europe, one in Korea, one in China, and US scouts in San Diego and San Francisco.
There are some hints that this is being copied by some of the other Big Pharma companies—so it must be a good idea.