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Merck ( MRK - Analyst Report ) recently entered into an agreement with Samsung Bioepis Co., Ltd. for the development and commercialization of several pre-specified and undisclosed biosimilar candidates.
Per the terms of the agreement, preclinical and clinical development, process development and manufacturing, clinical studies and registration will be handled by Samsung Bioepis. Meanwhile, Merck will be responsible for commercialization.
Merck will make an upfront payment to Samsung Bioepis. Moreover, Samsung Bioepis will be entitled to receive product supply income as well as additional payments on the achievement of pre-specified clinical and regulatory milestones. Additional financial details were not available.
With this deal, Merck is looking to establish a presence in the biosimilars market. Merck is looking towards biosimilars to drive long-term growth. The biosimilars market represents huge commercial opportunity with more than $60 billion of biologic sales slated to lose patent protection through 2017.
We note that Merck is not the only company looking to establish a presence in the biosimilars market. In fact, Samsung Bioepis is a joint venture between Biogen Idec ( BIIB - Analyst Report ) and Samsung Biologics. The joint venture was set up for the development, manufacture and marketing of biosimilars. Biosimilars are generic versions of biologics.
Merck currently carries a Zacks Rank #3 (Hold). The company is going through a challenging period with Singulair facing tough generic competition. The loss of Singulair exclusivity in the EU will impact results further. While headwinds remain in the form of the Singulair genericization, EU pricing pressure, unfavorable currency movement, US health care reform and pipeline setbacks, some of the company’s recent launches should start contributing significantly to the top line in the forthcoming quarters.
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