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Merck KGaA (MKGAF) Expands Distribution Deal with Roche

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Germany-based Merck KGaA (MKGAF - Free Report) announced that it has expanded the distribution alliance with Roche Holding AG (RHHBY - Free Report) to include the enzyme portfolios of Kapa Biosystems (acquired by Roche in 2015) – polymerase chain reaction (PCR) and quantitative real-time PCR (qPCR).

Under the terms of the distribution agreement, Merck will gain the rights to all geographies expect the U.S., Brazil, and Japan. Financial details of the deal were, however, not disclosed.

The transition of portfolios is expected to be complete by Jan 1, 2017.

The agreement will strengthen the existing relationship between Merck KGaA and Roche, providing its customers broader access to novel products through distribution channels. The transition will significantly boost the company’s Life Science segment, which continues to be driven by the Sigma-Aldrich acquisition.

We note that Roche inked a global exclusive distribution agreement with Sigma-Aldrich, which was acquired by Merck KGaA in 2015. The Sigma-Aldrich acquisition offered Merck KGaA with a premier brand tools for genomics, proteomics and cell analysis.

A look at Merck KGaA’ year-to-date share price movement shows that the stock has consistently outperformed that of the Zacks classified Medical drugs industry. The company’s stock price rose 2.4% in year to date, compared with the industry’s 24.7% decline.

Zacks Rank & Key Picks

Investors looking for a couple of favorably placed stock in the health care sector may consider Cambrex Corporation and Vanda Pharmaceuticals, Inc. (VNDA - Free Report) . Both stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cambrex’s earnings estimates increased from $2.46 to $2.55 for 2016 and from $2.91 to $3.06 for 2017 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 19.78%. Its share price has increased 6.4% year to date.

Vanda’s loss estimates narrowed from 68 cents to 56 cents for 2016, while its earnings estimates have increased from 16 cents to 17 cents for 2017 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average positive surprise of 56.65%. Its share price has surged 76.7% year to date.

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