Merck promotes Oschmann as CEO to replace Kley

Merck promoted Stefan Oschmann to be its new chief executive as the German drugmaker looks to revitalise its business by betting on a new generation of cancer treatments.

Mr Oschmann, 58, is currently deputy chief executive and has been a member of the executive board since 2011. He will take over in April from Karl-Ludwig Kley who will retire next year after nine years in the top job.

The change of leadership takes place at a critical time for the company, which is facing a sharp decline in the sales of its bestselling drug Rebif while pushing ahead with a promising pipeline of cancer drugs.

Rebif, an injectable treatment for multiple sclerosis which accounts for around a quarter of Merck’s healthcare sales, is losing out to rival medicines that can be taken orally.

Sales of Rebif dropped 12 per cent in the second quarter of this year.

Merck has not had a major drug approved in more than a decade, but analysts are optimistic about the prospects for avelumab, its new cancer drug which is being co-developed with Pfizer of the US.

The US Food and Drug Administration last week granted fast-track status for avelumab based on positive early-stage trials, which could accelerate the drug’s path towards market if it continues to produce strong data.

The medicine is part of a fast-emerging new category called anti-PD-L1 immunotherapies that harness the body’s own immune system to fight tumours.

Others developing similar products include Merck & Co of the US as well as Bristol-Myers Squibb, Roche and AstraZeneca, with analysts and scientists touting them as the biggest breakthrough against cancer for decades.

Under Mr Kley, who took over in 2007, Merck has strengthened its two non-pharmaceutical divisions, which make laboratory supplies and specialty chemicals. The drugmaker is nearing completion of a $17bn deal to buy US laboratory supplies company Sigma-Aldrich which will help reduce the company’s reliance on healthcare.

The plan for Mr Oschmann to succeed Mr Kley has been an open secret for months as the latter approaches his 65th birthday next year.

Mr Oschmann joined German Merck in 2011 from US Merck, giving him a good understanding of the difficulties faced by both companies in explaining their separate ownership and identities to customers and investors. The two companies share common German roots but were split during the first world war, when Merck’s US business was confiscated by the US government.

Today, US Merck is by far the bigger of the two in terms of sales and market valuation, but it is forced to use the name “MSD” outside its home market because German Merck owns the brand name everywhere except North America.

October 13, 2015

Jeevan Vasagar in Berlin and Andrew Ward in London

Source: http://www.ft.com/