Merck KGaA collaborates with Dr Reddy's on biosimilars

With the aim of capitalizing on the batch of patent expires for blockbuster biotechnology-based drugs (worth some 40% of global biologics sales of $63 billion), German pharma major Merck KGaA (MRK: DE) and India’s second largest drug company Dr Reddy’s Laboratories (NYSE: RDY) have entered into a partnership to co-develop a portfolio of biosimilar compounds in oncology, primarily focused on monoclonal antibodies (MAbs). The partnership covers co-development, manufacturing and commercialization of the compounds around the globe, with some specific country exceptions.

The Merck Serono and Dr Reddy’s partnership marks the first step by the German group to enter the biosimilar space. Merck Serono began exploring the opportunity last year to assess how it could capitalize on its expertise in biopharmaceuticals and its growing presence in key markets including select emerging markets. Earlier this year, it set up a dedicated biosimilars unit that will be based in the Canton of Vaud in Switzerland, where the main biologics manufacturing facilities of the division are located. The investment required for this initiative is fully reflected in the guidance provided for Merck’s 2012 and mid-term financial performance, which was provided to the Capital Markets on May 15.

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