Merck KGaA has been making new moves to propel itself into becoming what CEO Belén Garijo described as a “globally diversified science and technology powerhouse.”
Most recently, the company closed its $3.4 billion acquisition of Pfizer spinout SpringWorks Therapeutics, which will help it stake a claim in the rare tumor space.
And in general, it’s all about “doubling down” on R&D and building the company’s U.S. footprint, said Miguel Fernández Alcalde, president of EMD Serono, Merck KGaA’s healthcare business in the U.S. and Canada.
Germany-based Merck KGaA has undergone a number of transformations throughout its deep history. In 2022, the company restructured into three distinct business units including one focused on the life sciences sector and manufacturing services. But with the contract manufacturing blitz of the COVID-19 pandemic era fading, the company is refocusing.
EMD Serono relocated its U.S. headquarters to Boston’s Seaport district to place itself squarely in the thick of the region’s most innovative “biotechs, startups, academia and scientists,” Fernández Alcalde said.
“I want to make sure we are bringing the U.S. [business] to the next level in terms of contributions to the whole organization."
Miguel Fernández Alcalde
President, EMD Serono
Merck KGaA also elevated its global head of R&D and chief medical officer of its healthcare business, Dr. Danny Bar-Zohar, to healthcare CEO.
“That tells you that the company’s moving along in the direction of doubling down on R&D,” Fernández Alcalde said.
Fernández Alcalde’s appointment to president of EMD Serono in December is also part of the company’s overall quest to build its U.S. footprint and bolster R&D through external deals.
“I want to make sure we are bringing the U.S. [business] to the next level in terms of contributions to the whole organization,” he said. “I do think we have lots of opportunities in the U.S. ecosystem and U.S. market. My job and my vision and ambition is to really untap all those things that we have ahead of us.”
A pharmacist by trade, Fernández Alcalde has been with Merck KGaA since 2014, serving most recently as EMD Serono’s chief operating officer.
“That gave me a lot of knowledge and understanding of the business of the company in the States and the teams, the dynamics, the culture, but also the U.S. [healthcare] ecosystem,” he said.
Driving dealmaking
Central to Fernández Alcalde’s role is supplementing the company’s current pipeline through external innovation investments, including more strategic in-licensing and co-development opportunities. The SpringWorks acquisition put the company on track to generate at least 50% of its future launch assets from external companies, compared to roughly 10%-15% just 18 months ago.
“It’s easily a fivefold increase in our ambition from external innovation,” Fernández Alcalde said.
In terms of what kinds of deals they’re targeting, Fernández Alcalde said several factors are at play.
“We are not looking [for] the $40 billion type of acquisition,” he said. Nor will they chase first-in-class potential blockbusters with never-explored mechanisms of action.
Instead, they’ll target smaller deals with the “right risk balance” for their pipeline. He pointed to the SpringWorks acquisition as an example, which not only adds two FDA-approved drugs to its portfolio, but also a “runway of three to five years of nice growth” in the form of several clinical-phase pipeline candidates.
“These areas where we have deep, good science [and a] validated proof of concept or an about-to-be-validated proof of concept where the mechanism of action is already validated, is something we are interested in,” he said.
The company will take a similar approach when it comes to therapeutic areas by branching out within reason.
“We are not sticking to the [therapeutic areas] we have today, but we are not going to go wild, either,” he said. Rather, they’ll look for specialties that are “adjacent” and “logical” in terms of what they’ve been historically known for, such as oncology and neurology/immunology.
Again, he pointed to the SpringWorks acquisition as an example and noted that some might ask what track record EMD Serono or Merck KGaA has in rare tumors.
“The answer is zero. But we do know how to commercialize,” he said. Plus, “it’s in an adjacent area of oncology.”
Fernández Alcalde is also thinking globally, intending to follow good science wherever it leads and consider deals from around the world.
“We couldn’t care less about where that science is coming from, whether it’s China, my home country Spain, the U.S. or South Africa,” he said. “If we think that science will help patients … we will definitely think about it.”
