Merck to Spin Off Biosimilars Business to Focus on Pembrolizumab

Merck said Wednesday it is spinning off its biosimilars business into a new company, along with women’s health products and other brands, in order to focus on its oncology drug pembrolizumab (Keytruda).

Merck markets a biosimilar infliximab, Renflexis; a biosimilar trastuzumab, Ontruzant; and a biosimilar etanercept, Brenzys, in partnership with Samsung Bioepis.

Another biosimilar from the partnership, SB8, a proposed bevacizumab biosimilar referencing Avastin, is under review by the FDA; a decision is expected later this year.

In a company release, Merck said the new firm “is well-positioned to be a partner in the commercialization of biosimilars worldwide.” It will be headquartered in New Jersey (as is Merck), with about 10,000 to 11,000 employees, and will have approximately 75% of sales generated from markets outside of the United States. The spun off products are expected to generate 2020 revenue of approximately $6.5 billion within Merck; as an independent company from a 2021 base-year of approximately $6.0 billion to $6.5 billion in revenue, the new firm is expected to achieve low-single-digit revenue growth.

The new firm's chief executive officer (CEO) will be Kevin Ali, who has spent about 30 years within Merck.

“Over the past several years, we have purposefully shifted the focus of our efforts and resources to our best opportunities for growth,” said Kenneth C. Frazier, Merck's chairman and CEO.

Sales of the 3 biosimilars were about $250 million last year; sales of pembrolizumab were $11 billion, according to The Wall Street Journal.