Merck to step up UAE presence

The US pharmaceutical company Merck is looking to buy or tie-up with companies in the Middle East as it seeks to expand sales.

Merck, the second-largest pharmaceutical company in the world, is in talks to join forces with or acquire up to five health care companies in the Middle East. The planned expansion efforts will help boost sales in the region by 30 per cent, about double what the company expects to achieve in other emerging markets such as South America and China, said Stefan Oschmann, the president of emerging markets for Merck.

Mr Oschmann declined to disclose how much the company was willing to invest in the region or what companies it was talking to. But he said Merck was exploring joint ventures, acquisitions and licensing or manufacturing partnerships. "We're looking into all different options," he said. "I expect that, over the next couple of years, significant deals will happen. You will see that we will have a much larger local and regional footprint."

Merck purchased the US biotech tool maker Millipore for US$6 billion (Dh22.03bn) in cash last month and the Swiss biotech company Serono for ?10.3bn (Dh51.65bn) in 2007. It has $9.6bn in cash and short-term investments. Merck is one of the top five pharmaceutical firms in the UAE and has set a target to be in the top two by 2013, Mr Oschmann said. Merck has about a 4 per cent share of the fragmented UAE pharmaceutical market.

"The UAE has a sophisticated medical system together with emerging market features," he said. "When you match these two, it makes it a very interesting area for us to invest in." Major pharmaceutical companies, such as Pfizer and GlaxoSmithKline (GSK), are beginning to look at investing heavily in the Middle East because of a significant shortfall in medical services. About one third of GSK's emerging market sales originate from the Middle East, Abbas Hussain, the president of emerging markets for GSK, said in December. Emerging markets account for about 13 per cent of GSK's overall sales and about 70 per cent of Merck's revenues.

The UAE's pharmaceutical market, in particular, has grown about 28 per cent from 2008, a ten-fold increase compared with the global market, according to figures from the US-based research company IMS Health. Merck offers two leading medications to treat diabetes, which is prevalent in the region. Mr Oschmann said Merck would invest "significantly" in clinical research trials in the UAE to help the company fine tune the development of diabetes-related drugs in the future.