DuPont Merck executives expect few changes in businessExecutives at DuPont Merck don’t expect many changes to the company following DuPont’s acquisition of the stake in the joint-venture firm held by Merck. Officials at DuPont
DuPont Merck executives expect few changes in business
Executives at DuPont Merck dont expect many changes to the company following DuPonts acquisition of the stake in the joint-venture firm held by Merck. Officials at DuPont Mercks North Billerica, MA, radiopharmaceuticals division believe the change should bring benefits to the company, given DuPonts stated interest in building its life sciences business.
DuPont of Wilmington, DE, and Merck of Whitehouse Station, NJ, announced the deal on May 19, in which DuPont agreed to buy out Mercks stake for $2.6 billion in cash. DuPont Merck had annual sales of $1.3 billion in 1997 and employs 4200 workers, who will become Du Pont employees when the deal is completed. The agreement is expected to close in July.
DuPont Merck was formed in 1991 as a collaboration between the two companies, which hoped to pool their resources by merging Du Ponts pharmaceuticals business with several pharmaceutical products and R&D funding contributed by Merck. Products are developed and marketed by the joint venture, with the profits split between the two.
DuPont Mercks medical imaging products include Cardiolite, a heart imaging agent that is the best-selling radiopharmaceutical; Quadramet for palliation of bone pain; and Miraluma, a breast imaging agent based on Cardiolite. The company is also developing an ultrasound contrast agent, DMP-115, in collaboration with ImaRx Pharmaceutical of Tucson.The radiopharmaceuticals business contributes about one-third of DuPont Mercks earnings, according to the company.
The joint venture agreement from the outset included an escape clause that Merck could exercise beginning in 1997, and this months deal represents the outcome of that provision. Merck executives stated that the reason for their decision is that the joint venture has not been a significant contributor to Mercks earnings growth objectives.
DuPont executives see things differently, however. The company this month announced that it intends to place renewed emphasis on its life sciences business, and hopes to increase its sales from the segment to 30% of total revenues, up from 20% currently. For that reason, DuPont Merck executives believe the operational changes to their company will be minimal.
The Du Pont life sciences strategy is very much in line with our strategy to grow our pharmaceuticals business, said Paul Howes, president and CEO of Du Pont Merck. There really shouldnt be any changes in organization.
DuPont will probably fund the acquisition with proceeds from the sale of Conoco, the oil unit it plans to sell off, in part to fund its expanded activities in life sciences. DuPont said it will take a $1 billion charge related to R&D for the acquisition.
The agreement will probably be a topic of conversation at the upcoming Society of Nuclear Medicine meeting in Toronto, where Du Pont Merck will be an exhibitor. About 100 abstracts on the companys products will be presented, including those on Cardiolite, Miraluma, and DMP-444, a new thrombus imaging agent under investigation.
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