Wednesday, September 8, 2010

More Coverage -- Of The Looming New Merck Vs. Centocor Arbitration

The only thing Jim Edwards, at B|Net's Placebo Effect, is wrong about (and now, by copying his, FiercePharma is, too) is the size of the potential liability: it is not $2.6 or $2.7 billion -- it is closer to $10 billion, over the next three years -- from Merck's perspective. Simponi® sales are ramping up ferociously overseas, and Remicade® is a juggernaut -- outside the US. And all of that may vanish into the mists of Brigadoon, and soon -- for New Merck.

It was Schering-Plough, afterall, that had entered the non-US distribution pact with J&J's Centocor. Now its CEO is gone; its stock is no longer listed on the NYSE; its board of directors disbanded (save 3 -- of 12). . . yet Merck would say that tiny old Schering-Plough ate its lunch. A ghost did it, I guess. See FiercePharma, on it -- this morning:

. . . .That technicality may or may not hold water with the arbitration panel of three former federal judges. Sure, it's all there in the fine print: Merck suffered a change in control, not Schering; Schering was the buyer, not the seller. But as BNet Pharma points out, the reverse merger was enough of a "change in control" to trigger Schering CEO Fred Hassan's $50 million golden handshake.

Remicade is now Merck's second-biggest drug. If it has to say goodbye to those revenues -- just as it did to Fred Hassan -- one of its reasons for buying Schering in the first place will have vanished. And Merck's stock price would suffer, angering investors. . . .

In general, Jim Edwards' coverage really nailed it, yesterday -- so much so, that FiercePharma's Tracy Staton quoted him, today, in the above piece.

Except as to size, of course.


Anonymous said...

What amazes me is that a CEO like Dick Clark will leave Merck in a few months with a bag full of cash and stocks as a reward for a lousy deal and the destruction of so many scientific career ...

Condor said...

Yes, but he'll get only a small fraction of what Mr. Hassan got.

Add to this that Clark will have worked for Merck for over 35 years, while Hassan put in just over six, at Schering-Plough -- to get a ten times bigger payout.