Merck's CEO Richard Clark introduces a new strategy for biogenerics. Credit: AP Photo/Keystone, Laurent Gillieron

Merck's CEO Richard Clark has unveiled plans to enter the biotech drug market by creating Merck BioVentures (MBV), a global division focused on developing biotech drugs, in particular copycat versions of existing biologics. The initiative represents Merck's shot at replenishing a dwindling pipeline and an attempt to position itself as a major competitor in the biotech field. The unit is expected to burn $1.5 billion over the next seven years, with a manufacturing capacity fully operational by 2012. The news comes at a time when the Whitehouse Station, New Jersey–based pharma faces dwindling sales of cholesterol-lowering blockbusters Zetia (ezetimibe) and Vytorin (ezetimibe and simvastatin) and the expiration of some key patents. Merck's new biotech division will take advantage of its GlycoFi technology, purchased in 2006. This glyco-engineering platform—a faster, less expensive production method than mammalian-based culture—will enable the company to circumvent generic manufacturing restrictions and be competitive in its pricing approach. MBV already has a candidate drug in phase 1, MK2578 (pegylated erythropoietin), designed to compete with Thousand Oaks, California–based Amgen's Aranesp (darbepoetin alfa), and at least five other products projected to be in late-stage development by 2012. “It was important to make a decision around manufacturing and leverage our internal capabilities,” says Frank Clyburn, MBV general manager. Biogenerics represent an important market opportunity as $10 billion worth of biologic drugs are expected to come off patent by 2010, with an additional $10 billion by 2015. Given that the new Democratic administration is expected to push biogenerics legislation through Congress, the timing is propitious, although a generic-drug-style abbreviated pathway looks increasingly unlikely. As clinical trial costs will, mostly likely, be added to the cost of developing a follow-on biologics environment, the investment and expertise needed for success could be considerable. But considering the large number of leading biologics, such as Epogen (epoetin alfa), Enbrel (etanercept) and Avastin (bevacizumab), facing patent expirations through 2017, and the diminished late-stage risk involved in producing follow-on biologics, Merck's strategy is timely. Basel-based Novartis and Petach Tikva, Israel–based Teva already market follow-on biologics in Europe and India, and several other companies also have the cash and the technology to enter the race. “Over the longer term, we will also apply our unique humanized GlycoFi yeast technology platform to the development of novel biologics,” says Caroline Lappetito, Merck's director of global communications.