Merck KGaA is interested in acquisitions, especially in the USA, but the German group is not going to charge into the market despite the credit crunch wiping millions of dollars off the value of possible targets.

That was the message from chairman Karl-Ludwig Kley who was speaking to PharmaTimes World News in Corsier-sur-Vevey, Switzerland, where the firm’s Merck Serono unit unveiled a 300 million euro expansion of its biologics site there. He noted that there are opportunities out there but noted that despite the slide in market capitalisation for many firms, “biotechs are not necessarily bargains”.

Merck is only interested in investing in innovative businesses and those focusing on emerging technologies, Dr Kley added, but “we are open to deals”. This could involve takeovers or products, though he noted that in the main, agreements for late-stage drugs are not attractive due to the prices involved. There is more value in signing pacts involving Phase II treatments, he noted.

The USA is a priority for the firm, Dr Kley noted, and Merck is building up its already-strong presence in emerging markets, notably in Latin America. However this is unlikely to be done through acquisitions but rather by building up its local businesses there. New management teams have been installed in India and China, areas that represent great opportunities for future growth, he added.

Dr Kley is pleased with the way that the company is progressing and reiterated his support for the diverse structure of Merck which as well as pharma, also specialises in liquid crystals (number one in the world), chemicals and consumer health. The latter is a niche business, he admits, “but a lovely niche”.

The Darmstadt-based group recently unveiled a very healthy set of figures for the third quarter, driving by sales of the multiple sclerosis drug Rebif (interferon beta-1a) which rose 10% to 338 million euros, and the cancer drug Erbitux (cetuximab). Interestingly, old Merck products such as the beta blocker Cardicor/Concor (bisoprolol) and Glucophage (metformin) are still selling well, despite having gone off-patent in major markets long ago.

Dr Kley told PharmaTimes World News that what had been perceived as being a weakness, ie the lack of a blockbuster, has become a strength as the firm is not reliant on one particular product. “We didn’t have a Lipitor,” he said, so the company does not face the patent cliff that looms for many companies.’

Also at a time when companies are being forced into drastic job cuts, Merck is actually increasing its headcount, certainly in pharma. A lot of those jobs will come at the Vevey plant which is being expanded in order to deal with future demand for Erbitux.

The active ingredient for the drug, for which Merck holds marketing and development rights to in most countries outside North America, is currently manufactured by Boehringer Ingelheim and Merck Serono hopes to be producing the drug itself by 2012.

ImClone, which owns Erbitux, is in the process of being acquired by Eli Lilly. Dr Kley added that the latter will be an excellent as the firms seek to get the regulatory go-ahead for further indications of the drug, especially in lung cancer, which is currently approved for head and neck cancers.