Merck has divested its biosimilars business to fellow German drugmaker Fresenius in a deal potentially worth 670 million euros.

The drugmaker said the move is aligned with a strategy of focusing on innovative medicines while enabling it to exploit its biosimilars portfolio - which is focused on cancer and anti-inflammatory medicines - to full potential.

Merck will bank an upfront fee of 170 million euros and milestone payments of up to 500 million euros under the deal, as well as royalties on future product sales.

The parties have also agreed to enter into supply and services agreements, which include drug development support and manufacturing services.

“The divestment of our Biosimilars business is a major step towards strategically aligning our R&D resources to Merck's Healthcare priorities,” noted Belén Garijo, member of the Executive Board of Merck and chief executive of its Healthcare division.

“We have increasing confidence in our Biopharma pipeline and this transaction will help prioritise innovative drug development of high quality and first-to-market best-in-disease assets”.

Separately, Fresenius also announced its intent to buy US generic drugmaker Akorn for $4.75 billion.