UPDATE: Merck: South Africa Venture, FDA Asthma Drug Approval

24th Jun 2010 22:42

(Updates with analyst comments, beginning in the third paragraph.) By Nathan Becker and Shara Tibken Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Merck & Co. (MRK) announced it was collaborating with South African company Adcock Ingram Holdings Ltd. (AIP.JO) to promote and distribute products in South Africa as it looks to tap into emerging markets, an area the drug-making giant sees as a big part of its business going forward. Meanwhile, Merck separately said Thursday it had received U.S. Food & Drug Administration approval for Dulera, an inhaler treatment for asthma patients age 12 and older. The drug, expected to hit store shelves nationwide by the end of July, was part of the portfolio at Schering-Plough, acquired by Merck in November. Analysts were excited about the drug and said it has blockbuster potential but could face hurdles competing against other well-established drugs, such as GlaxoSmithKline PLC's (GSK) Advair. Last year, Advair generated sales of about $7.5 billion. "The asthma indication is definitely a huge indication, and if it were to take the majority of the market share, it could be a megablockbuster," Morningstar analyst Damien Conover said. But Conover said the drug likely won't take a majority of the share and could be a "middle-tier type of drug," with potential peak sales of $1 billion. He added the drug also will face competition from a new drug from Novartis AG (NVS), as well as from a potential generic version of Advair. Merck shares closed Thursday's session up 19 cents to $35.61. They have climbed 40% over the past 12 months, but have dropped 6% over the past three. Financial details of the collaboration with Adcock weren't disclosed. Merck said jointly promoted products will include over-the-counter products and selected prescription medicines currently registered in South Africa by Merck and Schering-Plough, which Merck acquired in November for $41 billion. Merck said the collaboration is part of its broader strategy of expanding and taking a leadership position in emerging markets. It said it expects to grow its position in those markets by making collaborations, much like the Adcock Ingram deal, with local companies. Emerging markets are likely to account for more than one-fourth of Merck's global pharmaceutical and vaccine revenue by 2013, the company said, based on its current emerging-markets strategy. Big drug makers are racing to grab market share in countries on the rise, notably China, India and Brazil. Companies such as Eli Lilly & Co. (LLY), Pfizer Inc. (PFE) and GlaxoSmithKline see much of the industry's growth in coming years being in such countries, as expanding middle classes gain better access to health care and changes in lifestyle increase the prevalence of certain chronic diseases, such as diabetes. Drug makers also face mounting price pressures in the U.S. and Europe from generic competition as well as public and private insurers, furthering the appeal of emerging markets as a source of growth. -By Nathan Becker, Dow Jones Newswires; 212-416-2855; [email protected]; (END) Dow Jones Newswires June 24, 2010 17:42 ET (21:42 GMT)