With the deals, the firm expects annual cost savings of $340mn and range ofcomplementary products for customers
Mumbai: German drugs and chemicals group Merck KgaA, which made a couple of acquisitions in speciality chemicals and pharma solutions space in 2014, expects these deals will help strengthen its position in its newly identified priority markets, including India.
The group’s life sciences solutions division Merck Millipore, which has been a leading provider of technology solutions and services to drug makers, will significantly benefit from the $17 billion global acquisition of Sigma-Aldrich Co. Llc to consolidate its position in India, where it has a large customer base.
Sigma offers a whole range of products used in the development and manufacture of drug formulations and ingredients.
Merck Millipore has a large customer base including almost all top pharmaceutical companies in India.
In early 2014, Merck also purchased AZ Electronic Materials SA, which makes high-purity specialtiy chemicals for the electronics market, in a $2.48 billion deal to expand its speciality chemicals business.
AZ Electronic Materials also had a sizable business and manufacturing facility in India.
“The products available in Sigma’s portfolio is completely complimentary to the technology solutions and services currently provided by Merck in India, a priority market for us," Udit Batra, the new global president and chief executive officer of Merck Millipore, said in an interview on Wednesday.
With the Sigma-Aldrich acquisition, Merck expects to achieve annual cost savings of approximately $340 million within three years because of synergies.
With the Sigma deal, Merck Millipore will be able to offer its customers a complementary range of products across laboratory chemicals, biologics and reagents in the laboratory and academic business.
Sigma has manufacturing and distribution facilities in the US, Australia, Brazil, Canada, Germany, India, Ireland, Israel, Japan, Singapore, Switzerland, Taiwan and the UK. The company also expanded its distribution centre and opened a new packaging facility at Bengaluru in India in 2012.
Merck Millipore had in June launched its new process solutions formulation laboratory in India, its first outside Europe.
This lab, which is part of a larger laboratory complex, is located at Navi Mumbai, with easy accessibility from the major pharmaceutical manufacturing centres at Ahmedabad, Goa and Hyderabad.
The objective of setting up this lab was primarily to assist local clients, using advanced excipients (additives used in pharma formulations) from Merck’s portfolio, with pre-formulation studies. It will also offer the possibility of inviting clients for hands-on training sessions and demonstrations of new technologies in solid dose formulation.
“India, as an important pharma-sourcing country, will benefit the most from the availability of services and product capabilities that is accepted globally. The new synergies that Merck could offer in this market will also help the company to tap the maximum potential of the market," said an industry consultant with a foreign advisory firm, who didn’t want to be identified.
Merck’s new growth model that is being enabled through acquisitions and organic options is also part of its recently introduced “Fit for 2018" transformation programme.
“With this, we’re also addressing significant market shifts, increasing competition in key product areas among others, and as part of this we will also continue to invest in each of these priority markets that will best suit the local market requirements," said Batra.