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Merck & Co hopes for big win in South Africa

By Gareth Macdonald , 24-Jun-2010

US drugmaker Merck & Co’s new deal with Adcock Ingram proves the FIFA football World Cup isn’t the only thing attracting people to South Africa this summer.

In an echo of the teamwork on display at this year’s tournament, Merck and Adcock will collaborate on the co-promotion and distribution of over-the-counter (OTC) products, with the goal being to win market share.

 

And while, like a world cup team list, details of the drugs covered by the agreement are being kept confidential, therapeutic areas will include asthma, dermatology, hypertension and migraine.

 

However, unlike some of the world cup matches so far, the outcome of the Merck-Adcock deal seems easier to predict given that Adcock already holds a 10 per cent share of South Africa's substantial OTC pharmaceutical market.

 

Merck’s interest in South Africa fits with recent analysis by RNCOS who forecast that the market would expand 14 per cent a year through to 2013 as a result of increasing burden of disease and growing demand for new medications.

 

The authours said that these factors “Will draw the attention of world’s leading healthcare providers and make the South African healthcare sector a lucrative area for further investments.”

 

For Merck, the co-promotion accord also works as part of a wider strategy of expansion and diversification on a global scale as Stefan Oschmann, president of MSD’s emerging market business explained.

 

The collaboration announced today is part of Merck's long-term strategy of expanding our geographic presence which will position us for leadership in emerging markets.”

 

Dr Oschmann said that: “We expect sales from these markets to be a key contributor to our future performance and growth” adding “we will strive to expand our presence across emerging markets by actively seeking local collaborations.

 

Merck, which registered sales of around $25bn in 2009, has previously said that it expects pharmaceutical and vaccine sales in new markets to contribute more than 25 per cent of its revenue by 2013.

 

Adcock also stands to benefit from the deal, both in terms of its product portfolio in South Africa, which will enhance its ability to battle larger rival Aspen Pharmacare, as well as its own overseas growth efforts .

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