Merck announces sale of ophthalmology products to Santen Pharmaceutical

Merck will receive roughly $600 million up front, with the potential for sales milestone payments

Kelsey Kaustinen
WHITEHOUSE STATION, N.J.—Merck, known as MSD outside of the United States and Canada, has announced the signing of an agreement under which Santen Pharmaceutical Co., Ltd., a pharmaceutical company specializing in the ophthalmologic field, will purchase a number of Merck’s ophthalmology products in Japan as well as key markets in Asia Pacific and Europe. Among the involved products are Cosopt, Cosopt PF, Trusopt sterile ophthalmic solution 2%, Trusopt PF preservative-free, Timoptic, Timoptic PF, Timoptic XE, Saflutan and Taptiquom.
 
Per the terms of the agreement, Santen will pay Merck approximately $600 million in an upfront payment, with the potential for additional payments if certain sales milestones are met (the annual sales of the aforementioned products in the noted markets are approximately $400 million). Santen will also purchase from Merck a supply of the ophthalmology products covered under this agreement for a two- to five-year period. The agreement is subject to certain closing conditions related to certain markets or regions, including obtaining antitrust clearance in Japan, and is expected to close in most markets within a few months.
 
“The decision to divest our ophthalmics business is part of our ongoing strategy to sharpen our commercial focus and improve our operational effectiveness,” Jay Galeota, president of Hospital and Specialty Care at Merck, said in a press release. “This transaction provides products that complement Santen’s portfolio and is designed to ensure continued access for physicians and patients to these medicines around the world.”
 
This is one of several divestments of ophthalmology products in recent years for Merck, which sold its U.S. ophthalmology business to Akorn Pharmaceuticals in 2013 and 2014, selling the company the U.S. rights to three branded ophthalmic products—AzaSite, Cosopt and Cosopt PF—for $52.8 million in 2013.
 
Following this divestment, Merck will continue to market its ophthalmology products in Canada, Latin America, Australia, Africa, the Middle East and other markets.
 
This agreement represents the second sale for Merck so far this month. On May 6, the company announced the establishment of a definitive agreement under which it would sell its Merck Consumer Care business to Bayer AG for $14.2 billion. Per the terms of the agreement, Bayer AG will acquire Merck’s existing over-the-counter business, which includes global trademark and prescription rights for Claritin and Afrin. As with the divestment of its ophthalmics business, the sale of Merck’s Consumer Care business is “part of our efforts to ensure that assets within our portfolio align with our core strategy, have industry-leading potential and generate long-term shareholder value,” Kenneth C. Frazier, chairman and CEO of Merck, commented in a press release regarding the transaction.

Kelsey Kaustinen

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