Merck Opens Up to Europe

Merck & Co. Inc. has long been recognized as one of the most innovative R&D focused drug firms; one that has produced a series of first-in-class medicines in hypertension (ACE inhibitors), cholesterol-lowering (statins) and vaccines (the still unapproved products for human papilloma virus/cervical cancer and for shingles). Yet its internal productivity certainly helped inspire a widely recognized reluctance to engage in partnerships and alliances. This reflected not ignorance about what was going on outside the company's labs, but rather a strong not-invented-here (NIH) syndrome. Indeed, Merck operated on the philosophy that it needed to own any critical business asset. If, therefore, it deemed an external research program critical, it generally tried to duplicate it inside Merck Research Labs (MRL)—doubling the alliance's costs: Merck paid the partner and it paid for its internalization.

But that attitude is changing—as it must. Merck's near-term growth prospects are anemic. It has been badly wounded in three...