Why Merck Is Planning to Change Its Research Strategy

Merck

According to The Wall Street JournalMerck & Co. (NYSE:MRK) is looking to both add and subtract within its drug research wing in hopes of improving its operations. The news outlet reports Merck has identified four key locations around the globe where it will put its plan into effect. The pharmaceutical giant’s goal is to improve the system through which it introduces new products to the pharmaceutical market.

Currently, Merck’s research-and-development branch relies mainly on its own personnel to discover new drugs and move them through the complicated testing process until they are ready for clinical trials. According to Wall Street Journal sources, Merck’s new system would allow the company to adapt to developments in labs based in Boston, San Francisco, London, and Shanghai — all hubs for medical education and research — and bring them under the Merck banner.

The addition of research centers in these four locations around the globe may be tied to a sell-off of some of the company’s current commitments. According to WSJ, Merck may look for buyers of medications it has developed to treat glaucoma and male sterility.

Changes to Merck’s current research system would be welcomed by those who see the pharmaceutical company missing opportunities to renew lucrative patents. According to The Wall Street Journal, many inside the company see outside sources as the key to improving Merck’s research-and-development unit as a whole. For that reason, cuts in staffing — which Merck has said may affect 20 percent of its employees — will also hit the R & D department as currently configured.

There is never a shortage of pharmaceutical innovation in places such as Shanghai, London, San Francisco, and the areas in Massachusetts surrounding the great universities of Boston. Merck’s strategy should give the company the opportunity to improve its research and development wing, which remains a source of incredible earning potential.

Merck stock had an exceptional run in 2013, posting gains of 22 percent on the year.

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