Merck expands push into biotech drugs with purchase of Avecia, British contract manufacturer

Merck buys British maker of biotech medicines

TRENTON, N.J. — Merck & Co. said Thursday it is making another deal in its strategy to become a top maker of biotech drugs, buying a British company that makes them.

Merck, the world’s second-biggest drugmaker, said its United Kingdom subsidiary, Merck Sharp & Dohme Ltd., has agreed to acquire Avecia Biologics from its parent holding company.

Specific financial terms of the deal were not disclosed, but Merck spokesman Ian McConnell said the value is well below $1 billion.

Avecia has been making small amounts of biotech drugs for use in patient tests of experimental treatments for heart disease, blood disorders and cancers for a number of companies since 1998. The drugs are “manufactured” in fermentation tanks containing rapidly reproducing cells including yeast and E. coli, with the active molecule then separated out and purified to produce medication.

The company, which is based in Billingham, U.K., and employs 500 people, is making a drug for commercial sale for the first time, for client Dyax Corp. Avecia spokeswoman Bridget Hall said that drug, soon to be launched under the brand name Kalbitor, is for swelling in the extremities.

Biologics, or biotech drugs, are grown in mammal, yeast or other cells rather than chemically synthesized like traditional pills. They are one of three areas that Merck, based in Whitehouse Station, N.J., is targeting for growth.

“This is one component of our increasing our resources and capabilities in biologics,” McConnell said of the deal.

Last December, Merck launched a new division called Merck BioVentures to make both new and follow-on, or generic, biotech drugs. They are starting to arrive in Europe, but are not yet allowed in the U.S. — although proposals to establish rules allowing them have been a hot part of the health care overhaul debate.

Company executives have said the unit will invest $1.5 billion in research by 2015 and aim to launch six or more generic biotech products from 2012 through 2017, a period when some major biotech drugs lose patent protection.

In February, Merck said it was buying a manufacturing facility and a group of potential generic biotech drugs, for preventing infections in cancer patients, from Insmed Inc. for $130 million.

Merck also gained Schering-Plough Corp.’s biotech operations when it acquired that company in November for $41.1 billion. Right after that deal closed, Merck Chief Executive Richard Clark said the company plans to make deals with biotech companies with first or best-in-class products, and has about $8 billion to spend.

Merck shares fell 30 cents to $37.45 in afternoon trading Thursday.