MSD, which is known as Merck in the U.S. and Canada, has announced that it will be transferring the sales rights of its diabetes drug Januvia (sitagliptin) to a local pharmaceutical firm Chong Kun Dang. Januvia’s patent is to expire in September this year.
In addition, MSD Korea will be shutting down its general medicine (GM) division, which currently employs around 100 people.
David Peacock, president of MSD Asia Pacific and interim leader of MSD Korea, sent an e-mail to all employees of the Korean offshoot on Tuesday, saying that the company would grant the exclusive right of sales and promotion forJanuvia portfolio to Chong Kun Dang and abolish the GM unit.
"MSD headquarters has decided to grant exclusive domestic marketing rights for the Januvia portfolio (Januvia, Janumet, and Janumet XR) to Chong Kun Dang, and we signed an agreement with Chong Kun Dang today," Peacock said in the e-mail.
Accordingly, Chong Kun Dang will exclusively handle sales and marketing of the Januvia portfolio starting from July 15, he said.
The decision aimed to ensure the continued value enhancement and growth of the Januvia brand after patent expiration, he went on to say.
"It also takes into account our strategic direction to focus more on innovative medicines such as anticancer drugs and vaccines,” Peacock added.
For employees facing important decisions as a result of the closure of the GM division, the company is preparing early retirement program (ERP) packages and additional external career support programs, he said.
His remarks signal that the GM unit, responsible for the Januvia brand, will be effectively eliminated.
MSD Korea confirmed Korea Biomedical Review’s inquiry about the abolishment of the GM unit.
The company plans to offer ERP for all employees in the GM division, estimated to be around 100. However, the company said the transfer of Januvia sales rights would not guarantee employment succession to Chong Kun Dang.
The current GM division is in charge of not only the Januvia portfolio but also the SGLT-2 inhibitor Steglatro (ertugliflozin) portfolio (Steglatro, Stegluzan).
MSD headquarters reportedly retained the rights to the Steglatro portfolio but signed a separate agreement with Chong Kun Dang for co-promotion.
Chong Kun Dang will sell all the portfolios previously handled by the GM unit in Korea, which means that MSD Korea has no reason to maintain the unit.
With the closure of the GM division, MSD Korea will be reorganized into the oncology, vaccine, and hospital specialties divisions, the company said.
Industry watchers said the closure of the GM unit was a foregone conclusion because the decision was made at the MSD headquarters level.
Steglatro's underperformance in the growing SGLT-2 inhibitor market and the lack of a follow-up pipeline made the GM division unviable, they said.
Still, nearly 100 employees at MSD Korea will lose their job overnight and it is uncertain whether the labor union would accept the company’s decision.
In the past, other pharmaceutical companies such as Merck and Takeda have faced conflicts with labor unions over the divestment or closure of business units. However, the closure of MSD Korea's GM division may lead to a more significant conflict, as the scale of the closure is unprecedentedly large.