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Merck pulls back the curtain on Organon with declining women’s health portfolio but determined women in C-suite, board

March 20, 2021
Life sciences

Merck & Co. is offering a first full look at Organon, the new company it’s spinning off with its women’s health and biosimilar portfolio. And for a company aspiring to be the leading women’s health specialist, it has assembled management and board teams featuring women.

By the look of it, the portfolio Merck’s shedding has been declining since at least 2018, according to a securities filing. But the company’s new top exec has said that it could reach sustainable growth “by allocating the appropriate resources and by focusing management attention.”

That C-suite team is led by Merck insider Kevin Ali as CEO. Former Allergan chief financial officer Matthew Walsh will serve as the new company’s CFO. And the board, led by former Humacyte chief Carrie Cox, boasts 70% women representation, the highest among S&P 500 healthcare companies, Merck said. Former Wyeth chief Robert Essner is also slated to join the company’s board.

The spinoff’s exec team also features several women in key positions. Merck’s commercial leader in Europe and Canada, Susanne Fiedler, will hop over as Organon’s chief commercial officer. The new company’s R&D efforts will be led by Sandra Milligan, who has served as head of global regulatory affairs and clinical safety at Merck Research Laboratories since 2015.

The general counsel role will be filled by Deborah Telman, who was Sorrento Therapeutics’ top lawyer. Also joining from Allergan is Rachel Stahler, who will become chief information officer, bringing along prior experience in the same jobs at Allergan and Syneos Health.

Organon’s portfolio will be led by the Nexplanon/Implanon contraceptive implant, which saw sales decline by 14% in 2020 to $680 million, mainly due to women delaying or canceling elective surgery during the pandemic. In 2019, the product enjoyed 12% growth. Looking beyond the pandemic, Organon expects Nexplanon to be the company’s first blockbuster product in women’s health.

Its other contraceptive product, NuvaRing, hauled in $236 million last year as sales plummeted by 73% on generic competition that kicked off in the U.S. in December 2019.

To drive growth post-Merck, Organon expects to “actively engage in business development and collaboration activities,” with a focus on women’s health, the company said in the securities filing. It points to the shared history with Merck and global commercial and manufacturing capabilities as advantages for being a choice of partner for other companies in this field.

Another pillar of Organon’s business—its biosimilars portfolio, developed under a deal with Samsung Bioepis—has been growing. But the franchise is currently too small to make much impact on Organon’s top line.

A large portfolio of established medicines will also come over. These include cholesterol drug Zetia and sister med Vytorin, which together brought in $664 million after a 24% decline. Other products span cardiovascular, respiratory, pain, bone, dermatology and others.

Organon views this legacy franchise as a buttress that could provide necessary cash flow to the company’s aspirations elsewhere. “The infrastructure and cash generation within this broad portfolio provides a scale, geographic reach and capital to support the growth opportunities that the women’s health and biosimilar business present,” Ali said during a conference call with investors last month.

Overall, the Organon products’ 2020 sales checked in at $6.53 billion, down from $7.78 billion in 2019 and $8.29 billion in 2018.

NuvaRing and Zetia’s loss of exclusivities will continue to pressure Organon’s 2021 performance, dragging down the firm’s revenues to about $6 billion to $6.5 billion, Ali warned during the call.

by Angus Liu


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