Careers at Merck
Merck & Co. (“Merck”)’s mission is “to discover, develop and provide innovative products and services that save and improve lives around the world.”
Merck has four main business segments: Pharmaceutical, Animal Health, Alliances, and Healthcare Services.
- Pharmaceutical – The Pharmaceutical segment is the largest segment, taking up over 88% of total sales. The segment is further divided into human health pharmaceutical products, and vaccines. The former consists of medicines and other therapeutic and preventive pharmaceuticals. Vaccines are preventive in nature, and are produced at the pediatric, adolescent, and adult levels.
- Animal Health – Merck also produces medicines and vaccines, similar in scope but not in scale to its Pharmaceuticals segment, for animals.
- Alliances – The Alliances segment has been discontinued. It was a result of the company’s collaboration with AstraZeneca, until the relationship was terminated mid-2014.
- Healthcare Services – The Healthcare Services segments focuses on the delivery of healthcare to patients – it looks at engagement, health analytics, and clinical services, all of which are aimed at improving healthcare services for patients.
In addition to the above, Merck also held an additional segment, Consumer Care, which was divested in October 2014.
Merck, started in 1668, is the oldest pharmaceutical and chemical company in the world. The company was started by Friedrich Jacob Merck, who acquired a pharmacy (called the Angel Pharmacy) in Darmstadt, Germany. Merck died and was succeeded by his nephew, Georg Friedrich Merck, who continued to operate the pharmacy. He was succeeded by a series of other members of the Merck family.
In the 18th century, after the discovery of morphine, the Angel Pharmacy began manufacturing alkaloids on an industrial scale – this product was widely known in the 19th century for being of a high quality. The company transformed, with Emanuel Merck at the helm in the 19th century, into a research-based company in addition to doing mere production and sale. In 1850, the business, previously a sole proprietorship, was structured as a partnership between Emanuel and his two sons.
The 19th century also saw the pharmacy selling to businesses outside of Germany, with some being in Basel and in Paris. The company expanded in the late 19th century and early 20th century into markets outside of Germany, with offices in London and New York, amongst others. The New York office was structured as an independent company, named Merck & Co, which is later expropriated by the US government and sold as a result of the First World War 80% of the company, which originally belonged to the German company, was put on sale.
The McKenna Corporation, financed by a number of banks at the behest of George Merck, was set up for the sole purpose of purchasing the 80% stake, which it did. The result of this is that Merck & Co has the naming rights to “Merck” only in North America, while the German company has the rights to the “Merck” name in the rest of the world. Today, Merck & Co is known as Merck Sharp & dolme, or MSD Sharp & Dolme, in the rest of the world while the German company is known as EMD in North America.
Merck & Co merged, in 1953, with Sharp & Dolme, which brought to the combined company vaccine technology, marketing expertise, and a sophisticated and large sales and distribution system. The combined company was the largest drugmaker in the US at the time. The next significant M&A activity was in 2009, when the company merged with a competitor, Schering-Plough.
The deal, which was in reality an acquisition, was worth USD41 billion, and was effected through a reverse merger where Schering-Plough was renamed “Merck & Co” while the original company was renamed “Merck Sharp & Dolme”.
Benefits at Merck
Business model of Merck
Merck’s customer segments are specific to each business segment.
- Pharmaceutical – The Pharmaceutical segment is divided into human health pharmaceutical products, and vaccines. The former are generally made available to the general public only by prescription, and are thus sold to wholesalers, retailers, hospitals, government agencies, health maintenance organisations, and other institutions. Vaccines are sold directly to physicians and their supplier-distributors, to wholesalers, and to government entities.
- Animal Health – Merck also produces medicines and vaccines, similar in scope but not in scale to its Pharmaceuticals segment, for animals. These products are sold to veterinarians, distributors, animal breeders and producers, and farms.
- Healthcare Services – The Healthcare Services segments focuses on the delivery of healthcare to patients. These services are generally provided to hospitals, other healthcare organisations, and government entities.
Merck’s value proposition is as a long-time, trusted brand that is known to make effective products. It also owns the intellectual property rights to produce and market its key drugs – these drugs are thus available only from Merck, ensuring that there will always be a steady demand for them.
Depending on the type of product, Merck may sell primarily to distributors and institutions, or directly to physicians and veterinarians. It reaches the former through marketing efforts, and serves the latter group through professional representatives.
It maintains market exclusivity for its drugs through patents.
Merck also markets heavily outside of the US, and sales from non-US markets made up 56% of sales in 2015.
Merck creates customer relationships through the use of marketing, either directly (through campaigns and personal professional representatives) or through joint ventures and licenses. One example of the latter is its 1994 partnership with Pasteur Mérieux Connaught (now Sanofi Pasteur) to market human vaccines in Europe. This joint venture led to the creation of Sanofi Pasteur MSD, still in operation all over Europe and the UK.
Merck has professional representatives who communicate directly with healthcare professionals, veterinarians, and other end users of its products. Aside from this, it also has a professional sales team to deal with its institutional clients.
Merck is involved in the research, development, production, distribution, and sale of medical products and vaccines, and the provision of healthcare services consulting.
Merck’s key partnerships lie in marketing and distribution. Key partnerships include:
AstraZeneca LP – to develop and market AstraZeneca’s products under a license. Merck’s share in the joint venture company, KBI, was bought out by AstraZeneca in 2014 for USD419 million.
Sanofi Pasteur MSD – to market vaccines in Europe and to collaborate in the development of combination vaccines. The joint venture contributed USD923 million in sales in 2015.
Merck’s key resources are its Property, Plant and Equipment, its Goodwill, and its intellectual properties (i.e. patents for drugs and other pharmaceuticals) and other intangible goods.
Merck’s key costs are in: Materials and production, marketing and administration, and research and development.
Merck’s key revenue stream is from the sale of its human health pharmaceuticals and vaccines. While it has other business segments, it does not report the specific proportion of income from these other segments as they are not sufficiently material.
|Source of Revenue/Cost||Revenue (FY 2015, million USD)||% of Total Revenue|
Animal Health and others*
|Costs and Expenses||(34,097)||-86%|
Materials and production
Marketing and administrative
Research and development
*Animal Health, Alliance, and Healthcare Services are not material for separate reporting. Animal Health contributed USD3.3 billion in sales in 2015.
info: Kenneth holds a BA from Pennsylvania State University and a JD from Harvard. Kenneth joined Merck in 1992 as general counsel. He was promoted to Executive VP in 2006, leading the human health segment. He was named President in 2010 and CEO in 2011. He is also a director in Exxonmobil.
info: Robert holds a degree in finance from Miami university, an MBA and a JD from Northwestern. Prior to joining Merck, he was the CFO of Baxter Healthcare and, before that, the Director of Corporate Financial Planning of Eli Lilly and Company. He is also a board member of CR Bard and Chairman of Gambro AB.
info: Michael holds a B.S in Mechanical Engineering from University of Notre Dame and a JD from Villanova University School of Law. Prior to joining Merck, he was General Counsel and Secretary at Hewlett Packard and, before that, a Partner at Morgan, Lewis & Bockius.
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