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Merck veteran named R&D chief, after drug setbacks

A view of the Merck & Co. campus in Linden, New Jersey March 9, 2009. REUTERS/Jeff Zelevansky
A view of the Merck & Co. campus in Linden, New Jersey March 9, 2009. REUTERS/Jeff Zelevansky

By Ransdell Pierson

(Reuters) - Merck & Co will bring back one of its veterans to head research and development, replacing retiring Peter Kim, who leaves behind a mixed record over the past decade at the drugmaker's highly respected laboratories.

Merck, after recent setbacks for some of its most important experimental drugs, said former Amgen Inc research chief Roger Perlmutter will take over from Kim on April 15, although Kim, 55, will stay on as a company advisor until August.

"This is an acknowledgement by Merck that the status quo wasn't getting desired results," said analyst Barbara Ryan of Barbara Ryan Advisors.

The appointment represents a homecoming for Perlmutter, 60, who joined Amgen in February 2001 after four years with Merck, where he oversaw global basic research and preclinical development. While at Amgen sales of its Epogen and Aranesp anemia drugs plunged due to safety concerns.

But Perlmutter helped Amgen, the world's biggest biotechnology company, branch out into new areas -- including successful development of Prolia for osteoporosis and Sensipar, used to treat dangerously high calcium levels in the blood. It is testing treatments for cancer, cholesterol, psoriasis and a promising new type of osteoporosis drug.

Most of the Amgen drugs are biologics, meaning they are injectable products made in living cells and involve a costly manufacturing process. But biotech drugs command far higher prices than conventional pills, making them an increasing focus for drugmakers.

"Merck may become more aggressive now in acquiring and developing more biotech drugs," with Perlmutter as research chief, Ryan predicted.

Perlmutter became Amgen's research chief only months after Kim, then a 42-year-old professor at the Massachusetts Institute of Technology, was selected to head research at Merck.

Merck has had several big successes under Kim's watch, including development of its blockbuster Januvia diabetes medicine, its Gardasil vaccine to prevent cervical cancer, its Zostavax shingles vaccine and its Isentress treatment for HIV. But more recently, it has been hurt by failed trials of cholesterol treatment Tredaptive and migraine drug telcagepant, and a regulatory delay for a new type of osteoporosis medicine called odanacatib.

Merck's Vioxx arthritis drug was recalled in 2004 after being linked to heart attacks and strokes, forcing Kim to defend controversial clinical trials of the pill that were conducted before his arrival.

New medicines are badly needed at Merck, where sales of its onetime $6 billion-a-year Singulair asthma drug are plunging due to generic competition and other medicines will soon face cheaper generics. Moreover, cost savings from Merck's 2009 purchase of rival Schering Plough have mostly dried up and are no longer able to boost company earnings.

"On balance, most investors we speak with have been disappointed by Peter Kim's tenure as head of Merck's R&D," Leerink Swann analyst Seamus Fernandez said in a research note on Thursday.

"We believe a transition makes sense at this time." Fernandez said he believed Perlmutter's 10-year tenure at Amgen were "constructive. Overall he strikes us as a thoughtful straight shooter and a decisive leader."

Merck praised Kim's tenure. "His contributions have positioned us well for future success."

Shares of Merck were down nearly 1 percent in afternoon trading on the New York Stock Exchange.

(Reporting By Ransdell Pierson; editing by Carol Bishopric)

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