US-based drugs company Merck has launched a $125m corporate venturing fund to build on last year’s $8.1bn internal research and development (R&D) budget.
The Merck Global Health Innovation group is a limited liability company managing a fund of the same name looking to identify new business models and external opportunities in adjacent healthcare fields to its main medical areas, which include diabetes and vaccines.
The launch follows the creation of Merck Funds in 1983 and Merck Capital Funds in 2000 with $100m.
The Global Health Innovation team of five, led by William Taranto, former executive director of healthcare strategy and alliances at medical devices company Johnson & Johnson until April last year, reports to Merck’s chief strategy officer and will invest in external venture deals as well as internal ideas developed by employees.
These deals are expected to fall into six areas: flexible access/alternate site of care, health innovation in disease management, providing health content through coaching or interactive media, diagnostics and devices, personalized medicine and informatics.
Merck’s annual results for 2010 showed $810m of net income on $46bn of sales, nearly double the 2009 revenues of $27.4bn after the acquisition of Schering-Plough.
In a presentation at the IBF Corporate Venturing and Innovation Partnering conference, Taranto said the pressures facing the pharmaceutical industry included higher development costs for new drugs with pressure on fees and greater demands for showing value while the life of the drugs was shortening through the use of generics and global competition.