Pharmaceuticals vendor Merck & Co. last week announced the formation of a subsidiary that will be given $100 million to invest in private online start-ups and other emerging companies focused on marketing and distributing pharmaceuticals and related health care services.
Already the operator of one of the top online pharmacies through a Web site run by its Merck-Medco Managed Care LLC unit, Whitehouse Station, N.J.-based Merck said it hopes to use the new Merck Capital Ventures subsidiary to expand the services it offers via the Internet to doctors, patients and pharmacists.
Merck Capital Ventures will begin searching for investment opportunities immediately. But it said its $100 million fund won't be used to invest in any research-based pharmaceutical, vaccine or biotechnology companies.
All Kinds of Possibilities
Instead, a company spokeswoman said, the investment opportunities being eyed by Merck include start-ups that offer new ways to find patients for clinical drug trials or to inform doctors and pharmacists about new drugs. "We're open to all kinds of possibilities that we see as innovative and [that provide] ways to improve our business," she said.
Merck Capital Ventures will be based in Montvale, N.J., and will be headed by Per G.H. Lofberg, who resigned last week from his job as CEO at Merck-Medco to become president of the new subsidiary.
Jim Williamson, an analyst at IDC in Framingham, Mass., said Merck's investment strategy makes sense as an adjunct to the Merck-Medco online pharmacy. "It tells me what they're doing is backing up their leadership position in that area with capital investments in other areas," he said.
An increasing number of prescriptions are likely to be filled online, and many doctors are expected to start sending prescriptions directly to pharmacies via wireless devices, Williamson said. That would significantly change the pharmaceutical business, he added.
Merck realizes "that the way people get their prescription drugs is going to be changing," Williamson said.
"And they want to be the ones doing the innovation, or at least [funding] the innovation, instead of being surprised by it," he said. "It's them playing from a position of strength using what they have, which is lots and lots of money."