Merck KGaA seeks investors to share clinical trial costs

Reuters

* Top executive says private equity could co-fund R&D

* Merck trying to rebuild pipeline after setbacks

FRANKFURT, Oct 14 (Reuters) - Merck KGaA said itwas in talks with private equity firms and other investors toshare the cost of some clinical trials, part of the Germanhealthcare group's effort to secure long-term growth.

Merck, which is seeking to rebuild a drugs pipeline weakenedby a slew of setbacks, is vying with much larger global rivalssuch as Novartis and Pfizer for licensingdeals with biotech research firms.

Pharmaceutical companies often team up with each other toshare the financial burden of testing drugs, developed either bythemselves or biotech firms, on humans. Costs can run tohundreds of millions of euros.

But Merck is hoping to tap a new source of funding in theshape of private equity, which has largely shunned the high-riskbusiness that requires deep knowledge of medicine and regulatoryrequirements.

With 6.9 billion euros ($9.4 billion) in sales fromprescription and over-the-counter drugs in 2012, the Germangroup, which has no affiliation with its namesake U.S. peerMerck & Co, is about 1 billion short of the global pharmasector's top 20.

However the drugmaker, controlled by the Merck family ofabout 150 descendants of the company's founder, has said it wasdetermined to hold its own against larger rivals.

Merck is also exploring more "risk-sharing" deals underwhich the company would receive a fee linked to the success ofsome of its products including in-vitro fertility treatments,the Financial Times cited head of healthcare Stefan Oschmann assaying.

Late-stage trials for a cancer drug typically costs between150 million and 400 million euros. That cost rises to as much as600 million euros for multiple sclerosis drugs, he said.

According to Deutsche Bank analysts, trials in the third andlast phase of testing required for market approval account forover 35 percent of a drug company's research and developmentspending on average.

Analysts expect Merck's two main products, multiplesclerosis drug Rebif and cancer drug Erbitux, to reach peaksales in 2013 and 2014, respectively.

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