Tuesday, March 2, 2010

MHT In Depth: Merck chairman details Millipore plans

By Julie M. Donnelly

Karl-Ludwig Kley, the chairman of the executive board at German drug maker Merck KGaA, was in Boston Tuesday, following the announced merger between Merck and Billerica-based Millipore Corp.  Merck agreed to pay $7.2 billion for the local laboratory instrument maker, and both sides said that the goal of the acquisition is growth, not consolidation. That being said, Kley has not ruled out layoffs at the Billerica location, he told Julie M. Donnelly in an interview with Mass High Tech.

Kley: This is a highly complementary merger, in terms of products, in terms of regions. It’s driven by and for growth. But when you put two companies together, you have to realize synergies, mainly in administrative functions. For instance, it’s inconceivable that you would have two totally separate IT systems.

MHT: Which facilities, if any, would be closed?

Kley: Merck has 125 global locations, and I can’t even tell you right now how many Millipore has. I can’t rule out right now the possibility of looking at closing some facilities. The headquarters will remain in Billerica. We are moving the current headquarters for the U.S. from Philly to Billerica and we welcome those workers. But we don’t plan to move people all around just for the sake of moving people.

MHT: Given the far flung reaches of Millipore, is it the most complex acquisition Merck has taken on?

Kley: The short answer is no. Each merger is complex. Millipore is a proud company, a successful company. We’re both confident, and we have our own cultures. It’s merging the cultures, not the business decision, that is the most difficult. We are two strong characters with personality, and I’m sure we can learn from one another.

MHT: In making a big acquisition on the instruments side, is that an effort to blunt against what is expected to be a tough couple of years for pharma, with drugs coming off patent and dwindling pipelines?

Kley: We’ve always been a hybrid company with a commitment to both the pharmaceutical side and the chemical side. But in the past we hadn’t had many instruments, so it helps us widen our focus. But it doesn’t take away from our pharma business. I strongly believe that an innovative pharma business has a future, and I’m very confident in our pipeline. We did the Serono acquisition (in 2007) on the pharma side, and now this acquisition, both to have a greater global reach to satisfy our customers.

Since we are 70 percent family owned, our strategy has always been for risk diversification, that’s very important for us.