How a nimble Merck is building on a 349-year legacy

Family-owned German multinational Merck is poised for a twin milestone, clocking 50 years of business in India this year, and 350 years internationally next year.

“We tout that (the 349 years) a lot because companies don't really last or exist that long and stay viable and grow for that long if you don’t have certain core competencies and core principles and culture that you continuously develop and adapt and move,” says Anand Nambiar, Merck’s Managing Director in India.

The company has a listed entity in India with revenues pushing ₹1,000 crore, but nevertheless retains an almost reclusive persona, revealing little of its history through the World Wars down to inventing liquid crystals that make it to your smartphones and televisions.

The road ahead is fraught with challenges, as the cost of healthcare spirals out of control and drugmakers come under greater governmental scrutiny. “In fact, somebody recently asked one of our board members, ‘What is your impression of Trump and how does it impact Merck?’ The simple answer is that we are 349 years old, so we’ve seen the Trumps and others come and go. One of our strengths is our ability to adapt and move and be nimble at the same time,” says Nambiar, speaking candidly of Merck’s transformation and his own personal challenges.

“Over the years, Merck has seen lots of adversities, through two World Wars, the expropriation of our unit in the US and, therefore, the formation of a different entity in the US. And then during the Second World War, we were practically grounded and had to start again from scratch,” recalls Nambiar. But, over the years, Merck has grown from being a traditional pharma company to “more of a science and technology leader,” he says.

The past 10 years have seen the company transform itself, with the Merck family (which owns 70 per cent stake) handing over the reins of governance to professionals outside. Even the executive board was transformed last year from a “German male-dominated sort of board to a multicultural diverse board.” The head of healthcare is a woman from Spain, Belén Garijo, and the life sciences chief Udit Batra is Indian. “Of the six members, two are from outside Germany. Diversity is big in the group, including in India,” he says.

Merck’s profitability has grown from single digits earlier to 29 per cent in 2016. “That’s not something that every company can boast of. It has been quality growth, and obviously that has a trickle effect on subsidiaries all over the world,” says Nambiar.

But market competition is hotting up. Drug majors like GlaxoSmithKline and Novartis allied to become a behemonth in the consumer healthcare segment. “From a scale standpoint, we are very different from some of those companies. We have to find our little sweet spot where we can play,” responds Nambair.

Merck focusses on five or six key brands in consumer healthcare, which resonate with the consumer and the prescriber, he explains. In India, Neurobion, for example, is a ₹150-crore-plus brand.

Responding to the challenges of price control on medicines, Nambiar echoes the industry’s observation that it has not improved access to the product. Access requires a multi-dimensional effort looking at costs in delivery, drugs, treatment, prescribers, infrastructure and so on, he says. That said, regulators across the world work with the interest of their citizens in mind, and companies need to abide by it, he adds.

India is close to the heart of the Merck family, dating back to a time when Rabindranath Tagore stayed with them and one of the Mercks translating Gitanjali in German. So, does being an Indian head of a multinational that understands India make Nambiar’s task more difficult? “It’s a bitter-sweet sensation. The expectations are very high,” he says.

Merck has been doing business in India since the late 1800s. Given the close ties, “our business size is not representative of that expectation: that’s the gap that I have to fill as quickly as possible.”

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