Merck (NYSE:MRK) Plans to Expand its Portfolio with Cubist Pharmaceuticals


Merck (NYSE:MRK), along with Gilead Sciences, is one of those pharmaceutical companies that are currently faring well in the market. Usually you don’t get to hear such news about a pharmaceutical company but Merck (NYSE:MRK) is planning to buy Cubist Pharmaceuticals (CBST), which makes antibiotics worth 7 billion dollars. Merck (NYSE:MRK) is planning to release a multitude of drugs in the oncoming years and it would require the power of an additional company to handle the projects it has lined up in the pipeline.

Merck (NYSE:MRK) is ready to pay a hundred dollars over a single share for the company and is expected that an agreement could be announced next week. The offer is over 34 percent of what Cubist was expecting. Merck (NYSE:MRK) seems really eager to buy this company because a pharmaceutical company makes revenue by rolling out therapies and drugs into the market and Merck (NYSE:MRK) sees the potential in the antibiotic drugs Cubist has in its pocket.

Cubist is planning to release new bacteria fighting drugs by 2020 and the support of Merck & Co. (NYSE:MRK) would come in handy. Merck & Co. (NYSE:MRK) has been on the market for a long time and it understands the intricacies of the market. Also there is a rising threat of drug resistant bugs so Cubist will have to make something that is more effective than the usual antibiotics. The CEO of Merck & Co. (NYSE:MRK) stated that the company is investing in midsize acquisitions because the company needs to expand its portfolio if it wants to make large and sustainable revenue.

For that, the company needs to come up with drugs more frequently because a drug getting approval and then being sent out to the market requires a lot of time and patience; sometimes the drug isn’t approved and then the company has no other alternative but to work on a new one. But Merck & Co. (NYSE:MRK) wants a whole queue of drugs so that the company won’t have to wait for years to market a new one. It won’t be that hard for Merck & Co. (NYSE:MRK) to get approvals for antibiotics because the food and drug administration isn’t as strict about them as they are about the cancer drugs.

Still, quality and effectiveness isn’t something that Merck & Co. (NYSE:MRK) can compromise upon because the health sector is sensitive and a mishap can lead to the company being marred for lifetime or even banned for a lifetime. Merck & Co. (NYSE:MRK) has a reputation to uphold, it is the country’s second largest pharmaceutical company and it has to deliver. The pharmaceutical market is volatile and turbulent; it can be really messy if you land a couple of failed drugs, the finances starts to wobble.

In such a scenario it is hard for a company to regain however Merck & Co. (NYSE:MRK) is going through a good patch these days and it should look to sustain that.