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Merck deal with Bayer could be a boon for Boston

A Merck building in Summit, N.J.

Kena Betancur/Getty Images

A Merck building in Summit, N.J.

The pharmaceutical giant Merck & Co. is pushing forward its pipeline of drugs — including a melanoma treatment that is getting priority review by federal regulators — but it is also open to making deals that will accelerate its growth, top executives told a gathering of investors in Boston.

That was made clear Tuesday, when Merck agreed to sell its consumer care business to the German drug maker Bayer AG for about $14.2 billion, while striking a collaboration with Bayer to co-develop and market cardiovascular disease treatments.

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Merck officials told more than 150 stock analysts and other investors that they might use money from the sale to buy companies with promising experimental treatments, particularly in biotechnology, where Merck has been lagging.

“We are focused on our pathway to growth in the future,” said Kenneth C. Frazier, chief executive of Merck, based in Whitehouse Station, N.J. Frazier hosted the company’s first investor presentation at its 10-year-old Boston research lab in the Longwood Medical Area.

The 11-story, 80,000-square-foot facility, on the edge of the Emmanuel College campus, employs more than 450 scientists, chemists, biologists, and others working in the fields of cancer, inflammation, diabetes, genetics, and neuroscience. The lab plans to hire 70 to 75 more people this year, partly to collaborate with Boston-area teaching hospitals and biotech startups.

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“I’m not opposed to mergers and acquisitions as a means of expanding our presence in [biotech],” said Roger M. Perlmutter, president of Merck Research Labs. “We’re interested in talking to everyone.”

But the Merck executives made it clear they are also committed to innovative work at the company’s own network of research labs in Boston, New Jersey, Pennsylvania, and California, where researchers are focusing on things like vaccines and immunocology. They are also working to improve existing treatments for viruses such as HIV and hepatitis C.

“We are going to continue to pursue research and development in a productive way,” Frazier said. “We might be on the verge of eliminating some of the greatest scourges of mankind.”

Merck used its Boston forum to disclose that the Food and Drug Administration has accepted for priority review its experimental antibody to treat metastatic melanoma. The drug is considered one of the company’s most promising candidates. The designation means the FDA will decide by Oct. 28 whether to approve the treatment for sale.

The spinoff of Merck’s consumer franchise is part of a broader strategy, unveiled last fall, to focus on high-growth drug programs and other products with global scale.

The consumer business does not operate out of the company’s Boston research facility, and its sale to Bayer won’t mean job cuts here, Merck executives said.

But the deal comes two weeks after two of its rivals, Novartis AG, of Switzerland, and GlaxoSmithKline PLC, of Great Britain, agreed to swap their vaccines and cancer drug franchises.

Novartis will sell the bulk of its Cambridge-based vaccines business to GSK for about $7.1 billion, potentially giving the British company a foothold in the Boston area. Novartis will buy GSK’s pipeline of cancer drugs for $14.5 billion and as much as $1.5 billion more if the drug programs meet certain milestones.

Another competitor, New York-based Pfizer Inc., has made an unsolicited offer to buy the Anglo-Swedish drug maker AstraZeneca PLC, but AstraZeneca has rejected the bid.

Like Novartis and Merck, Pfizer and AstraZeneca both run substantial research labs in the Boston area.

Frazier said Merck was showcasing its Boston presence — in the shadow of several of the nation’s leading academic medical centers — because “this is the area where basic science intersects with medical practice.”

Robert Weisman
can be reached at robert.weisman@globe.com. Follow him on Twitter @GlobeRobW.
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