Summary
Merck & Co., Inc. (MRK) filed an 8-K on April 15, 2011, detailing a significant amendment to its global distribution agreement for Remicade and Simponi products with Johnson & Johnson's subsidiary, Centocor. Effective July 1, 2011, Merck, through its subsidiary Schering-Plough, will relinquish exclusive distribution rights in several major territories including Canada, Central and South America, the Middle East, Africa, and Asia Pacific, to Centocor. In exchange for these relinquished rights, Merck will retain exclusive distribution rights in Europe, Russia, and Turkey, with profits from these retained territories to be shared equally with Centocor. Additionally, Merck will make a one-time payment of $500 million to Centocor. This amendment also resolves all ongoing arbitration claims between the companies related to the 2009 Merck-Schering Plough merger. Investors should note the financial implications of this territory shift and the substantial one-time payment.
Key Highlights
- 1Merck's subsidiary, Schering-Plough, amended its global distribution agreement for Remicade and Simponi with Centocor (a Johnson & Johnson subsidiary).
- 2Effective July 1, 2011, Merck relinquishes exclusive distribution rights for Remicade and Simponi in Canada, Central/South America, Middle East, Africa, and Asia Pacific to Centocor.
- 3Merck retains exclusive distribution rights for Remicade and Simponi in Europe, Russia, and Turkey.
- 4Profits from Merck's retained territories (Europe, Russia, Turkey) will be shared equally with Centocor.
- 5Merck will make a one-time payment of $500 million to Centocor as part of this agreement.
- 6The amendment settles all outstanding arbitration claims between Merck and Centocor related to the 2009 merger.
- 7This filing includes a joint press release from Merck and Johnson & Johnson announcing the Second Amendment Agreement.