Merck Merck announced in January 2021 that the company is discontinuing development of its COVID-19 vaccine and plans to focus its COVID-19 research strategy and production capabilities on advancing two therapeutic drug candidates, MK-4482 and MK-7110. This decision follows Merck's review of findings from Phase 1 clinical studies for the vaccines which showed inferior results compared to other vaccines. Merck and its collaborators plan to continue their COVID-19 research. Merck will also continue to evaluate the potential of the developing medicines instead of vaccines to pursue broader pandemic-response capabilities. In a similar statement, France's Pasteur Institute said on Monday it was ending development of a Covid-19 vaccine with US pharmaceutical company Merck after clinical trial results proved disappointing. The announcement is a further blow for hopes for a French-led vaccine following recent news that leading national pharmaceutical company Sanofi is also struggling to bring its vaccine candidate to market. Sanofi announced in December that its vaccine would be ready by the end of 2021 at best, and the group is now being encouraged by the government to help produce rival vaccines that have already been authorised for use in Europe. These rival vaccines include products from German-American tie-up BioNTech/Pfizer and US pharma group Moderna. Britain has also authorised the use of a vaccine developed by the University of Oxford and AstraZeneca, which is being assessed by European Union regulators. The Pasteur Institute said it was still working on two other Covid-19 vaccines which are not yet ready for clinical trials. On March 2, 2021 Merck has entered into multiple agreements to support efforts to expand manufacturing capacity and supply of COVID-19 medicines and vaccines. The Biomedical Advanced Research and Development Authority (BARDA), a division within the U.S Department of Health and Human Services (HHS), will provide Merck with funding of up to $268.8 million to adapt and make available a number of existing manufacturing facilities for the production of COVID-19 vaccines and medicines. Merck has also entered into agreements with Janssen Pharmaceuticals, Inc., one of the Janssen Pharmaceutical Companies of Johnson & Johnson, to support the manufacturing and supply of Johnson & Johnson's SARS-CoV- 2/COVID-19 vaccine. Merck will use its facilities in the United States to produce drug substance, formulate and fill vials of Johnson & Johnson's vaccine. "We are steadfast in our commitment to contribute to the global response to the pandemic as part of the remarkable efforts of the entire medical and scientific community," said Mike Nally, executive vice president, Human Health at Merck. "This funding from BARDA will allow us to accelerate our efforts to scale up our manufacturing capacity to enable timely delivery of much needed medicines and vaccines for the pandemic." This funding is in addition to Merck's 2continued investment in its global vaccines manufacturing network as part of its planned capital investments of more than $20 billion from 2020 through the end of 2024. Literally hundreds of COVID-19 vaccine candidates went into development around the world in the course of 2020, many with the support of governments. By the end of 2020, more than 200 vaccine candidates were still in development. The number of vaccines currently being used around the world is nearing double digits. However, the difficulty of developing new vaccines is illustrated by the fact that only one of the Big Four vaccine makers that dominate the world vaccine industry (Pfeizer, GSK, Merck & Sanofi ) has so far succeeded in producing a working vaccine against COVID-19 on the abridged timeline. The rest of the approved vaccines are distributed among other smaller vaccine makers backed by governments as the following graphic shows: Leading vaccines Developer How It Works Phase Status Pfizer-BioNTech MRNA 2 3 Approved in several countries. Emergency use in U.S., E.U., other countries. Moderna MRNA 3 Approved in Switzerland. Emergency use in U.S., U.K., E.U., others. Gamaleya Ad26, Ad5 3 Early use in Russia. Emergency use in other countries. Oxford-AstraZeneca ChAdOx1 2 3 Emergency use in U.K., E.U., other countries. CanSino Ad5 3 Approved in China. Emergency use in other countries. Johnson & Johnson Ad26 3 Emergency use in U.S., Bahrain. Vector Institute Protein 3 Early use in Russia. Novavax Protein 3 Sinopharm Inactivated 3 Approved in China, U.A.E., Bahrain. Emergency use in Egypt, other coutries. Sinovac Inactivated 3 Approved in China. Emergency use in Brazil, other countries. Sinopharm-Wuhan Inactivated 3 Limited use in China, U.A.E. Bharat Biotech Inactivated 3 Emergency use in India. Sources: France 24, Merck Website, Fortune, The New York Times, Statista. These four firms had a combined market share of nearly 80% of the world vaccine market in 2017. 3Questions 1. What is the structure of the vaccine industry in which Merck competes? a. Why do you think the industry might have evolved such a structure? Why do you think the French government has been pushing both The Pasteur Institute and Sano to participate in the vaccine development competition? Evaluate the type of differentiation Merck is using. If you were a consultant to Merck, what would you recommend do to participate in the market for COVIDl9 related medications? Discuss the innovation level in this industry. Where are Merck and its competitors in terms of industry life-cycle? What type of innovation you believe is best for Merck? Based on the latest data, Merck is obviously out of the race to produce a successful COVID-19 vaccine. How can you help Merck to recreate value