) entered into an agreement with Santen Pharmaceutical Co., Ltd. to
divest its ophthalmology products including Cosopt, Cosopt PF,
Trusopt, Trusopt PF, Timoptic, Timoptic PF, Timoptic XE, Saflutan
and Taptiqom in Japan and key markets in Europe and Asia-Pacific.
The agreement is expected to close in most markets in the next few
These ophthalmology products generated annual sales of
approximately $400 million in the above-mentioned territories. We
note that the patent for Cosopt has expired in a number of major
European markets in Mar 2013. Sales are expected to decline in
As per the terms of the deal, Santen will pay for supply of these
ophthalmology products from Merck for the next two to five years.
Merck will receive an upfront payment of approximately $600 million
from Santen. Santen will make additional payments based on defined
sales milestones as needed.
We note that this is not the first time that Merck has decided to
divest its ophthalmology products. Last November, the company had
sold the rights to ophthalmic products --Cosopt, Cosopt PF and
AzaSite -- in the U.S. to
). These ophthalmology products generated annual sales of
approximately $45 million in the U.S.
Meanwhile, the company stated that it will continue to sell its
ophthalmology products in Latin America, Canada, Australia, the
Middle East, Africa and other markets.
We believe that the divestments are in line with Merck's ongoing
strategy to streamline its operations and improve operational
efficiencies. Earlier this month, Merck entered into an agreement
) to sell its consumer care business for $14.2 billion.
Merck carries a Zacks Rank #3 (Hold). Some better-ranked stocks
) carrying a Zacks Rank #1 (Strong Buy).
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