Feb. 11 (Bloomberg) -- Activists gathered with signs outside Merck’s East London offices last week, protesting the drugmaker’s involvement in a campaign to delay South Africa’s proposal to allow low-cost copies of patented drugs.
The only problem: The group STOPAIDS targeted the wrong Merck. The protesters were at the offices of Merck KGaA, a Darmstadt, Germany-based company that makes pharmaceuticals, chemicals and laboratory equipment. The company involved in organizing the industry campaign in South Africa is Merck & Co., the drugmaker from Whitehouse Station, New Jersey.
The confusion has long been a sore point for the German company, which in 2011 went to court in an effort to secure the use of a Merck page on Facebook Inc.’s social network. The two companies, which also battled last year over website addresses, are holding private talks about the use of the Merck name with the aim of coming to a solution, Karl-Ludwig Kley, chief executive officer of Merck KGaA, said in an interview Feb. 7.
“We both have the legacy of Merck,” Kley said. “We have it for 350 years and they have it for almost 100 years. There are possibilities, it just requires some good will and creativity from both sides.”
Kelley Dougherty, a spokeswoman for Merck & Co., declined to comment.
The two Mercks started as one company, with its roots in Friedrich Jacob Merck’s acquisition, in 1668, of a pharmacy in Darmstadt. The German company set up a subsidiary in the U.S. in 1891; the U.S. company was expropriated in World War I and became independent.
The two now have no connection other than sharing a similar name. Each owns rights to the Merck trademark in different geographical areas, with the U.S. company using MSD or Merck, Sharpe & Dohme outside the U.S. and Canada.
“There’s no question that having two major pharmaceutical companies with the name of Merck causes a lot of confusion,” Timothy Calkins, professor of marketing at Northwestern University’s Kellogg School of Management, said in an interview. “It is something I think they should address. As we get more global, and as these companies bump into each other more often, it’s going to become more and more of a challenge.”
The U.S. Merck is much bigger, with $44 billion in sales last year and a market value of $160.4 billion, compared with an estimated 11.1 billion euros ($15.1 billion) in revenue for Merck and a 25.7-billion-euro market value.
The issue reached a boiling point due to the Internet and ownership of the use “.merck” as a so-called top level domain, which is the part of an Internet address that comes after the dot, such as .com and .gov.
In September, a panelist at the World Intellectual Property Organization said neither company could bar the other from applying for the top level domain. Talks continue with ICANN, the Internet Corporation for Assigned Names and Numbers, about domain-name ownership, Kley said Feb. 7.
One option would be for the two companies to follow the example of AbbVie Inc., which split from parent Abbott Laboratories last year, Calkins said.
“It’s clear that they’re different companies, but it’s also clear there is a shared heritage,” he said. “That might be the best way to resolve this.”
Yet the German Merck may be less willing to bend. Kley said last week that he objects to “KGaA” being added in media references to the German Merck outside of the U.S. and Canada. He said Merck & Co. should be referred to as MSD outside of the region and not as “Merck” or even Merck & Co.
Last week’s protest illustrates the need for a solution. STOPAIDS sent a group of activists to Merck KGaA’s London office with South African flags and banners bearing the German company’s logo and signs such as “Merck -- ready to walk all over South Africans to turn a profit.” STOPAIDS, an umbrella organization of U.K. agencies that work on HIV, posted photos of the protest on its website and issued a press release.
But the executive organizing the industry response to the South African proposal works for MSD Southern and East Africa -- a unit of the U.S. company. STOPAIDS later apologized to Merck KGaA.
Kley, a lawyer by training, said he will be “much more aggressive” in promoting “the real Merck” and would pursue legal action if necessary.
“For me it’s not imaginable that the Merck family, which has had the Merck name for 350 years, forgets about their name and the name of the company,” Kley said. “After all, we are Merck in practically all countries around the world.”
--Editors: Phil Serafino, David Risser