Merck Joins the Big Pharma VC Party, Setting Up $250M Biotech Investment Fund

Xconomy National — 

[Updated with Merck comment 1:25 pm ET, 9/16] Just about all the major pharmaceutical companies have their own venture capital funds to invest in biotech startups, and now one of the real biggies, Whitehouse Station, NJ-based Merck, has joined the club.

Merck (NYSE: MRK) has established the new Merck Research Venture Fund (MRVF) with $250 million to invest around the world, according to a report today by In Vivo, an industry publication. The new venture operation is led by Merck senior vice president David Nicholson. The company also has set up a separate Global Health Innovation Fund with another $250 million.

[Updated Merck comment.] “Presently, MRVF is making strategic LP investments in a small number of geographically diverse life-science venture firms. While we expect to make direct investments in biotech companies in the future, we are not yet doing so,” says Merck spokesman Ian McConnell.

Big Pharma companies, as everyone who follows the industry knows, are struggling like crazy to come up with innovative new products to replace aging blockbusters that are losing patent protection from generic competitors. That need has helped create an opening in recent years for Big Pharma VC firms to invest in biotech startups, particularly as traditional biotech VC firms have been stuck by the lack of an IPO market to provide a reward for their efforts. Pfizer, GlaxoSmithKline, Novartis, Eli Lilly, Roche, J&J, and AstraZeneca have all found themselves in position to fill some of the void in early-stage biotech investing the past few years.

According to In Vivo, the Merck Research Venture Fund will enable Merck to invest in early-stage startups, offer its scientists up as advisors to the smaller companies, and provide Merck’s dealmakers with an inside track in negotiations when it’s time for the small company to strike a co-development partnership.

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