Change is in the air at Merck, where later this month the Germany group will gain a new CEO when deputy chief executive Stefan Oschmann takes over from Karl-Ludwig Kley, who retires after nine years in the role.
Oschmann’s appointment was announced last year at the same time as the company unveiled a rebranding exercise that is nothing if not eye-catching. With a colour palette that includes bright pink, brighter green and a comparatively subdued yellow, the company’s brand is a particularly visible sign of change at the company.
For Uta Kemmerich-Keil, CEO and president of Merck’s Consumer Health business, the new brand is a clear statement of intent for her company. “It expresses exactly the mindset that the Consumer Health division stands for – it’s for joyful life and it’s bold and vibrant, exactly what we want to be.”
She adds: “It clearly differentiates us from many other companies – especially when you’re looking at the pharmaceutical industry, and it brings to life something that we have been living for quite a while.”
If the branding is the most obvious outward marker of changes going on at the company, behind the scenes the business Uta leads has been making more fundamental changes to the way it operates, chief among them its approach to innovation.
Innovating innovation
Coming from very much a decentralised approach, the firm has kept that aspect of how it innovates and brings new ideas through the pipeline. “You want your ideation to be very close to your consumers to really understand what consumer needs are,” Uta explains. “So we still have an ideation process that helps us to get as many insights as possible out of the market, because Indonesia is – for sure – not the same as India, or Brazil, or Germany. So you really need to be able to be at the pulse of what the consumer needs in the market.”
“What we have changed is that the upcoming process is much more, for us, a centralised process, so that we try to make sure that we have fewer, but bigger, ideas that we are pushing through our pipeline.”
The aim, Uta explains, is to be able to put more collective energy and effort behind strong ideas and to allow them to expand beyond just one local market.
“We are trying to reduce complexity within the organisation so we can leverage as much as possible the skill set that we have in certain central functions, while at the same time not losing the pulse locally.”
Scale in itself is not what I look for, I look for local scale
New Consumer Health brand Vivera is, Uta says, a good example of this approach. The food supplement for gastro-intestinal problems was launched in January in Chile, as part of its Latin American roll-out. First developed in that region, Merck operations in at least one other region have shown an interest in the brand, fulfilling the company’s criterion for having at least two regions following an idea for it to gain backing.
“If it had only been an idea that was supported by one country, we would not have given it central support … and that makes the ideas bigger and gives us better leverage on our innovation.”
Strategic evolution
It’s approaching two years since Uta took over as CEO and president of Merck’s Consumer Health business and time has, she says, flown by since then.
Looking back she says: “We have achieved a big step in our strategy, which is to outgrow the markets in which we compete.”
One of the company’s four healthcare businesses, alongside Biopharma, Allergopharma (allergen immunotherapy) and Biosimilars, Consumer Health is pursuing a ‘3×3 strategy’. This sees it strive for a presence of least three leading brands and a local market share of at least 3% in each of the15-20 key countries, based on the thinking that – in consumer health at least – ‘local wins’ are what count rather than sheer size.
“Scale in itself is not what I’m looking for, I look for local scale. That’s super important to me,” Uta says, adding that Merck is “outgrowing the industry” at the moment.
An interesting way Merck’s consumer health strategy is being implemented can be seen in its ‘brand transfers’ from its Biopharma unit.
A first wave of these was finalised in late 2013, with the transition of vitamin B brand Neurobion and Floratil, a probiotic antidiarrheal product. A second wave came with the shift of Vigantol in 2015, and earlier this year a third wave of transfers began in Latin America, home to one of its key markets in Brazil, involving the iron deficiency related anaemia treatment Anemidox/Confer and liver protector Hepabionta.
“The transfers have been made with brands where we felt they are ready to be ‘consumerised’. What was key for us in moving the brands from the prescription business to our business was that we felt they were ready to be promoted with consumers much more than with doctors,” Uta says, explaining that the complexity of consumer health markets precluded the transfers from being straight Rx to OTC switches, meaning that it wasn’t just the brands themselves that transferred, with sales, regulatory and medical teams accompanying their move to Merck’s Consumer Health business.
The change that I want to drive in my own organisation is to think more holistically about how we add value to our consumers
Adding value
Beyond brand transfers, Uta points to a further evolution in her unit’s focus as it increasingly stives to also value to what it does.
“The change that I want to drive in my own organisation is to think more holistically about how we add value to our consumers. One piece of that is our traditional way of doing business, but it goes beyond that. I won’t go into areas that are not my home turf, but we need to think of all consumers and their needs in a different way.”
One of the ways it is doing this can be seen in a new service the company is launching in France. “Projet Moi” (Project Me) is aligned with its Bion 3 brand and aims to support consumers in their personal life goals. “We say, ‘what is the one thing that you have always wanted to do, but have never done?’. And, it’s not necessarily the big thing like climbing Kilimanjaro. It’s more about ‘what is it that I would like to experiment with and haven’t done yet’,” Uta says.
“This type of understanding about consumers and their needs and going beyond a chemical product and formula is what needs to be the next step in the organisation.”
When PME spoke to Uta it was in her company’s home territory of Darmstadt in Germany, where Merck held its first Global Consumer Health Debate. The focus for this was women’s health and well-being, and, while determined not to lose her focus, Uta is keen to consider where Merck can contribute to its consumers’ well-being. “That doesn’t mean that we want to start selling meditation courses, but I think we need to not be one-dimensional and look at things in a more holistic way, because in the future we will need to deliver solutions to people, and not just a puzzle piece of the solution.”
This idea is a central one for Uta’s future plans. “We are working a lot at the moment on thinking about what we really want to push for that leaves a mark. How do we as an organisation feel that we are meaningful beyond developing and selling healthcare products? So what additional value can we add to individuals, and also to society?”