Interview with Dr. Udit Batra, CEO and President of Merck

On March 31, 2015, Dr. Udit Batra, CEO and President, Merck Millipore was interviewed by three reporters including Process Industry, in Shanghai. Dr. Udit Batra introduced Merck Millipore's business profile and future plans, emphasizing that Merck Millipore will focus on growth in emerging markets, particularly China. In the interview, Dr. Udit Batra also shared details of Merck Millipore's philosophy and recent trends.

Q: What is your perspective on the current hot topics in the life sciences field? Do you have plans to adjust your production line and product portfolio, or expand in any key areas?

Udit Batra: I would like to answer your question from two aspects. Our current customer base is composed of R&D and laboratory enterprises, as well as process-based enterprises. With regards to R&D and laboratories, regardless of whether they are academic labs or labs in major pharmaceutical companies, they need to complete the whole process in a simpler, more rapid and detailed manner, and they need to be able to perform analyses more easily. Our products help customers to analyze individual cells and even proteins more effectively, in order to obtain detailed molecular information.

For companies looking for a complete process solution, disposable bioreactors are particularly sought-after. Our customers need products with faster response times, rather than larger size. They also need small-sized disposable bioreactors, for a range of purposes including the production of stem cells.

I think this trend is more obvious in the developing world. Regard of whether customers require support with a complete process and follow-up technical support, or subsequent data analysis, this kind of end-to-end solution creates a better application experience for our customers.

Q: In 2014 Merck Millipore cooperated with the Chinese Drug Administration to hold a bio-pharmaceutical symposium where the main topic of discussion was biosimilars. China has recently published a draft policy paper on biosimilars. Do you think that cooperating with the Chinese government will become a trend as Merck Millipore develops its business in China in the future? Do you think biosimilars will feature in related laws and regulations?

Udit Batra: As we gradually contact more and more customers, we obtain more information on these areas. As for biosimilars, policies are constantly changing, not just in China, but in many countries around the world. Everyone considers the biosimilars market to be very important, and regulations are very mature.

Merck Serono, has also been communicating regularly with food and drug administrations, including some local legislature departments, with regards to drafting relevant policies or guidelines, in order to help promote the development of China's pharmaceutical industry. Nevertheless, we must make efforts to further control equipment costs and improve production efficiency and quality, thereby ensuring the sound development of China's biosimilars market. In addition, disposable systems have a number of advantages; they are convenient, faster, and easy-to transport, and we have high expectations for this product. Merck Millipore will continue to provide support for the development of the industry from a professional perspective.

Q: Currently more and more disposable bioreactors are being applied widely in the pharmaceutical industry. What do you think of the prospects for this technology in China? Currently, the maximum capacity of a disposable bioreactor is 2000L. Do you think capacity is a critical point of difference between disposable bioreactors and stainless steel bioreactors? Is conventional technology more cost-effective during larger-scale productions?

Udit Batra: I think we can look at this question from two different perspectives. Firstly, a disposable bioreactor does not simply refer to the reactor by itself, or a plastic bag, or buffer device, etc. It may be composed of additional components, and it is a complete system solution. At present, from the perspective of our customers and markets, 2000L is the maximum capacity, and this is why we focus on the 2000L limit. But I believe that if some customers require more capacity, we will make every effort to develop and research solutions according to their needs; everything is possible. Greater capacity will mean the technology itself becomes more complicated, including the need to strengthen the entire system. For example, vaccine production does not require a larger sized bioreactor; each batch is relatively small, particularly in terms of cell culture media, and usually each country makes some localizations. Antibodies are the same. Therefore, our further investments in disposable bioreactors will increase our advantages. In our global business, Merck Millipore's investment in disposable bioreactors accounts for a relatively large ratio, far more than our investment in stainless steel technology. Currently the capacity of Merck Millipore products, such as the Mobius series, are available in 50 ~ 2000L and they have been developed into a wide range of products and solutions.

Q: How has Merck Millipore's business changed following the acquisition of Sigma-Aldrich?

Udit Batra: We officially announced the news of the acquisition of Sigma-Aldrich in September 2014, and the specific acquisition process is expected to be completed in mid-2015. Before that, both companies will still operate separately.

Firstly, through this acquisition, our product line will be further expanded, including our antibodies business, analytical reagents and media. The competiveness of these three businesses will benefit greatly from Sigma-Aldrich. In other words, Sigma-Aldrich makes a substantial contribution to Merck Millipore's three businesses.

Secondly, Sigma-Aldrich will improve Merck Millipore's core competiveness. Sigma-Aldrich itself has established a very successful e-commerce platform that will significantly expand our range of products well beyond the 60,000 products we currently offer worldwide. At the same time, this platform can facilitate the delivery of products to customers within 24-48 hours after orders have been placed. It is one of the most advanced systems of its kind in the industry and this is what our customers are looking for.

Finally, Sigma-Aldrich will really strengthen Merck Millipore's R&D advantage. After the acquisition of Sigma-Aldrich, our sales performance in China is expected to double. Thus we are confident and optimistic about our future in this regard.

Q: Following the acquisition of Sigma-Aldrich, Merck Millipore will strengthen its business in three aspects. Does Merck Millipore have any other areas of weakness from your perspective? Do you have any business development plans in place to resolve any such weakness in the future?

Udit Batra: Well, there is always room for improvement, and we have the ability to identify what areas we need to improve at any time. But we do not regard this as a weakness, but more as an opportunity for improvement, which is really important to our future growth. We are never anxious about achieving success, but rather we work out every detail in a down-to-earth manner. The acquisition of Sigma-Aldrich is the biggest acquisition in Merck's 350 years of history. Therefore, we have to take time to adapt to these development trends in order to lay a better foundation for our future development.

In addition, we will not only continue to expand our product line, providing customers with better services in the field of research and development, but we will also make progress in our diagnostics business.

Q: Merck Millipore will invest more in China, but are you worried about gradually increasing labor costs and decreasing governmental tax incentives for foreign companies today?

Udit Batra: I think this is an issue faced by all managers, and the appropriate response should be very carefully considered. These challenges are critical to the development of an enterprise. Chinese market demand continues to rise rapidly. Merck Millipore has an 8% - 9% share of the global market, but only 5% - 6% share of the Chinese market. We still have huge potential to develop in China.

Today our advantages are in decline in China, but we will not reduce our investments in China because of this. Demand in China is still rising, our R&D and investment in China is also increasing, including our cooperation with Fudan University's School of Medicine, pharmaceutical production research, as well as investments in production facilities.

In short, we will continue to monitor the development trends of the Chinese market, and we will not make any hasty decisions to reduce our level of investment because of the current market situation.