The Merck story: how a pharmacy turned into two successful businesses
Merck is the world’s oldest pharmaceutical company. Its history dates back to the 17th century, and it remains a significant representative of its industry to this day.
When discussing Merck, experts often specify which company they are referring to. Today, there are two companies with this name on the market: the German company and the American company. In 1891, the German company opened a subsidiary in the United States, which was later nationalised by the American government. Since then, the German company has used the Merck brand in all countries except North America.
History of emergence
The history of the pharmaceutical empire began in 1668 when Friedrich Jakob Merck purchased a pharmacy in Darmstadt. Following the founder’s death, management passed to his nephew. For 150 years, the pharmacy was passed down through the family. In 1816, however, things changed. Emmanuel Merck took over the management and decided to take the family business to the next level. He greatly increased the production of medicines and transformed the pharmacy’s laboratory into a fully-fledged pharmaceutical company. By 1900, E. Merck was producing over 10,000 different medicines.
Division of the company
The business paid special attention to creating pure reagents, thanks to which Merck’s activities reached the international level. By the early 20th century, the company had established offices in other countries, including the UK and the US. However, the First World War dealt a significant blow to the business:
1. In 1915, US authorities cancelled Merck’s rights to do business in the United States.
2. Around 80% of the shares in the American division were sold on the open market.
Georg Merck, who ran the American office, obtained US citizenship and became known as George Merck. He purchased the shares for US$3.8 million, thereby retaining control of the company. This resulted in the formation of two distinct entities: the German E. Merck and the American Merck & Co.
Merck story in different countries
The American business developed rapidly under the leadership of George’s son, George Jr., who established the company as a leading player in the chemical-pharmaceutical sector. One of the company’s key areas of business was the production of fine synthesis products.
By 1925, Merck & Co.’s turnover had reached 10 million dollars. In 1957, the company held an IPO and entered the stock market. A significant achievement during this period was the release of the antibiotic streptomycin.
Meanwhile, the German company E. Merck also achieved success in Europe. The company became a pioneer in the production of synthetic vitamins. The business also received a patent for the substance MDMA. Initially, it was developed as a vasoconstrictor drug. Decades later, this substance became known to the world as ‘ecstasy’.
