Merck and AstraZeneca Agree to Amend Partnership

Merck

, known as MSD outside the United States and Canada, announced today that Merck and AstraZeneca have amended the option agreement related to their partnership known as AstraZeneca LP

. The updated agreement provides that AstraZeneca will not exercise its option to acquire Merck's remaining interest in AZLP in 2012 and provides AstraZeneca a new option to acquire Merck's partnership interest in June 2014. This amended agreement benefits both companies and provides clarity around the valuation process at the conclusion of the partnership. Under the amended agreement, the agreed-upon valuation for Merck's interest in Nexium and Prilosec for the 2014 exercise is a fixed sum of $327 million, subject to a true-up in 2018 based on actual sales from closing in 2014 to June 2018. Also, the exercise price will include an additional amount equal to a multiple of ten times Merck's average one percent annual profit allocation in the partnership for the three-years prior to exercise. The exercise price calculation also could include the net present value of up to five percent of future U.S. sales of Vimovo, subject to a sales threshold that has not yet been achieved plus certain additional amounts. Merck previously assumed it would record sales and earnings contributions from AZLP only through Sept. 2012. The continuation of the partnership is expected to contribute approximately $200 million to Merck's revenues and approximately $0.03-0.05 in earnings per share to Merck in 2012 and does not change Merck's prior full-year guidance for 2012.