Four centuries, one family

Curiosity – and breakthrough

In 1827, a breakthrough in techniques transformed the company. Medical science was still in its infancy, but pharmacist Emanuel Merck concentrated on the study of the chemistry of natural plant substances – specifically alkaloid research, such as the commercial extraction of morphine from opium. The purity of alkaloids manufactured by Merck soon surpassed all of its contemporaries in the industry. As a result of Emanuel’s work – five generations after Friedrich founded the company – Merck shifted from a pharmacy to an industrial company, and the pharmaceuticals industry itself moved finally from a craft to a science.

Merck’s scientific curiosity continues today. After a long dry spell involving several setbacks in its new drug pipeline, Merck this year received FDA marketing approval for avelumab, the first immunotherapy drug designed to treat a rare form of skin cancer (Merkel cell carcinoma). If avelumab proves as effective in other cancer types, analysts expect the drug to generate billions in sales.

“Our success story is the outcome of a tremendous research spirit and strong passion for discovery,” Stefan Oschmann, CEO of Merck KGaA said at a recent shareholders’ meeting. “We are at the threshold of a technological development whose potential we cannot even estimate yet. But I do know one thing: scientific curiosity will remain our driving force.”

The company and the family

Emanuel Merck was not only a scientist but a talented business leader who altered the management structure of the company in a partnership. The involvement of Emanuel’s three sons – a businessman, a pharmacist and a chemist – expanded the expertise within the company’s leadership and helped transform the business. In doing so, Emanuel also established the principles behind the family’s leadership and long-term vision that last to this day. With a 70 percent stake in the company, the family today is responsible for the strategic direction of the business, managed through the parent company E. Merck KG. Family members share a common understanding of business values and a sense of responsibility to the next generation.

For more than 100 years, Merck has strictly separated the operational management of its businesses from its owners. In doing so, the family prevents itself from interfering in daily operations, while still enabling efficient communication and fast decision-making. All Executive Board members and executive representatives of the Merck family are personally liable for the fortunes and misfortunes of the business. The external managers of the Executive Board are partners, not employees – the company sees them as temporary family members.

Identity

Over the last decade, under the leadership of CEO Karl-Ludwig Kley, Merck has completed €40 billion ($44.7 billion) in acquisitions – one of the greatest transformations in the company’s history, second only to its rise from the ashes after World War II. At the same time, the company has divested itself of its less innovative products and services, including the sale of several divisions. Sales over 10 years have climbed from €7 billion to €15 billion, and profits from €1 billion to €2.5 billion.

Yet Merck’s core remains what it has always been, shaped by the influential role of the family and its values: courage, achievement, responsibility, respect, integrity and transparency. They have been pillars of our culture since the time of Emanuel Merck in the 19th century.

Over the centuries, the notion of “family” has provided solidarity and cohesion. We find younger workers today, Millennials, are drawn to our sense of purpose as they seek direction and meaning to their work. “Family” is like a lighthouse – a guiding spirit in the sometimes dark and stormy business landscape. It’s not far-fetched to say that the concept of Merck will serve as a source of inspiration and purpose for the next generation and generations to come well into the future.

Dr Walter Huber is the Managing Director of the Merck Family Foundation, Darmstadt, and a former Senior Vice President of Corporate Communications for the Merck Group, in Darmstadt. He joined Merck KGaA in 1991 as Head of Public Affairs after three years as Head of Public Relations at Upjohn in Germany.

Walter Huber spoke to Christian Weyand, a Partner in Brunswick’s Frankfurt office.

Photographs: Courtesy of Merck KGaA, Darmstadt, Germany