Abstract: E. Merck of Darmstadt and the Origins of Industrial Research Capabilities in U.S. Pharmaceuticals at Merck & Co.

Andrew Godley


The U.S. pharmaceuticals industry dominated global output and new drug creation from the 1940s to the 1970s. The development of the industry's research capabilities that led to such success has previously been explained as the outcome of deliberate investments by the leading U.S. firms in in-house research. This paper challenges this interpretation of the emergence of the U.S. pharmaceuticals industry by highlighting first how German firms' research efforts continued to lead in global pharmaceuticals innovation through to 1940; U.S. pharmaceuticals R&D remained relatively underdeveloped. The undisputed research leader in the U.S. industry by 1940 was Merck & Co. The paper then analyzes this critical case study, showing how Merck & Co. actually acquired its research capabilities only in the late 1930s. The paper shows that much of this was actually as a result of a transfer of knowhow and technology from its former parent, E. Merck of Darmstadt, rather than from its own internal investments. Given Merck & Co.'s prominence as the sector's research leader, the paper concludes that the U.S. pharmaceuticals industry's research capabilities were developed significantly later than is reflected in the current literature, and that these new capabilities were in fact far more dependent on a transfer of technology from one of the leading German producers to its former U.S. subsidiary.