Merck & Co to continue posting sales and profits under AstraZeneca partnership

US drug giant Merck & Co (NYSE: MRK) and Anglo-Swedish major AstraZeneca have amended the option agreement related to their partnership known as AstraZeneca LP (AZLP), meaning that the US firm will continue to record sales and profits for two more years tied to AstraZeneca’s gastro-intestinal drugs Nexium (esomeprazole) and Prilosec (omeprazole).

The updated agreement provides that AstraZeneca will not exercise its option to acquire Merck's remaining interest in AZLP in 2012 and provides AstraZeneca with 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.

As a result of the amended agreement, Merck will continue to record supply sales and equity income from the partnership for the remainder of 2012 and 2013. In 2014, AstraZeneca will now have the option to purchase Merck's remaining interest in AZLP based in part on an agreed-upon calculation of the value of Merck's interest in Prilosec and Nexium. AstraZeneca's option is exercisable between March 1 and April 30, 2014. If AstraZeneca chooses to exercise this option, the closing date is expected to be June 30, 2014.