Merck and China's largest pharmaceutical and health company, Sinopharm, are collaborating to increase access to and sales of human papillomavirus and other selected vaccines in that country, one of the world’s fastest growing pharmaceutical markets. The partners signed a statement of mutual intent to cement the deal and say they’ll also discuss the potential for promoting and marketing Merck’s pharmaceutical products in China.

For Merck, the deal provides access to a fast growing market that is seen as critical for its future growth. For Sinopharm, the deal will help propel the company towards its goal of boosting its revenue 50 percent by 2012.

“Expanding our business in emerging markets throughout the world is critical to the mission and growth of Merck and innovative partnerships are a key element of our approach,” says Richard Clark, Merck's chairman and CEO.

Merck said in May that it anticipates that sales from emerging markets will represent more than 25 percent of the company’s total pharmaceutical and vaccine sales by 2013 based on the implementation of the company's emerging market strategy.

China could contribute as much as $40 billion to the pharmaceutical industry’s annual sales growth by 2013, according to IMS Health, making it the industry’s third largest market.

Merck clearly sees room to grow. Peter Kellogg, the company’s CFO put it bluntly at the Bank of America Merrill Lynch Healthcare conference in May: Merck’s performance in emerging markets is “not something we consider acceptable,” he said. Merck was the fifth biggest player in most emerging markets, defined as Asia-Pacific, Latin America, Eastern Europe, Middle East and Africa, although it is the second largest pharmaceutical company worldwide.

One emerging market where Merck has done well is Latin America, Kellogg noted, chalking the company's success there to “years of good investment, good commercial presence and continuity.”

Following that model, like many of its biggest pharma peers, Merck is building its presence in fast-growing markets like China’s, where it has recently announced plans to spend up to $44 million to set up a new facility in Beijing’s Tianzhu Free Trade Zone and another $195 million to set up a clinical R&D hub in the city, even as it cuts back resources in developed markets such as the United States.

A new market for Merck's HPV vaccine, Gardasil, couldn’t come at a better time. Sales of the vaccine were off 7 percent, year over year, falling to $510 million from $548 million between the combined reporting periods of the fourth quarter of 2009 and first quarter of 2010 compared to the same period a year prior.