* Merck & Co.'s Oschmann to become head of drugs unit Jan. 1
* To replace Elmar Schnee, following regulators' rebuffs
* Kai Beckmann to enter executive board as head of personnel
* Merck KGaA shares indicated 0.1 percent higher
(Adds details, background)
FRANKFURT, Dec 13 (Reuters) - Germany's Merck KGaA hired an executive from U.S. peer Merck & Co as head of its drugs division to replace Elmar Schnee, following a string of setbacks in product development.
Stefan Oschmann, aged 53, will be in charge of the group's prescription drug unit Merck Serono from Jan. 1, 2011, and he will also head the OTC drugs unit Consumer Health Care, the company said on Monday.
It said that Schnee, at the helm of the pharmaceuticals unit since 2005, would leave the company for personal reasons but the departure comes after healthcare regulators rejected some of Merck KGaA's most promising development projects.
The European drugs watchdog on Sept. 24 dealt the German family-controlled group a blow by advising against the oral multiple-sclerosis treatment cladribine in the drug's potentially largest market.
Last year, EU regulators came out against the use of Merck's blockbuster-hopeful Erbitux to fight lung tumours, the most common form of cancer.
German-born Stefan Oschmann has been in charge of Merck & Co's emerging markets operations since 2009, Merck KGaA said.
The Financial Times Deutschland had reported on Sunday in an advance copy of its Monday edition that Merck will not extend the contract of pharmaceuticals head Schnee.
Citing unnamed sources, the paper also said that Merck KGaA will extend the contract of Chief Executive Karl-Ludwig Kley, while Chief Financial Officer Michael Becker is set to retire.
A spokesman for Merck had declined to comment on the possible management reshuffle on Sunday.
Germany's Merck also said on Monday that Kai Beckmann, who has been with the company since 1989, would become executive board member responsible for human resources. (Reporting by Ludwig Burger; Editing by Louise Heavens)