Company Overview

Merck is among the world’s largest and oldest pharmaceutical companies, fiercely independent about its methods and a major supplier of important products. Unlike its larger competitors, who mostly license drugs from other companies, Merck tries to develop products at its own laboratories. Similarly, it likes to do its own research. In 2007 Merck spent $4.9 billion on R&D.

Most Merck headlines since 2004 haven’t been the sort it craves. In August 2005, Merck lost the first of some 9,000 lawsuits alleging that the company marketed the blockbuster drug Vioxx, an arthritis pain reliever, despite evidence that it was unsafe. The company reached a settlement agreement with plaintiffs in late 2007, agreeing to pay $4.85 billion to settle most claims. But the cost of addressing this troubling issue—not to mention of revenue from a blockbuster—has perhaps been less of a problem than the blow to Merck’s reputation. Lawyers representing plaintiffs and Merck critics painted Merck as irresponsible and greedy. That image has stuck to some degree.  Revenues have been roughly flat since 2003, although they rose slightly in 2007.

Indeed, things may be looking up for Merck. The company has create a leaner, more efficient operation. CEO Richard Clark has laid off more than 7,000 workers since 2005, shuttered several manufacturing plants and streamlined others.  It has several blockbuster drugs—those generating at least $1 billion in revenue—and has made more vigorous efforts to create other blockbusters. Among its biggest successes in 2007 were Singulair, an asthma medication that generated $4.3 billion in sales—a 19-percent increase over the previous year—Zetia and Vytorin, which generated $5.4 billion, a 34-percent spike over 2006 (Merck divvies up the revenues for the cholesterol-fighting drugs with Shering-Plough via a collaborative agreement.  Antihypertension medications Cozaar and Hyzaar generated a combined $3.4 billion in sales—a 6 percent increase compared to 2006. The company also enjoyed more recent success with Gardasil, a vaccine to prevent the papillomaviruses that cause cervical cancer and genital warts. The drug reached blockbuster status nine months after it was introduced. On the downside, in 2008, the company lost its patent protection on the osteoporosis drug Fosamax, which had been a huge seller.