Essay on Merck Case Study

Many other drugs also lose patent protection leading to the creation of substitutes that are cheaper.

Looking at Merck’s financial statements, the annual consolidated sales are currently at $27,428.3 million and the Earnings Per Common Share are currently at $5.65, total assets are currently at $112,089.7 (Merck Annual Report, 2009), stock is currently selling at $33.90 per stock and net income is at $340.40 million dollars, Medco’s current stock price is at $63.93, their current sales are at $16,319.80 million, at the moment (Google Finance), Merck are at a good standing to acquire Medco, earnings per share will definitely increase.

Some financial considerations we must take into account are that the purchase price of $6.6 billion, Merck would be paying a premium to acquire Medco, which had reported revenues of $2.2 billion in 1992. The revenue generated is 22% increase from 1991. This shows that Medco has seen tremendous growth in both revenue and earnings since coming into the market in 1984. Thus Merck will gain the ability to increase more market share as well.

Merck & Company was the world largest drug manufacturer during the 1990’s. They planned to acquire Medco Containment Services Incorporated which was the largest prescription benefits management company (PBM) and marketer of mail-order medicines in the United States. They were both in the pharmaceutical industry. Merck planned to acquire Medco for $6.6 billion on July 28, 1993. I believe that their merger will be beneficial to each other because the major force driving the acquisition of Medco by Merck was Medco’s extensive database which contains a computer profile of each of its 33 million customers, amounting to 26% of all people. Medco clients include 100 fortune 500 companies and 58 Blue Cross Blue Shield group and insurance Companies. Basically, Merck will Medco database to identify prescriptions that can be switch to a Merck drug. By having access to Medco database, it will definitely increase their sales. That database can also allow Merck to determine the patient that did not refill their prescriptions which can lead to a considerable decrease of sales revenues each year. Finally, Merck will also use Medco computerized patient record system to show that the premium paid for Merck drug is worth the price charged. The merger will also save about $ 1 billion a year in our operations. Medco database is very crucial for Merck and as for the merger. It will really help Merck target and achieve a precise

Merck will soon face many challenges in the business of producing drugs. The company's most popular drugs are coming to a close to their patent expiration. One of the best selling drugs is called Zocar, which is used for cholesterol problems. Zocar will have to soon face competition next June from other generic drug makers.

Merck is a drug manufacture giant who brings an annual revenue of nearly fifty billion. Prior the Vioxx recall Merck was a highly valued company when it came to its ethical standard. It had consistently toped list for companies to work for (Lawrence & Weber, 2014). In addition to this they were well recognized as a socially responsible company who placed an importance on testing to provide the best quality pharmaceuticals. The Vioxx recall caused a huge blow for the company resulting in lawsuits and drop in company value.

Starting 2011, in order to drive future growth, Merck started focusing on reducing costs, making strategic investments in new product launches, and improving its research and development pipeline. Merck’s sales worldwide reached $48 billion in 2011, which was a 4% increase from 2010. With two drugs under review with the FDA, the company has 19 other drugs in the Phase III of development.

Since its humble beginning as a small drugstore, Merck has placed a large amount of importance on improving the health and well-being of its customers. As drug patents expire and genetic forms of their top products become available, Merck’s strategy is to do the unexpected; instead of raising the price of their older products in favor of patent protected new drugs, Merck focuses on reducing their cost in order to better compete with their generic counterparts. Additionally, Merck’s plan for growth now encompasses a much more aggressive pursuit of new drugs in their pipeline through extensive research. Merck became the second largest health care company in the world after the merger with Schering-Plough in 2009 and has

The Company is organized into three business segments: Pharmaceutical, Medical Devices and Consumer. Out of the three, Johnson & Johnson have the highest sales within the pharmaceutical segment, which contributes over 43% of the company’s revenue and generated revenue of about $32.3 billion in 2014. As a percentage of sales, the pre-tax profits for the pharmaceuticals segment were 36.2% in 2014. This was achieved due to the strong sales of high margin products. Pharmaceutical segment has several multi-million dollar drugs covering a broad range of areas such as neuroscience cardiovascular and metabolism immunology oncology and infectious diseases as well as vaccines. Products in this segment are distributed directly to retailers, wholesalers, hospitals and health care professionals for

The painkiller Vioxx was introduced in 1999 by Merck & Co. It has been used by over 20 million Americans since it was put on the market. Vioxx remained on the market for approximately five years without adequate warnings about its risks. In September of 2004, Merck took Vioxx off the market after a study revealed that it doubled the risk of heart attack or stroke for patients that used it for more than 18 months. Although Merck claimed that they had no idea of these possibly lethal side effects, some internal documents imply that they had been aware of the problem for years and had not made moves to change it. Over 300 lawsuits have been filed against Merck, and it is expected that thousands more will arise.

Center for International and Area Studies Yale University New Haven, CT 06520 203-432-9395 (Fax: 5963) e-mail: william.rapp@yale.edu Revised December 1998

The company is so large that no one drug can lift it from its current sales doldrums. In addition, the company was once highly attractive to investors, but its recent stock price fell to 1997 lows. This may put pressure on the company to attempt acquisitions at a time when the company is ill-equipped to integrate a new company into its organization, and it is engaged in a cost-cutting program at a time when it may need to invest even more in research and development (McTigue Pierce, 2005).

The second rests in Pfizer’s expiring patents on several popular drugs that invite their competitors to enter the market with similarly performing pharmaceuticals. Once these patents expire, Pfizer will either have to extend the patent through reformulating the performance of the drug for another purpose called “ever greening”, or abandon the line in the pursuit of another, more profitable product. Regardless of what they do in terms of their own product offerings, generic imitations of their products will enter the market, diluting the profitability of the drug and forcing reliance on the sales of other existing products to make up the loss.

2. Patent related and Generic Competition: The developed countries like US and Europe have strong patent protection laws which gives a lot of benefits for the pharmaceutical companies. But, the patent

Even though cost for medical care continues to escalate, Merck, the largest health care company in the world still works to improve people’s health and well-being. In November 2009, Merck, and Schering-Plough combined to create a new corporation. Both organizations together provide an even stronger commitment to providing good health and well-being. Through the years, Merck researchers have helped to find new ways to treat and prevent illness - from the discovery of vitamin B1, to the first measles vaccine, to cold remedies and antacids, to the first statins to treat high cholesterol (Merck, 2013).