Essay on Merck Case Study

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| Merck & Company Inc. | Case 1 | |


Introduction of the Company
Merck was established in 1891 to improve human and animal health through the development of innovative products. Merck currently has two reportable segments, the Pharmaceutical Segment and the Vaccines and Infectious Diseases Segment. Merck sells products through several channels including wholesalers, retailers, hospitals, clinics, government and managed health services providers. In the 1980’s the Merck was very successful in producing 10 major new drugs and had a very healthy pipeline. In later years, Merck has entered into joint ventures with many other pharmaceutical companies in order to expand its pipeline. In the last several years Merck has
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In the last several years, Merck’s individual R &D department has not been able to keep pace with declining revenues from existing products. It is only through Mergers and Acquisitions that Merck has supplemented this income. * Large Balance, $1.4B in goodwill on Merck’s Balance Sheet – the goodwill on Merck’s balance sheet is primarily attributable to past acquisitions. * Almost $4B in long-term debt on the balance sheet

* Patent Expiration - in the next four years, the two highest sales producing pharmaceutical products will go off patent. Patents on Merck’s Cozaar and Singulair will expire in February 2010 and August 2012, respectively, exposing about $8.2 billion worth of sales to generic competition. This equates to about 35% of Merck’s forecasted revenue in 2012 [and 29% of 2009 revenues]. * Competitive Pricing – Merck is sometimes forced to lower prices of products, either ones that have gone off patent to maintain market share in the product, as well as for products that are still on patent in order to compete with rival products for the same treatment that are marketed by competitors
The Internal Factor Evaluation Matrix

Based on the IFE Matrix, Merck registers a score of 2.5 which is an average score. This indicates that Merck is steady in its control of the internal factors that affect its operations. It also indicates
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