Essay on Merck Case Study

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.

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

Pfizer is the largest American pharmaceutical company and one of the largest pharmaceutical companies in the world. It competes with Merck and Glaxo, and markets such well-known medications as Celebrex and Viagra. However, the pharmaceutical industry as a whole has undergone changes in recent years with significant consolidation taking place and with increased scrutiny regarding the ways in which drugs are developed, tested and marketed. In addition, recent controversies have erupted regarding Merck's drug Vioxx, and Pfizer has been the target of unwanted publicity regarding its painkiller Celebrex. This research considers the strategic position of Pfizer, including its strengths and weaknesses as well

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.

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.

As previously mentioned, application fees can reach up to $8000 and maintenance and examination fees can reach up to $650 per year. Since patents may need to be amended and the maintenance fees can accumulate leading to a costly application process. With high costs, after the approval of the patent, many companies charge higher prices for their products in order to recover their costs. This is especially prevalent in pharmaceutical companies who also charge high prices due to the costs of research and development. Pfizer patented a drug called Lipitor and after the expiry of the patent, the cost of Lipitor was “80% off the original cost” (Reference 11). When the drug is first introduced, the drug is the only product that that particular market for a certain medical condition. Therefore, with a monopoly, companies are able to charge higher prices to recuperate their costs from research and development as well as patent costs. However with the patents only protecting innovations for 20 years, patent cliffs occur where the patent expiration of drugs causes many other pharmaceutical companies to produce generic versions of the same drug. This can lead to revenue losses for the original pharmaceutical company as they had to invest significantly into their research and development while other

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.

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

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

This time Pfizer seemed focused on diversifying the product pipeline by acquiring Wyeth. In fact, in its 2009 financial report, Pfizer reported that one of its key strategies was to have a “diversified product portfolio in which it is expected that no drug will account for more than 10% of our revenues in 2012.” To assess whether Pfizer was able to achieve its goal of diversification the first step is to examine the product pipeline and value chain of Wyeth.

Today's Merck is a global healthcare leader working to help the world be well. Merck is known as MSD outside the United States and Canada. Through our prescription medicines, vaccines, biologic therapies, and consumer care and animal health products, we work with customers and operate in more than 140 countries to deliver innovative health solutions. We also demonstrate our commitment to increasing access to healthcare through far-reaching policies, programs and partnerships. For more information, visit www.merck.com and connect with us on Twitter, Facebook and

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.

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 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.

Merck is probably the best run pharmaceutical company today with the best in-house R&D. Merck has been pleasing the shareholders with lower spending and revenue growth. They have a healthy relationship with the FDA, which allows them to bring a drug to market faster. The organization stands by its values, mission, and vision. Needs of the stakeholders are met and the company has streamlined its process for profitability.