Merck: Open for Innovation ?

2831 WordsMar 8, 201412 Pages
MERCK: OPEN FOR INNOVATION? Founded in 1891 as an American subsidiary of his German namesake, Merck was once considered the “undisputed king of the pharmaceutical industry with ground‐ breaking drugs”(The Chief Executive 2003). But for the last decade, Merck has gone through a period of stagnation; it began to lose exclusivity patents on blockbuster drugs and has witnessed Pfizer’s rise to top place in the industry. It seemed now that internal R&D that was once the company’s main asset would not be enough to compete in an industry defined by innovation. Thus the recent 2009 merger with rival Schering and Plough could be the beginning of a new take by Merck. Could Merck prosper with an…show more content…
The pharmaceutical industry is still very profitable and attractive with stable growth and more than ten companies in Fortune, 500 with combined profits around $28 million (Mullins, 2007, p 91). The main nuisance is high and costly entry barriers and high buying power. SWOT Analysis Merck has much strength. For one, Merck’s name carries much weight in the pharmaceutical industry, it is a company that has been around for a long time and has established a name for itself. Also, it has a large R&D department that has been instrumental in shaping the current drug industry. For example, their drug ‘Insentress’, has been, and still is, one of the leading HIV treatment drugs. In addition, Merck operates on a very large scale; it is multinational corporation with much power in the industry and sells its products all over the world. Merck’s name has garnered much support from their customers, who have over the years become loyal to the company and their products. However, Merck also faces several challenges. Most notable was the VIOXX scandal: the drug was linked with increasing the risk of heart attacks and strokes. This resulted in their paying a 4.58 billion dollars in damages to the families of the victims who suffered from such side effects from the use of VIOXX. From a financial

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