Merck : The Pharmaceutical Research

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Merck introduction Merck was a manufacturer of fine chemicals in Germany, had only a small sales presence in the United States until the First World War. In 1917, the U.S. government seized the stock of all German-held subsidiaries, the Merck family and other investors bought back the company’s stock and incorporated as a U.S. firm with no ties to the German parent. Mergers and acquisitions with other small U.S. chemical firms followed, and scale economies, coupled with necessity, led to a large R&D push at Merck. By the start of World War II, Merck Research Labs (MRL) was the leading pharmaceutical research institution in the United States. Developments in vitamins, antibiotics, hormones made by Merck boosted its profitability and strengthened its position as leading drug researcher and manufacturer. Merck was seen as a science led company which made breakthrough drugs and theses drugs would sell themselves on its own merits. They had a research driven model which was highly successful in the beginning and their profits were at the top most levels in the industry. In the 1990s, operating profit margins as high as 40% were common among leading drug makers. By 2001, price competition and buyer demands exerted pressure on margins, but the return on human pharmaceuticals sales still exceeded 30%, more than double that of the average corporation in the S&P 500 Composite Stock Index. They were successful in attracting top scientific minds into the company to manufacture drugs

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