Failure of the ENHANCE clinical trial exemplifies Merck’s ability to overcome setbacks that could put them under water. Data Monitor states that in 2002 Zetia/Vytorin, a drug that lowers cholesterol provided a positive distraction to the revenue loss caused by their Vioxx and Zocor brands. Yet in the face of media backlash, Merck still has a pre-eminent position in the vaccine market with a focus in therapeutic and preventative agents, generating over 80% of 2007 sales as a small molecule company.According to Genentech, efforts in the department of Small Molecule Drug Discovery are “focused on the synthesis and development of new small molecule cancer therapeutics. Multidisciplinary project teams work on every aspect of drug discovery – from target identification to pharmaceutical optimization” (1). When it comes to patent expiration, according to Data Monitor, the product in question exposes itself to any form of regulatory curtailment.Meanwhile, the R;D pipeline continues to move products through while delivering comparable revenue (6) However, Herper questions if pharma companies like Merck are truly R;D centric or whether they are in fact “large scale marketing operations” (1). As an expert that worked many years in research, Herper questions voluminous marketing budgets that supersede that of R;D.
From an ethical position, Merck faces the same threat of drug industry mistrust. Stakeholders are now able to see through cover ups.With access to the internet and more information useful medical information found online, users of their drugs can do their due diligence and do not have to rely solely on the advice of their doctor. Since seeing a product pass through the late stage pipeline comes with a hefty price tag upwards of $1 billion, their only solution to appease all stakeholders is to work with more researchers, invest aggressively in research and development while continuing to work with physicians, unions, and representatives.
This collaborative effort will lead to better health for Merck.Opportunities As we age, there is a continued push from doctors to medicate. This is the reason for big pharmas financial success.
If it wasn’t for doctors prescribing their products to patients, they would not be in business because they would not be profitable. Data Monitor states that “Gardasil, Januvia/Janumet and Ientress franchises brands-Fosamax, Cozaar/Hyzaar and Singular-means that successful drug development will remain crucial in securing Merck’s long-term commercial success” (5). Mergers have the innate ability to cut operating costs and accelerate profit growth.The Schering merger accelerated Merck’s late state pipeline by allowing them to invest more aggressively in R&D.
Since both companies already had plans to minimize costs prior to the merger, marketing and administration reductions resulted in cost savings exceeding $3. 5 billion (Market Watch 25). Threats Schering-Plough’s partnership with Johnson & Johnson has led to litigation which may cause Merck issues.
Schering-Plough once had exclusive worldwide marketing rights to “anti-TNF Remicade” in all markets outside of the US, Japan and portions of the Far East.According to the Marshall Protocol Knowledge Base monitored by the Autoimmunity Research Foundation, Anti-TNF drugs or TNF blockers are drugs that interfere with the body’s production of TNF-alpha. MPMB also states that Anti-TNF drugs are expensive not only expensive but have adverse side effects.
The drugs are also not effective in chronic disease treatment (MPKB 1). When Pfizer merged with Wyeth, together they formed a pharmacaceutical company that had yet to be seen. In 2008 the companies’ total sales tipped the scale at over $70 billion.Their prescription sales were $10 billion shy of their total around $60 billion (PharmaWatch 32). In evaluating the Pfizer-Wyeth merger, according to Pharma Watch, one must take into consideration that in order for it to be profitable, they must cut cost aggressively. To find the revenue loss resolution, they must consider all options for overhead reduction (34). In conclusion, although Merck faces significant financial risk upon patent expiration of their highest selling products, they remain a world leader in healthcare and chemical production for two main reasons.First, Merck has continued sales growth.
But most importantly, Merck saves lives with their innovative inventions. As mutual fund manager, based on the information gained from this analysis the strongest aspects of the SWOT analysis that influence my decision to invest in this company are its increased late stage R&D pipeline, consistent record of successful blockbuster products and recent portfolio expansion with the Schering-Plough merger.