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Merck & Co.

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Merck & Co Inc.

Type: Public (NYSE: MRK)

Founded: 1891

Headquarters: Whitehouse Station, New Jersey

Key people: Richard T. Clark, President & CEO

Industry: Drug Manufacturer- Major

Products: Propecia®/Proscar® Zocor® See more complete products listing.

Revenue: $22.012 billion USD (2005)

Operating income: $5.536 billion USD (2005)

Net income: $4.631 billion USD (2005)

Employees: 61,500 (2005)

Website: www.merck.com

Merck & Co., Inc. (NYSE: MRK), also known as Merck Sharp & Dohme or MSD outside the USA and Canada, is a United States pharmaceutical company. It was originally the United States subsidiary of the German company now known as Merck KGaA. In common with many other German assets in the United States, Merck & Co. was confiscated in 1917 during World War I and set up as an independent company. It is now one of the top 5 largest pharmaceutical companies in the world both by capital and revenue.

 History

Merck & Co. traces its origins to Friedrich Jacob Merck (1668) and Emanuel Merck (1816) of Darmstadt, Hesse. Emanuel and his successors gradually built up a chemical-pharmaceutical factory that produced — in addition to raw materials for pharmaceutical preparations — a multitude of other chemicals.

In 1891, George Merck established his roots in the United States and set up Merck & Co. in New York as the US arm of the family partnership, E. Merck (named for Emanuel Merck), which is now Merck KGaA. Merck & Co. was confiscated in 1917 during World War I and set up as an independent company in the United States. Today, the US company has about 61,500 employees in 120 countries and 31 factories worldwide. It is one of the top 5 pharmaceutical companies worldwide, much larger than its German ancestor, which currently employees around 28,600 people in 54 countries.

In 2005, CEO Raymond Gilmartin retired at the age of 64 following Merck's voluntary worldwide withdrawal of Vioxx. Former president of manufacturing Richard Clark was named CEO and President of the company.

On November 28, 2005, Merck announced it would cut 7,000 jobs (11 percent of its work force) and close or sell five manufacturing plants in the first phase of a restructuring meant to save up to US$4 billion by the end of the decade.

[edit] Corporate governance

Current members of the board of directors of Merck & Co. are: Lawrence Bossidy, William Bowen, Richard Clark, Johnnetta Cole, William Harrison, William Kelley, Rochelle Lazarus, Thomas Shenk, Anne Tatlock, Samuel Thier, Wendell Weeks, and Peter Wendell. Mission

Merck & Co. or MSD describes itself as a “a global research-driven pharmaceutical company. Merck discovers, develops, manufactures and markets a broad range of innovative products to improve human and animal health, directly and through its joint ventures.” Its mission is “to provide society with superior products and services by developing innovations and solutions that improve the quality of life and satisfy customer needs, and to provide employees with meaningful work and advancement opportunities, and investors with a superior rate of return."

Merck also states that it prides itself on its commitment to diversity and its social conscience. The Merck Company Foundation has distributed over $160 million to educational and non-profit organizations since it was founded in 1957. Merck has published the Merck Manual of Diagnosis and Therapy since 1899, which has been used by doctors and families alike.

Merck is also famous for publishing their Merck Index, an authoritative collection of information about chemical compounds. Products

 Vytorin (ezetimibe/simvastatin) – a combination cholesterol-lowering preparation marketed in collaboration with Schering-Plough.  Zocor (simvastatin) – a cholesterol-lowering statin.  Propecia/Proscar (finasteride) – used for alopecia (male pattern baldness) and prostatic conditions.  Emend (aprepitant) – treats vomiting and nausea brought about by chemotherapy.  Fosamax (alendronate) – osteroporosis medication.  Singulair (montelukast) – an asthma medication that blocks leukotrines.  Crixivan (indinavir) – a protease inhibitor HIV medication.  Maxalt (rizatriptan) one of many triptans used to treat migraines.  Cozaar/Hyzaar - used to treat hypertension and to reduce the risk of strokes.  Cosopt - reduces intraocular pressure in people with glaucoma or ocular hypertension.  Invanz - an injectable antibiotic (Carbapenem) used for those with diabetic foot infections.  Primaxin (imipenem with cilastatin) – a broad spectrum carbapenem antibiotic.  Gardasil - a vaccine against HPV, the sexually transmitted disease that is the most common cause of cervical cancer.  Zostavax - a vaccine for prevention of shingles in adults older than 60 years of age.  Rotateq - a vaccine available in the United States to prevent rotavirus gastroenteritis, a leading cause of severe diarrhea in infants and young children.  ProQuad - a vaccine for simultaneous vaccination against measles, mumps, rubella, and varicella in children. Vioxx

In 1999, the United States Food and Drug Administration ("FDA") approved Vioxx® (known generically as rofecoxib) a Merck product that became widely used for treating arthritis. Vioxx was stronger than existing medications, while easier on the stomach than established anti-inflammatory drugs such as Naproxen. Vioxx became one of the most prescribed drugs in history.

Thereafter, studies by Merck and by others found an increased risk of heart attack associated with Vioxx use when compared with Naproxen. There was no indication of this risk in the original placebo-controlled safety trials, and that it was possible that the effect was more related to Naproxen decreasing the risk of heart attacks than one of Vioxx increasing the risk. Nonetheless, in 2002 Merck adjusted the labeling of Vioxx to reflect possible cardiovascular risks.

On September 23, 2004, Merck received information about results from a clinical trial it was conducting that included findings of increased risk of heart attacks among Vioxx users who had been using the medication for over eighteen months[1] On September 28. Merck notified the FDA that it was withdrawing Vioxx from the market, and it publicly announced the withdrawal on September 30. The FDA has since recommended that Vioxx be put back on the market, but with a more prominent warning regarding cardiovascular risks on its label.

On November 5, 2004 the medical journal The Lancet published the results of its analysis of the available studies. It concluded that “the unacceptable cardiovascular risks of Vioxx (rofecoxib) were evident as early as 2000...” [2] The Lancet condemned Merck for having kept the drug on the market, despite its knowledge of the risks, and also criticized the FDA for its failure of regulatory oversight.

On August 19, 2005, Merck was found liable in the death of a man who took Vioxx. The plaintiff was awarded $253.4 million in damages, which were subsequently reduced to $20 million, the maximum allowed by Texas statute. In a followup case in New Jersey, Merck was found not liable. A third case is pending in Louisiana. Merck's stock fell $2.35 to $28.06/share (7.73%) in the minutes after the verdict was announced and three months later 7,000 Merck employees were laid off. At the time of the verdict, there were over 4,000 other lawsuits pending against Merck regarding Vioxx, and several thousand against Pfizer, the maker of competing anti-inflammatory drug Bextra, which, in some cases, causes an adverse skin reaction which burns patients "from the inside out."

Merck is currently trying to get a successor drug to Vioxx, called Arcoxia (known generically as etoricoxib) approved in the USA. The FDA has said it will approve Arcoxia if it proves to be safer than Vioxx. Two other drug companies, Pfizer and Novartis, are trying to get alternatives to Vioxx approved. Their drugs are called Dynastat (parecoxib) and Prexige (lumiracoxib), respectively. Diversity

Merck & Co. was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mothers magazine. External links

 About Merck & Co.  Merck & Co company profile from Pharmaceutical Business Review  The Biotech-Companies Database  Yahoo! - Merck & Co., Inc. Company Profile  About Merck KGaA  History of Merck  Information about first lawsuit against Merck from Yahoo! Finance  Vioxx Information Institute Vioxx Patient News Overview: What is going on?

Vioxx has been the subject of tremendous media attention and hype, here are some of the most important developments.

Vioxx Recalled

On September 30, 2004 Merck the maker of Vioxx announced they would pull the best selling drug ( 2.5 billion dollar per year) off the market as a major study confirmed long held concerns that Vioxx raises the risk of heart attack and stroke.

May have Caused 27,000 Heart Attacks

On October 6, 2004, the Wall Street Journal reported that some government researchers believe Vioxx may have led to more than 27,000 heart attacks and sudden cardiac deaths before it was pulled from the market. This estimate of deaths was based on findings of patients of Kaiser Permanente, one of largest HMOs in the U.S.

Lancet Medical Journal Says Drug Should have been Pulled in 2000

On November 4, 2004, the most prominent British medical journal The Lancet published a study that concluded Merck and the FDA should have withdrawn Vioxx from the market as early as 2000 because of earlier studies that showed the drug nearly doubled the risk of heart attacks among patients.

Vioxx Trial

In August 2005 the first of many expected trials against Merck begin in Texas. The case alleges that Robert Ernst, a healthy 59 year old was the victim of a Vioxx related heart attack caused by a blood clot. Lawyers representing Mrs. Ernst are asking for at least $40 Million dollars in damages for her husband's premature death.

Vioxx Under Scrutiny

Vioxx may increase patients risk of heart attack, stroke and kidney failure according to a studies that have appeared in Medical Journals.

A class of drugs called COX-2 inhibitors was developed in the late 1990's, COX-2 inhibitors were generally promoted as being safer and better pain treatment than the traditional and widely used nonsteroidal anti-inflammatory drugs, known as NSAIDs, examples being aspirin and ibuprofen. However, studies have led some researchers to questions the cardiovascular safety of Vioxx and other COX-2 inhibitors such as Celebrex.Another study published in the Medical Journal, The Lancet indicated that this group of drugs may harm the kidneys. In the article, two Spanish doctors, describe the case of a 67-year-old woman who developed kidney failure. Her kidney failure ended after she stopped taking Vioxx, leading the doctors to conclude that the kidney problems she experienced were related to the ingestion of the drug. This was the first case to show that COX-2 inhibitors may be associated with Kidney problems. It was not the Last.

Kidney Failure?

Both Merck, the manufacturer of Vioxx, has since reported several instances kidney failure possibly associated with their drug, and Pharmacia, the manufacturer of Celebrex another popular COX-2 , has received similar reports in people taking their drug. As of this writing, none of the reported conditions were conclusively diagnosed as kidney failure directly related to the drugs.

Kidney problems are a side effect of all NSAIDs including COX-2 inhibitors, according to researchers in the field. Therefore the mounting evidence suggesting an association between kidney failure and COX-2 inhibitors is not surprising. The companies are apparently aware of this and the current labels for Vioxx carry the same warnings and risks as NSAIDs, including the potential for kidney damage.

Some doctors believe that Vioxx and COX-2 drugs are no more effective than other NSAIDs. They also conclude with the mounting evidence that there is no safety advantage.

They argue that patients suffering from conditions such as arthritis patients should taking an NSAID, such as ibuprofen. Merck promotes VIOXX, which is much more expensive, while the patient would be better off financially and medically taking a cheaper drug, one which is a fraction of the price of Vioxx.

Heart Attack Risks

In addition to kidney failure, researchers are concerned about the increased the risk of heart attacks. In February, the FDA's arthritis drugs advisory committee analyzed COX-2 inhibitors cardiovascular risks. Merck presented a study to support its contention that Vioxx is safer on the gastrointestinal tract than other NSAIDs. Although the study found that Vioxx reduced the incidence of ulcers and other gastrointestinal problems by about half that of the over-the-counter NSAID Aleve, the study showed that people taking Vioxx had four times the risk of a heart attack. However, Merck claims their Vioxx studies show no evidence that the drug increases the risk of a heart attack compared with other NSAIDs. The company claims that Vioxx has little effect on the heart. They claim that the study appeared to increase the risk of a heart attack because Aleve the drug in the study, like aspirin, actually reduces heart attack relative to people on Vioxx.

The FDA is considering changing the label of Vioxx to highlight the potential for heart problems.

In February an FDA panel concluded Vioxx should retain its strong warning that it can cause ulcers like the older, less expensive painkillers - the panel also concluded that doctors and patients should be warned that it might carry a heart attack risk. The panel said patients and doctors must be warned that in the study, Vioxx patients had more than twice the risk of heart attacks or other cardiovascular side effects as traditional pain killers users.

FDA's advisers concluded that more research is needed but that Vioxx's label should warn of the concern and potential danger. Although the FDA isn't bound by its advisers' recommendations it usually follows them.

FDA Says Merck Misleads on Vioxx Safety

September 2001

The government has ordered Merck & Co. to cease promotions aimed to get doctors to prescribe its blockbuster arthritis painkiller Vioxx, saying they minimize potential safety risks.

The Food and Drug Administration told Merck to set the record straight by sending a ``Dear Doctor'' letter to all health workers who may have been exposed to the misleading campaign.

The main issue: Whether Vioxx users face an increased risk of heart attacks and strokes. A recent study comparing Vioxx to another painkiller, naproxen, suggested they do. Many heart experts are divided about the risk and want more research. But an FDA advisory panel has said Vioxx should carry a warning label about the potential risk.

Merck has argued that Vioxx falsely looked risky because naproxen thins the blood much like aspirin does and thus protected against heart attacks. It aired that view in the recent promotions that state,

``Vioxx is a wonderful, effective'' painkiller but not one that has a blood-thinning side benefit.

``In fact, the situation is not at all clear,'' the FDA responded, saying no studies prove naproxen thins blood enough to explain the discrepancy. ``The company continues to stand behind the overall safety and cardiovascular safety of Vioxx,'' said Merck spokeswoman Jan Weiner.

Vioxx Side Effects

Recently a report in the Journal of the American Medical Association linked Vioxx to blood clots, heart attacks, and strokes.

Other serious side effects associated with Vioxx usage are:

Serious stomach problems, such as stomach and intestinal bleeding, can occur with or without warning symptoms. These problems, if severe, could lead to hospitalization or death. Although this happens rarely, you should watch for signs that you may have this serious side effect and tell your doctor right away.

Serious allergic reactions including swelling of face, lips, tongue, and/or throat which may cause difficulty breathing or swallowing occur rarely but may require treatment right away.

Serious kidney problems occur rarely, including acute kidney failure and worsening of chronic kidney failure.

Severe liver problems occur rarely in patients taking NSAIDs. Tell your doctor if you develop symptoms of liver problems. These include nausea, tiredness, itching, tenderness in the right upper abdomen, and flu-like symptoms.

More common, non life threatening, side effects associated with VIOXX have include:

Upper and/or lower respiratory infection and/or inflammation

Headache

Dizziness

Diarrhea

Nausea and/or vomiting

Heartburn, stomach pain and upset

Swelling of the legs and/or feet

High blood pressure Back pain

Tiredness

Urinary tract infection.

More About Vioxx and COX 2 Arthritis Medication

Vioxx represents a new generation of arthritis drug known as COX 2 inhibitors. Celebrex (celecoxib) is another COX 2 inhibitor.

The risk of cardiovascular problems, including heart attack, stroke, sudden death and blood clots, is believed by researchers to be more than two times higher in people who used Vioxx (rofecoxib group drugs) than in the traditional, arthritis pain treatment nonsteroidal anti-inflammatory drugs (NSAIDs) which are part of the naproxen group. This was concluded by a study that involved 8,000 patients and compared the COX-2 inhibitor rofecoxib (Vioxx) with the traditional NSAID naproxen.

An additional study found the annual rates of heart attack in Vioxx (rofecoxib) among 48,000 patients was higher than the regular population. In those studies, 0.52% of patients taking an inactive placebo pill had a heart attack each year, while the annual rate of heart attack was 0.74% for patients taking Vioxx-type drugs (rofecoxib group drugs)

The researchers concluded that until more is known, doctors should use caution in prescribing Vioxx to patients with potential heart problems.

Vioxx was approved by the FDA in 1999 for the treatment of osteoarthritis, acute pain in adults, and the treatment of severe menstrual pain. Vioxx is contraindicated in patients with hyper- sensitivity to any component of Vioxx and in people who have had a severe allergic reaction to aspirin and other non-steroidal anti-inflammatory drugs (NSAIDs).

Key Statistics GO Get Key Statistics for:

TRADING INFORMATION

Stock Price History Market Cap (intraday): 89.20B

3 Beta: 0.5 Enterprise Value (8-Sep-06) : 84.44B 3 52-Week Change : 39.23% Trailing P/E (ttm, intraday): 16.16 1 3 Forward P/E (fye 31-Dec-07) : 16.74 S&P500 52-Week Change : 4.31%

3 PEG Ratio (5 yr expected): 2.95 52-Week High (04-Aug-06) : 41.78

3 Price/Sales (ttm): 3.95 52-Week Low (07-Oct-05) : 25.50

3 Price/Book (mrq): 4.59 50-Day Moving Average : 40.34

3 3 Enterprise Value/Revenue (ttm) : 3.78 200-Day Moving Average : 36.35

3 Enterprise Value/EBITDA (ttm) : 7.56 Share Statistics

3 FINANCIAL HIGHLIGHTS Average Volume (3 month) : 10,300,900

3 Average Volume (10 day) : 7,604,380

Fiscal Year Shares Outstanding: 2.18B

Fiscal Year Ends: 31-Dec Float: 2.17B

4 Most Recent Quarter (mrq): 30-Jun-06 % Held by Insiders : 0.11%

4 % Held by Institutions : 70.50%

Profitability 3 Shares Short (as of 10-Aug-06) : 30.08M

Profit Margin (ttm): 24.86% 3 Short Ratio (as of 10-Aug-06) : 2.7

Operating Margin (ttm): 30.22% 3 Short % of Float (as of 10-Aug-06) : 1.40%

3 Shares Short (prior month) : 31.38M Management Effectiveness

Return on Assets (ttm): 13.12% Dividends & Splits

Return on Equity (ttm): 30.31% 5 Forward Annual Dividend Rate : 1.52

5 Forward Annual Dividend Yield : 3.70% Income Statement 3 Trailing Annual Dividend Rate : 1.52 Revenue (ttm): 22.36B 3 Trailing Annual Dividend Yield : 3.70% Revenue Per Share (ttm): 10.23 5 5 Year Average Dividend Yield : 3.50% Qtrly Revenue Growth (yoy): 5.60% 5 Payout Ratio : 60% Gross Profit (ttm): 16.86B 3 Dividend Date : 02-Oct-06 EBITDA (ttm): 11.17B 5 Ex-Dividend Date : 30-Aug-06 Net Income Avl to Common (ttm): 5.56B 2 Last Split Factor (new per old) : 2:1 Diluted EPS (ttm): 2.54 3 Last Split Date : 17-Feb-99 Qtrly Earnings Growth (yoy): 108.10%

Balance Sheet

Total Cash (mrq): 10.46B

Total Cash Per Share (mrq): 4.809

Total Debt (mrq): 6.46B

Total Debt/Equity (mrq): 0.335 Current Ratio (mrq): 1.513

Book Value Per Share (mrq): 8.861

Cash Flow Statement

Operating Cash Flow (ttm): 8.00B

Levered Free Cash Flow (ttm): 5.44B