Merck and Medco

1.0 Executive Summary

Merck & Co. is one of the largest pharmaceutical industries in United States. It has been one of the most important researches and developers of vaccines, medicines and treatments for more than a decade. Their business is mostly focus on the research and development of new treatments.

Medco Containment Service or Medco Health Solutions Inc. nowadays. Is a huge Pharmacy Benefits Management and the largest mail-order drugs distributor in United States. It was known

Merck & Co acquired Medco in 1993 as a successful horizontal merger upgrading the pharmaceutical business. Merck & Co. could use the marketing channel and distribution methods of Medco While get access to their data base with information about doctor and patients for around 30 million people. The acquisition cost around $6.6 billion to Merck & Co.

Merck & Co was one of the largest pharmaceutical companies while Medco was the largest pharmaceutical distributor in the United States. Their revenues were totally different with Merck revenues being more than the triple of the Medco ones.

In terms of internal problem, these were totally different business. While one focus on the research and development of new products as well as the manufacture of other ones the other was more an intermediaries that looks discount from supplier to sell for a discount price for employer’s medic plans.

External Problems were totally different. As a Medco a company that realizes reviews for drug and recommend medicines to doctors to be prescript to their patients, this attend with anti-trust policies alleging that Medco favored Merck products on their reviews and the recommendations to the doctors.

At the begging was a successful acquisition increasing both companies’ revenues from 1993 to 1996 until the Federal Trade Commission accused them for violated antitrust policies. In 2003 after a couple IPO’s were cancelled, Medco was Spinoff to their shareholders.

2.0 Introduction

Mergers and Acquisition...