Case Study - Pfizer-Merck

You have asked for an analysis on the Merck/Pfizer case study. In this paper I will attempt to point out problems that may affect each or both company(ies).

Update

Since the date of the case study, both companies have gone through changes in upper management.

On November 30, 2010, Merck & Co. announced that its current President, Kenneth Frazier would replace Richard Clark, as CEO of Merck (merck.com). During the same time period, Pfizer Inc. replaced CEO Jeffrey Kindler, with Ian Read, the company’s head of global pharmaceuticals (http://www.cnbc.com/id/40523607/Pfizer_CEO_Change_Could_Signal_Strategic_Switch).

Industry Size and Composition

In 2010, the pharmaceutical industry will continue to grow despite the economic downturn of 2008 and 2009 and healthcare reform. According to IMS Health, “the global pharmaceutical market in 2010 is expected to grow 4 - 6 percent on a constant-dollar basis, exceeding $825 billion. The forecast, the leading annual industry indicator of market dynamics, predicts global pharmaceutical market sales to grow at a 4 - 7 percent compound annual growth rate through 2013 … which takes into account the changing mix of innovative and mature products, and the rising influence of healthcare access and funding on market demand. Global pharmaceutical market value is expected to expand to $975+ billion by 2013.” (http://www.imshealth.com/portal/site/imshealth/menuitem.a46c6d4df3db4b3d88f611019418c22a/?vgnextoid=500e8fabedf24210VgnVCM100000ed152ca2RCRD).

Problems Facing Both Companies

Patent Expiration

Over the next five years, products that currently generate significant revenue for Pfizer and Merck will lose its patent protection. With the government’s accelerated approval process for generic drugs, smaller companies will gain a larger market share with generic equivalents sooner rather than later. Because new products are not expected to generate the same level of sales as products losing patent...