Merck Medo Merger

Case Study

Merck’s Acquisition of Medco

By Noothan K Ellanki

Company Profiles:

Merck & Co., Inc. is a global research-driven pharmaceutical company that discovers, develops, manufactures and markets human and animal health products, directly or through its joint ventures. Merck is a pure pharmaceutical company that does not have other businesses. Furthermore, it is an innovative company that produces branded drugs only, which it has developed itself. Merck conducts research at 11 major research centers in the United States, Europe and Japan. The company claims it performs about 1 percent of the biomedical research in the world.

Merck manufactures products in 32 facilities and sells products in approximately 150 countries. In many countries outside the US, Merck's affiliates are known as MSD or Merck Sharp & Dohme. In Africa, Merck has subsidiaries in South Africa, Tunisia and Morocco. In Asia, it has subsidiaries in Japan, Hong Kong, Singapore, Pakistan, Thailand and China. Merck’s product line consists of a broad portfolio of prescription products. Human health products include medicines to help treat high blood pressure, congestive heart failure, elevated cholesterol levels, osteoporosis and arthritis, among others, and vaccines to help prevent childhood diseases, pneumonia and hepatitis A and B.

Merck’s highest revenue-generating product is Zocor, a medicine to control cholesterol levels. Over the past years, this medicine alone achieved worldwide annual sales of over US$ 5 billion, almost a quarter of the company’s earnings. Sales of Zocor were affected by increased competition and the loss of basic patent protection in Canada, the United Kingdom, Germany and other European countries. In June 2006 the patent for Zocor will expire in the US, which will probably affect the company’s earnings in a negative way. Other important Merck products...