Drug development is costly and its success is inherently uncertain. A candidate drug failing a late clinical trail would have significant financial consequences for the company.
I believe the company is foundering and its in a panic mode.
See projected debt load and interest expense associated with Schering Plough acquisition. Totally changes financial profile.
As the Vioxx lawsuit continues to be played out, negative headlines and cash outflows will be a long-term concern for the company. Litigation is an ongoing concern for pharmaceutical giants.
30% of sales through 2008 may be affected by generics due to patent expirations.