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Company: Merck (MRK)
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146 votes

  HPV vaccine Gardasil has potential to be widely adopted

HPV vaccine Gardasil has already been adopted as a future standard treatment in Texas, with several states potentially follwing suit.

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27 votes

  Merck acquisition of Schering-Plough strengthens Merck pipeline

Merck's pipeline of late stage drugs has grown to 18, thanks to its acquisition of Schering-Plough. Further, combined revenue between the two companies in 2008 was $47B, which is roughly double that of Merck alone. The acquisition price is steep, but it will ultimately be a good investment.

Merck & Co. Inc. (MRK) today (Monday) agreed to pay $41.1 billion in stock and cash for Schering-Plough Corp. (SGP), forming the world’s second-largest prescription drugmaker.

It’s the second mega-deal for Big Pharma this year, as Pfizer Inc. (PFE) made a $68 billion offer for Wyeth (WYE) in late January. Large pharmaceutical companies have been bucking a slide in M&A activity that has been exceptionally quiet.

“It clearly is a year of mergers for pharmaceutical companies,” Philippe Lanone, an analyst at Natixis Securities in Paris, told Bloomberg News in a telephone interview. “They don’t have much of a choice if they are to guarantee EPS growth in the years to come.”

The pharmaceutical industry is consolidating now that many of the blockbuster drugs of the 1990s are losing patent protection, negatively affecting sales. And the situation has been made worse by a lack of replacements in the research and development pipeline at big drug companies.

Unlike many of Merck’s current drugs, Schering-Plough has blockbuster drugs that won’t face generic competition for several years. The deal doubles the number of drugs Merck has in late stage development to 18, Chief Executive Officer Richard Clark, said in a conference call with analysts.

For its part, Schering-Plough has been firing workers and closing factories trying to save $1.25 billion as it battles concerns over falling cholesterol drug sales. Schering’s stock price spiraled down 36% in 2008.

While the deal may make sense for both companies, some analysts are questioning the price.

Holders will receive 0.5767 Merck shares and $10.50 in cash for each share of Schering-Plough, making the deal worth $23.61 a share, a 34% premium to the stock’s Friday closing price.

“The price seems way too low. It’s a tremendous deal for Merck. I think it should be at least $12 billion to $15 billion higher,” said Moskowitz, noting that Schering-Plough’s overseas rights to arthritis drugs Remicade and Golimumab were worth at least that much.

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9 votes

  The recent approval of Januvia gives a strong boost for the company

The recent approval of Januvia gives a strong boost for the company.

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3 votes

  Strong Q4, Biologics aquisition strong signs for present and future

Merck's Q4 earnings represent a large swing to profitability beat analysts' expectations by 17.5% ($0.87 vs. $0.74 expected). Despite decreasing revenues from blockbuster drugs like Vytorin suffering from safety concerns and generic competition, Merck has seen increasing revenues from vaccine sales. Further, the company's acquisition of Insmed's biologics portfolio and facilities now strengthens its position in an emerging medical field. Among the biologics is a Phase III product designed to prevent infection in chemotherapy patients. The company's investments in its pipeline will certainly strengthen its future outlook.

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10 votes

  Promising drug pipeline

A promising array of new products makes up for drops in sales of old products due to patent expirations. As of the end of 2006, Merck has 21 products in Phase II clinical trials.

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