Transcript Merck

Symbol: MRK
Exchange: NYSE
12/4/2000
 Nathan
Mendes
 Ronnie Ng
 Scott Perkins
 Zvi Rhine
 Zack Weaver
Profile

Merck & Co., Inc. is a global, researchdriven pharmaceutical company that
discovers, develops, manufactures and
markets a broad range of human and
animal health products, directly and
through its joint ventures and provides
pharmaceutical benefit services through
Merck-Medco Managed Care.
Major Drugs
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Zocor & Mevacor: Cholesterol Drugs
Vasotec, Cozaar & Hyzaar: Hypertension and Heart
Failure
Fosamax: Osteoporosis
Pepcid: Anti-ulcerant
M-M-R II & Varivax- Live Vaccines
Singulair: Asthma
Crixivan & Strocrin: HIV Symptom Treatment
Aggrastat: Prevents Blood Clots
Vioxx: Arthritis
Expiring Patents

2000
– Pepcid
– Vasotec
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2001
– Mevacor
– Prinvil

Combined 1999 Domestic Sales of $3 Billion
– Mevacor and Vasotec already being phased out
Growth Opportunities
Vioxx
 Relief of osteoarthritis and acute pain
 Inhibits Cox-2 enzyme while protecting Cox-1
– Relieves pain while easy on the stomach
 More than 5 milion prescriptions in the first seven
months on the U.S. market
 Once daily dosage- ease of use
 Competitive boost in efficient launch of Vioxx
– Patients were able to start taking the drug within
days of its approval
Growth Opportunities
Zocor
 Lowers bad cholesterol levels and triglycerides while
raising levels of good cholesterol (HDL)
 Money back guarantees if patients cannot reach their
cholesterol goals
 Number 1 cholesterol lowering drug in the European
market
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U.S. Market has room to grow
– Only 4 out of 10 heart disease patients with
dangerous cholesterol levels use a cholesterol
lowering drug
Growth Opportunities
Singulair
 Asthma medication
 Number of children with asthma has increased 160%
since 1980
Fosamax
 Osteoporosis
 Only drug consistently proven to increase bone
density
 Shows results within 12-18 months of first dose
– significantly shorter than most drugs
One Year Performance
• Up 23.4% from date purchased
Industry

S&P Pharmaceuticals are up 22.5% (Year to October
6)
 S&P 1500 is -2.7% (Year to October 6)
 Concerns over pricing restraints over new Medicare
prescription plans
 Income and Price Inelasticity of Drugs is favorable
 FDA is streamlining and making more efficient new
drug approval processes
 Kick-ass margins
– Upwards of 20%
Competitors
Peer Group
Merck
Glaxo
Lilly (Eli)
Pfizer
Schering-Plough
SmithKline
Symbol
MRK
GLX
LLY
PFE
SGP
SBH
Price
91.9375
57.3125
90.4375
44.1875
55.1875
65.25
P/E
32.25
31.93
32.17
70.16
33.73
30.24
ROE % Pre-Tax Margin %
20.1
27
62
30.3
53.9
32.4
36.2
27.5
46
30.5
51.7
19.3
Recommendation
HOLD