strategic-management

26
Merck & Company Inc. — 2009
Mernoush Banton
Adjunct Faculty/Consultant
MRK
www.merck.com
The eighth-largest pharmaceutical firm in the world, Merck, is acquiring the eighteenthlargest
pharmaceutical firm, Schering-Plough, for $41 billion. Merck plans to reorganize
once its acquisition of Schering-Plough goes through in the fourth quarter of 2009. Merck
says it then will name the heads of five main divisions: (1) global human health, (2) animal
health, (3) consumer health care, (4) manufacturing, and (5) Merck Research Laboratories.
The leaders of each division will answer to Merck CEO Richard Clark. The newly formed
structure will aid Merck in penetrating the vaccine and biologics markets, as well as
emerging markets. About 40 percent of Schering-Plough’s (NYSEP:SGP) senior leaders
will be part of the newly combined company and a “substantial majority of Schering-
Plough employees will remain with the combined company.”
Acquiring Schering-Plough allows Merck to leapfrog to number two worldwide, just
behind Pfizer. The new Merck will have about $42.4 billion in annual sales. Merck and
Schering-Plough are already partners on the blockbuster cholesterol drugs Vytorin and
Zetia. The marriage will unite Merck’s asthma and allergy treatment Singulair and cervical
cancer vaccine Gardasil with Schering-Plough’s allergy spray Nasonex and well-known
consumer products including the Coppertone sun care line and Dr. Scholl’s foot care items.
Buying Schering-Plough also boosts Merck’s sagging pipeline of drugs in development,
gives it a sizable biotech unit, and creates a dominant player in vaccines as well as
cholesterol, respiratory, and women’s drugs. The merger will also allow the new Merck to
slash costs—including roughly 15,000 jobs—to deal with increasing generic competition
and the unknown impact of health care reform.
Merck’s mission statement is as follows:
The mission of Merck is to provide society with superior products and services by
developing innovations and solutions that improve the quality of life and satisfy
customer needs, and to provide employees with meaningful work and advancement
opportunities, and investors with a superior rate of return.
History
Merck was established in 1891 to engage in the discovery, development, manufacture, and
marketing of a variety of products, mostly to improve human and animal health. Merck
sells products through drug wholesalers and retailers, hospitals, clinics, government, and
managed health service providers. Over the years, Merck has devoted itself to increase
access and to deliver donated medicines through far-reaching programs to those people
who need them. Merck further publishes unbiased health reports as a not-for-profit service.
Through the 1980s, the company proved to be successful by being research driven and
keeping the pipeline filled with new and innovative products. During this time, Merck was
the pioneer in introducing 10 major new drugs, including Mevacor (for high cholesterol)
and Vasotec (for high blood pressure).
Throughout the years, Merck has entered into many joint-venture agreements with
companies such as Sanofi Pasteur S.A., Rhone-Poulenc S.A., Johnson & Johnson, Astra