Important note: Information in this article was accurate in 2005. The state of the art may have changed since the publication date.

Reuters NewMedia - December 15, 2005

The company provided the details at its annual meeting with industry analysts and portfolio managers at Merck headquarters in Whitehouse Station, New Jersey. Its shares rose 1.5 percent.

Merck, whose profits are expected to fall this year and again in 2006, said it would keep marketing and administrative expenses flat through 2010 and allow only slight increases in research spending over the same period.

"Merck will remain a research-driven pharmaceutical company, but we need to change our approach to virtually every aspect of our business and we must act with a sense of urgency," said Richard Clark, the company's recently named chief executive.

Clark, Merck's former head of company manufacturing who was promoted in May to CEO, had provided few other specifics until Thursday on how he hopes to revive the company's fortunes.

Merck's profits are falling due to generic competition for a number of products at the same time the company is fighting more than 9,000 lawsuits related to Vioxx, which was withdrawn in 2004 after being shown to cause heart attacks and strokes among long-time users.

Merck said its two new cholesterol treatments are among a handful of its experimental drugs that will be in late-stage trials by the first quarter of 2006. Merck is counting on the medicines to help revive earnings growth after its cholesterol fighter Zocor, the company's biggest product, begins facing competition from cheaper U.S. generics in mid-2006.

One of the new cholesterol drugs, MK-524A, works by a new approach to raise levels of heart-protective "HDL" cholesterol and also lowers artery-clogging fats called triglycerides, Merck said.

The other new drug, MK-524B, combines MK-524A in a single pill with Zocor, which works through the standard approach of cutting levels of "bad" LDL cholesterol.

Merck said it hopes to seek approvals for both drugs by 2007. That is about the time Pfizer Inc. is expected to disclose data from late-stage trials of its own product that pairs its top-selling cholesterol drug Lipitor with a new compound called torcetrapib that sharply raises levels of HDL.

"This clearly puts another horse on the track to compete with Pfizer's torcetrapib-Lipitor combination," JP Morgan analyst Chris Shibutani said in a research report, noting the Pfizer and Merck drugs appear to be in similar stages of development.

Shibutani said Merck's combo product could also pose unexpected competition for Vytorin, a highly potent LDL-lowering drug sold by Merck and Schering-Plough Corp..

Schering-Plough shares were down 31 cents, or 1.6 percent, to $19.54 on the New York Stock Exchange.

Merck also plans to seek approvals in 2007 for a newly announced treatment for many strains of HIV, MK-518, which works by blocking an enzyme called integrase, and for a diabetes drug that pairs experimental treatment Januvia (MK-431) with the widely used drug metformin.

Next year, Merck plans to ask U.S. regulators to approve Januvia as a stand-alone treatment for type 2 diabetes, and seek approvals for a lymphoma treatment called vorinostat and the drug MK-517 as an intravenous treatment for nausea and vomiting caused by chemotherapy.

The company last month forecast cost savings of up to $4 billion through 2010 through elimination of 7,000 jobs and manufacturing improvements.

It said accrued company cost savings could reach $5 billion through 2010 as it holds down annual increases in research spending to the "low-to-mid single digit" percentage range from 2006 to 2010, while keeping a lid on marketing and administrative expenses.

Thomas Bundock, with the Ram Partners hedge fund, said Merck officials had made an "interesting" presentation on company strategy and its new drugs.

"Overall, though, there is still a question in my mind about the (Vioxx) litigation that's ongoing. It's a tremendous overhang."

To boost productivity further, Merck on Thursday followed the lead of other struggling drugmakers by announcing it will narrow its primary focus to nine disease areas. The pared-down approach will allow the company to use fewer sales representatives to pitch its products to specialist doctors.

The disease areas include Alzheimer's disease, atherosclerosis, cardiovascular disease, diabetes, novel vaccines, obesity, oncology, pain and sleep disorders.

The company reaffirmed it expects earnings to fall 4 percent this year and perhaps by the same magnitude in 2006, as Zocor faces competition from cheaper generics.

Merck was up 45 cents to $29.65 in early afternoon trade on the New York Stock Exchange.

051215
RE051228

Always watch for outdated information. This article first appeared in 2005. This material is designed to support, not replace, the relationship that exists between you and your doctor.

AEGiS presents published material, reprinted with permission and neither endorses nor opposes any material. All information contained on this website, including information relating to health conditions, products, and treatments, is for informational purposes only. It is often presented in summary or aggregate form. It is not meant to be a substitute for the advice provided by your own physician or other medical professionals. Always discuss treatment options with a doctor who specializes in treating HIV.

Copyright ©1980, 2005. AEGiS. All materials appearing on AEGiS are protected by copyright as a collective work or compilation under U.S. copyright and other laws and are the property of AEGiS, or the party credited as the provider of the content. .