Merck mergers

March 9 Merck and Schering-Plough announce a merger, making the combined company one of the largest pharmaceutical companies in the world. Merck pays 41.1 billion for the smaller company. 

The stock plunged from nearly 100 at the end of 2000 to the 40s in the summer and early fall of 2002. Merck unexpectedly announced in June 2001 that it would miss its earnings for that year, then followed up in December with the shocker that its earnings for the next year would be flat. On Wall Street, the pressure grew to seek a merger, even as archrival Pfizer swallowed up Warner-Lambert Company, then Pharmacia. 

Seven months after that, with the stock down in the 40s, Emma was still holding on to his Merck shares. But it wasn t based on faith so much any more. The price was just too low now—in fact, the entire market was too depressed—to do any selling. With Pfizer s new merger, I think Merck is going to get left behind rather quickly. I don t know what their strategy is. If I was going to buy anything in the pharmaceutical industry. I d buy Pfizer. ... 

There are three basic arguments in favor of a merger or acquisition. First is a variation on the argument for doing more licensing and joint ventures—that no company, not even a big one like Merck, can expect to do everything itself or have a monopoly on great ideas. Even joint ventures aren t a solution, experts like Columbia professor Frank... 

Presumably, too, mergers save money, through layoffs and economies of scale, that can then be used for more research. You fire the blue-collar people, close plants, it buys you two years, maybe three, sums up Evans, the Sanford Bernstein analyst. Pfizer expected to book 270 million in savings from its acquisition of Warner-Lambert and a further 2.5 billion from Pharmacia. Even before the Pharmacia deal, its R D budget was almost double Merck s with Pharmacia, it would be spending over 7 billion, versus less than 3 billion for Merck. Standing alone, Merck didn t have a prayer of coming close. 

And the cost-cutting and uncertainty that inevitably accompany a merger can hurt staff morale as people await the ax. Milton Moskowitz, the pioneer in ranking best places to work, says one reason Merck keeps placing so high on these lists is that it has adamantly refused to merge. People feel, if they do well, they ll move up. They won t be displaced by someone from another company, he notes. 

Abelson, Reed, Out of the Merger Rush, Merck s on a Limb, The New York Times, August 4, 2002. 

Kansas University-Merck Corporation (20). In August 1980, a merger was announced between INTER-X, a drug research company, and Merck and Company, a multinational pharmaceutical corporation. INTER-X was founded by Takeru Hlguchi, a professor of pharmaceutical chemistry at Kansas University. Merck is a New Jersey based corporation with 1979 sales of 2.4 billion ... 

Finally, the integration of combinatorial chemistry with other drug discovery tools is occurring. The identification of hydroxyethylamine-based inhibitors of cathepsin D by Ellman (libraries 1.14a,b and 1.15), and the penultimate derivation of selective MMP-3 inhibitors from a library of N-carboxyalkyl amino acid by researchers at DuPont Merck (library 1.23), represent two illustrations of the successful merger of structure-based ligand design and library synthesis. The recent introduction of S AR by NMR methodology for lead discovery has also been used in conjunction with a combinatorial library (library 4.12). 

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