After shying away from acquisition, Merck has announced plans to acquire New Jersey drugmaker Schering –Plough for $41.1 billion.
The merger will still be called Merck, and for the next two years will be headed by Merck Chief Executive, Richard Clark.
The deal echos another one for two drug giants, Pfizer agreeing weeks ago to buy Wyeth for $68 billion.
Changes among pharmaceutical companies are sparked by the loss of patents on blockbuster drugs coupled with proposals to reform healthcare that may see the price of drugs drop.
Schering-Plough CEO Fred Hassan tells Reuters, “Merck came to us at the very time these changes were unfolding.”
Merck and Schering-Plough already market the cholesterol drugs, Zetia and Vytorin together. With the merger Merck hopes to reduce its work force by 15 percent.
Merck has a long tradition of avoiding major acquisitions in its 117-year history.
Merck CEO Richard Clark, who joined the company in 1972 and worked in manufacturing and operations, had only witnessed one major transaction on his watch – the $4.85 billion settlement for thousands of Vioxx liability claims by former users who suffered heart attacks and stroke.
Clark later replaced Chief Executive Raymond Gilmartin in 2005, who lost his job after Vioxx was pulled off the market.He’s been at the helm when two patent giants, Zocor and Fosamax expired, yet earnings continued to grow.
Meanwhile Gardasil, the HPV vaccine for young girls, asthma drug Singulair and cholesterol drugs Vytorin and Zetia have seen demand fall. The new Merck hopes to expand into biotechnology.
Clark, 63, is just two years away from mandatory retirement age. #