Has Merck's comeback turned into a wipeout?
Under chief Richard Clark, an unassuming company lifer, Merck
But though Merck's share price surged to pre-Vioxx highs early this year as Clark settled the litigation for just $5 billion and got eight drugs approved in two years, the stock now sits at a Vioxx-era $26, down 50% in 11 months. Don't just blame the financial crisis--that's the worst performance of any big pharmaceutical company this year.
An earnings guidance call Thursday and a meeting with analysts at company headquarters Dec. 9 will give Clark a chance to soothe Wall Street. The problem will be making analysts feel they haven't heard it all before.
One of Clark's first moves, in 2005, was to cut 7,000 jobs; Merck just announced it would cut 7,200 more. He's promised "fundamental changes" to the company's business model. But really getting Wall Street's attention will require unveiling a truly impressive research surprise or announcing a big acquisition.
"I want to like Merck, but they keep not succeeding," says Les Funtleyder, health care strategist at Miller Tabak. "They have some decent people and a very good research structure, but we have to go with the facts and the fact is success has been elusive."
Merck's total sales will drop 1% to $23.9 billion next year, according to analyst John Boris at Citigroup. He's bullish because the stock is so cheap, but in a recent report, he laid out the challenge Merck will face in 2009: Sales of top-seller Singulair, for allergies and asthma, will barely grow because of safety worries, and generics maker Teva Pharmaceuticals
Has Merck's comeback turned into a wipeout?
Under chief Richard Clark, an unassuming company lifer, Merck
But though Merck's share price surged to pre-Vioxx highs early this year as Clark settled the litigation for just $5 billion and got eight drugs approved in two years, the stock now sits at a Vioxx-era $26, down 50% in 11 months. Don't just blame the financial crisis--that's the worst performance of any big pharmaceutical company this year.
An earnings guidance call Thursday and a meeting with analysts at company headquarters Dec. 9 will give Clark a chance to soothe Wall Street. The problem will be making analysts feel they haven't heard it all before.
One of Clark's first moves, in 2005, was to cut 7,000 jobs; Merck just announced it would cut 7,200 more. He's promised "fundamental changes" to the company's business model. But really getting Wall Street's attention will require unveiling a truly impressive research surprise or announcing a big acquisition.
"I want to like Merck, but they keep not succeeding," says Les Funtleyder, health care strategist at Miller Tabak. "They have some decent people and a very good research structure, but we have to go with the facts and the fact is success has been elusive."
Merck's total sales will drop 1% to $23.9 billion next year, according to analyst John Boris at Citigroup. He's bullish because the stock is so cheap, but in a recent report, he laid out the challenge Merck will face in 2009: Sales of top-seller Singulair, for allergies and asthma, will barely grow because of safety worries, and generics maker Teva Pharmaceuticals
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