Merck outlines turnaround strategy
pharmafile | December 15, 2006 | News story | Sales and Marketing |
Merck's battle to regain profitability and bring new life to its product pipeline is gathering momentum as its unprecedented reorganisation takes shape.
Senior management are leading a company-wide effort to change every aspect of Merck's business, from R&D to marketing, to produce a new model for the troubled pharma company.
The company has yet to escape from the shadow cast by the 2004 withdrawal of Vioxx, but even before the Cox-II inhibitor was abruptly pulled from the market, company earnings had been stagnant for a number of years.
Vioxx compounded this and in 2005, profits fell by 20% to $4.6 billion, having already fallen by 15% in 2004, and Merck still faces more than 27,000 lawsuits related to the ill-fated drug.
To rescue its position, the company has embarked on a wide-ranging reorganisation of its business that includes the elimination of 7,000 positions by 2008 and making significant cost-savings through restructuring its manufacturing supply.
Chief executive Richard Clark said during 2006, Merck had gathered the momentum it needed to work towards its 2010 performance goal – double-digit compound annual earnings per share growth.
"We've successfully launched five novel medicines and vaccines; advanced promising products through every phase of our pipeline; and driven the continued success of our in-line products. We've accomplished this even as we're executing on a new strategy, reinvesting to support our success and making our cost structure lean and flexible," he said.
In sales and marketing, the company aims to cut its costs for primary care products, redeploy sales reps for best effect and use alternative channels to complement its sales force.
President, Global Human Health Peter Loescher said: "We are continuing to shift resources from traditional sales and marketing approaches to new channels and innovative approaches such as new e-detailing and video detailing programs to increase the productivity of our promotion and engage the physician in ways they find most useful."
The launches this year of cervical cancer vaccine Gardasil and diabetes treatment Januvia both incorporated aspects of the new commercial model.
Research and development has also been a major area of focus in the company's new strategy – since 2005, Merck has reduced its late-stage development time by 10 months and increased productivity four-fold in early-stage research since 2002.
The company has three products currently being evaluated by the FDA – Janumet, a combination of Januvia and metformin, the chemotherapy induced nausea and vomiting treatment EMEND IV, and Arcoxia, the much-delayed successor to Vioxx.
Merck has been advised that the FDA will hold an advisory committee meeting to examine Arcoxia, but no timing for this has been disclosed.
The company expects to file three new drugs with US regulators next year – including MK-0518, a first-in-class HIV treatment, insomnia drug Gaboxadol and atherosclerosis treatment MK-0524A.
It also expects to bring the number of products in phase III trials by mid-2007 to four, including a combination of MK-0524A and simvastatin, which it says could potentially reduce coronary heart disease risk beyond what statins provide alone.
"Of course, even as we change our business model, one thing remains the same. We are still a company whose mission is to discover and develop novel medicines and vaccines that address unmet medical needs and to get those products to the people who need them," Richard Clark said.
