Merck cites strong growth in analyst presentation
Cites "momentum" of key products as key to company's future
Table of Contents
Five key products
Merck-Medco extends lead in pharmacy care
Revenues, new products, but still committed to basic science
Products in development
Speaking to a packed roomful of more than 300 securities analysts, Raymond Gilmartin, president and CEO of Merck (Whitehouse Station, NJ), described his company's strong growth platform and outstanding performance.
"As a company, Merck is totally focused on growth," said Gilmartin, citing Merck's significant investments in R&D, new products, and its Merck-Medco pharmacy subsidiary.
When it comes to growth, Gilmartin knows of what he speaks. In six of the last seven quarters, Merck's revenue growth for its pharmaceutical and vaccine businesses ranked either No. 1 or No. 2 worldwide; for the last three quarters, Merck topped all other pharmaceutical companies in revenue growth.
Joining Gilmartin in detailing the company's performance were: David Anstice, president, Human Health—The Americas; Richard Clark, president, Merck-Medco; Judy Lewent, senior vice president and chief financial officer; Per Wold-Olsen, president, Human Health—Europe, Middle East & Africa; and Edward Scolnick, president, Merck Research Laboratories, and executive vice president, Science and Technology.
Judy Lewent, senior VP and CFO, outlined some of Merck's recent accomplishments and strategic initiatives:
- Increased revenues from Merck's five key product growth drivers from 20% of global human health sales in 1995 to 58% in the third quarter 2000. Revenues from medicines that will lose patent protection by 2002 have decreased from 53% of global human health sales in 1995 to 30% in the third quarter 2000.
- Increased investment in marketing and administration by 22% through the third quarter 2000 and estimates a full year 2000 SG&A (sales, general and administrative) expense growth rate in the high teens. SG&A estimated growth for 2001 is in the low double digits.
- Expanding its U.S. field sales force by approximately 1,500 representatives over the next 18 months to prepare for new product launches and maintain the momentum of Merck's existing portfolio.
- Will increase its investment into external research activities, from more than $200 million during the past three years to approximately $250 million over the next three years.
Five key products
David Anstice and Per Wold-Olsen highlighted the outstanding performance of Vioxx, Merck's newest product, along with Zocor, Fosamax, Singulair, and Cozaar/Hyzaar.
Vioxx, Merck's once-a-day pill for osteoarthritis and acute pain, has become the world's fastest growing prescription arthritis medicine, and it is already Merck's second-largest selling product. Vioxx is the only COX-2 indicated in the United States both for osteoarthritis and acute pain, such as pain following knee or hip replacement and dental surgery.
Zocor, Merck's cholesterol-modifying drug, continues its strong growth backed by studies showing that Zocor can favorably impact all major lipid parameters: LDL (bad cholesterol), HDL (good cholesterol), and triglycerides. At higher doses, Zocor has been proven superior to its major competitor at raising HDL, a risk factor for heart disease.
Fosamax, the leading medicine worldwide for the treatment of postmenopausal osteoporosis, continues to show outstanding growth. Fosamax is the only non-hormonal osteoporosis agent indicated to reduce the risk of hip fractures. Merck has launched a novel once-weekly dosage of Fosamax in the United States and has received its first European Union approval in the United Kingdom. The new formulation may make Fosamax more convenient for many women, and extends its patent life in the once-weekly form to 2018. Fosamax also received approval for use in men with osteoporosis. Approximately one in five people with osteoporosis are men.
Singulair, Merck's once-a-day pill for asthma control, is the only once-a- day leukotriene receptor antagonist for the prevention and chronic treatment of asthma and the first asthma controller therapy in more than 15 years to be approved for children as young as 2 years.
Singulair is now approaching prescription market leadership in the United States and is one of the top-selling asthma controllers worldwide. Singulair has been shown to reduce day-time asthma symptoms and night-time awakenings, reduce the number of asthma attacks, improve lung function, and improve overall asthma control in patients age 2 through adulthood, with a demonstrated safety profile.
Singulair is not a steroid and may improve compliance because it is an oral rather than an inhaled medication. These advantages give Singulair the potential to become the leading medicine for asthma control.
Cozaar and Hyzaar were the first of a new class of well-tolerated high blood pressure medicines called A-II antagonists. Despite multiple competitors, they remain the most widely prescribed drugs in their class and the third most frequently prescribed branded anti-hypertensive medication in the world. Growth continues as physicians continue to recognize the excellent efficacy and tolerability of these products. Merck is currently evaluating the effects of once-daily Cozaar and Hyzaar on morbidity and mortality in three ongoing mega-trials involving more than 15,000 patients.
Merck-Medco extends lead in pharmacy care
Richard Clark said Merck-Medco is extending its lead in coordinated pharmaceutical care by providing superior service in clinical programs, advanced pharmacy technology and the Internet. Merck-Medco now serves more than 65 million plan members, or about one in four Americans. Merckmedco.com, the world's largest Internet pharmacy, dispenses more than 100,000 online prescriptions per week. New online prescriptions are growing by more than 30% per quarter, and merckmedco.com sales are now larger than all other major online pharmacies combined.
Merck-Medco's key accomplishments for 2000 include the seamless integration of nearly 10 million lives as a part of the UnitedHealthcare Group contract and the acquisition of ProVantage with its 5 million lives. In October, Merck-Medco launched Generics First, a generic sampling and physician education program designed to drive further cost savings for plan sponsors. In April, Merck-Medco, in partnership with Readers Digest, launched YOURxPLAN, a prescription drug savings plan for consumers who either have inadequate or no prescription drug insurance. Merck-Medco's pharmacy of the future concept is expanding as it completes its second automated pharmacy in New Jersey to complement its Las Vegas pharmacy. That pharmacy now fills approximately 600,000 prescriptions per week, while maintaining the highest dispensing- quality levels in the industry.
Revenues, new products, but still committed to basic science
Merck is on track to spend $2.4 billion in research in 2000 and plans to invest $2.8 billion in 2001. The company is complementing its internal investments in research through significant initiatives with more than 40 research institutions and universities to ensure that Merck stays on the leading edge of science.
Significant Merck strategies in the R&D arena include:
- integration of genomics technology into the drug discovery process throughout Merck's research laboratories,
- strategic expansions of Merck's research laboratories, and
- continued investment in new technologies and information that advance the rate of scientific discovery and development.
Products in development
Speakers outlined the importance of pipeline drugs in their company's future. Some highlights on new product initiatives:
- Etoricoxib (MK-663), Merck's second COX-2 inhibitor, is the most selective COX-2 inhibitor known to be in development. Phase III studies for osteoarthritis, rheumatoid arthritis, and pain are just being completed.
- Zocor and ezetimibe, for cholesterol control: in a partnership with Schering-Plough. Ezetimibe—a cholesterol absorption inhibitor—is being evaluated for monotherapy and in combination with Zocor.
- Singulair is in Phase III trials for allergic rhinitis. In addition, it is being evaluated as a fixed-dose combination product with Claritin for use in allergic rhinitis under another partnership with Schering-Plough.
- Cancidas, a once-a-day intravenous antifungal, has demonstrated a good tolerability profile in clinical trials. Merck submitted a New Drug Application for FDA approval of Cancidas in July 2000; an FDA Advisory Committee Meeting is slated for Jan. 10, 2001.
- Invanz is a long-acting, injectable carbapenem antibiotic with activity against a wide range of bacteria. Merck submitted a New Drug Application for FDA approval in Nov. 2000.
- MK-869, a substance P antagonist compound, is moving into Phase III research for chemotherapy-induced emesis.
- KRP-297 is licensed from Kyorin for the treatment of type 2 diabetes.
- Rotavirus vaccine is under development for childhood diarrhea and dehydration, and large safety studies will begin soon.
- Human papillomavirus vaccine is aimed at the cause of most cases of cervical cancer.
- Investigational HIV vaccine is in very early stages with clinical immunization regimens under study in humans.
For more information, contact Laura Jordon of Merck at 908-423-5185.
Edited by Angelo DePalma
Managing Editor, Drug Discovery Online and Pharmaceutical Online
adepalma@vertical.net