Merck's Fortunes Take A Tumble

On the eve of the third Vioxx trial -- the first involving a federal court -- being tried in Houston, Merck may finally be paying the price for bringing such toxic drugs to market.

The New Jersey mega-drug company plans to cut 11 percent of its workforce immediately (about 7,000 jobs in the long term), close or sell five of its manufacturing facilities and restructure its operations structure. Wall Street didn't take the message very well: Merck stock prices fell 4 percent yesterday.

Interestingly, business analysts and Merck executives claim the move has more to do with internal cost-cutting, an odd, but emerging, trend among the mega-pharmaceuticals considering profit margins on drugs exceed 70 percent.

And, with Merck's leading moneymaker, Zocor, running out of patent protection time, the company stands to lose as much as half of its estimated $4.5 billion in annual sales.

Meanwhile, Federal Court Judge Eldon Fallon estimates, when it's all said and done, the number of federal Vioxx lawsuits could reach 100,000.

Yahoo News November 28, 2005

CNN Money November 29, 2005

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