July 25, 2012
Merck SWOT Analysis
Merck is the 2nd largest pharmaceutical company in world offering prescription
medications, biologics, vaccines, animal health, and consumer care products. It generated 48
billion dollars in revenue in 2011 and has 40,000 employees. Research and development of
proprietary medicines for global marketing is the core of the business. Recent acquisitions and
transactions designed to take advantage of emerging markets. Stakeholders include:
shareholders, medical professionals, medical researchers, medical facilities, and patients.
Headquarters:One Merck Drive
P.O. Box 100
Whitehouse Station, NJ 08889-0100
Revenue (USD Mn)48,000
Financial Year End:December
New York Stock Exchange TickerMRK
Continues to benefit from strong M&A activity
Has a diverse portfolio of product offerings
Strong research & developmental pipeline with 20 products in late-stage development.
Pricing pressure caused by Health Care Insurance payment structure and government regulation in the United States and abroad.
Significant litigation involving Vioxx.
Uncertainty regarding new product development in Biologics
Emerging Global Markets are growing at double-digit percentage rates.
Generic Biologics Market to exploit competitor’s patent expirations.
New Mergers and Acquisitions, Joint Ventures, and Licensing agreements are promising.
Uncertainty in Global regulations, trade agreements, and political conditions.
Global economic austerity programs may cause pricing pressure or abandonment of projects.
Competition from generic drugs due to Patent expiration.
Continues to benefit from positive M&A activity
In 2009 Merck merged businesses with Schering Plough and continues to benefit from
reduced costs as a result of the merger. In February, 2011, a Merger Restructuring Program was
announced, resulting in workforce reductions affecting sales and administration, consolidation of
headquarters, office staff, as well as the sale or closure of some manufacturing and development
sites have reduced the workforce by 17%. In July of 2011, the company announced an
additional work-force reduction of 12 to 13%. From February, 2010 until December 31, 2011
Merck has eliminated 18,430 positions from employee separations and elimination of
contractors. The program is expected to be largely complete by the end of 2013, and yield
annual savings of $4 billion to $4.6 billion
Other M&A activity will continue to enhance new product development. Inspire
Pharmaceuticals allows Merck to take advantage of ophthalmic products and medications. Smart
Cells offers new avenues introduce treatments for type 2 diabetes. Acquisition of rights to a
biosimilar version of Embrel for treatment of autoimmune disorders like rheumatoid arthritis.
Owns a diverse portfolio of current product offerings
Merck has a broad line of pharmaceuticals, animal health products, consumer care
products, biological medications, and vaccines. 42 products are divided into 9 divisions offering
reduced exposure to product patent expiration. The patent expiration of the largest revenue
producing product, Singuliar, with $5.5 billion in revenue, would not completely wipe out
company profits. This diversity provides an important safety net as the company continues to
invest in research and development of new products.
Strong research & developmental pipeline with 20 products in late-stage development
In the last 13 months the Food & Drug Administration has approved 6 major
medications: Zioptan and Cosoft PF both are...