Merck vs Pfizer

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Evaluating
Merck & Co., Inc vs. Pfizer, Inc.

Amy Lan Lan Liu
Connor Buestad
Raghul Subramanian
Natalia Cosa

ACCT 831

March 16, 2011

Table of Contents:

Part 1: History, Background and Core Business …...................................................................2 a. Merck & Co., Inc. ….............................................................................................................. 2 b. Pfizer, Inc. …........................................................................................................................... 2 c. Core Business …...................................................................................................................... 3

Value Chain …................................................................................................................... 4
Porter’s Five Forces …....................................................................................................... 6
SWOT Analysis …................................................................................................ …….... 8

Part 2: Financial Analysis …..................................................................................................... 15 a. Profitability Analysis …........................................................................................................ 15 b. Liquidity Analysis …............................................................................................................. 18 c. Solvency Analysis …..............................................................................................................19

Part 3: Valuation Analysis ….................................................................................................. ..20 a. Residual Income …................................................................................................................20 b. Cost of Equity …....................................................................................................................21 c. Valuation …............................................................................................................................22 d. Sensitivity analysis ….............................................................................................................23

Part 4: Recommendations …………………………………………………………….……...23

Appendix: …...............................................................................................................................25 Appendix A: Profitability Analysis…...........................................................................................25 Appendix B: Liquidity Analysis …...............................................................................................25 Appendix C: Solvency Analysis …...............................................................................................26 Appendix D: Residual Income and Cost of Equity........................................................................26 Appendix E: Sensitivity Analysis..................................................................................................27 References ……………………………………………………………………………………….28

Part 1: History, Background and Core Business
a. Merck & Co., Inc.: History and Background Information
Merck is headquartered in Whitehouse Station, New Jersey. According to its website, the company was originally established in 1891 as a US subsidiary of the Merck KGaA German company. Merck became an independent company in 1917. In 1963 Merck launch the first measles vaccine, and, in 1967 launched a mumps vaccine. In 2009, Merck acquired Schering-Plough and now represent the world’s third-largest pharmaceutical company by market share. Today, the company has over 94,000 employees worldwide (2012).

Merck is the third largest global healthcare...
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