Merck is a leading U.S. drug company that has also entered the evolving field of biotechnology. The company is seeking to remain competitive, and tap into a potentially lucrative means of developing new treatments for disease. Merck has been the undisputed leader of the prescription drug industry. The company has examined the external environment and changes taking place there. They have also examined the opportunities available because of new technologies, which can be threats as other companies are also turning to new techniques. The company determined in 1992 that it needed to enhance its position, and it merged with Medco, a medical distribution company, as a way of diversifying within its field while also using the information gathered through Medco to develop new products and strategies. A strategic plan for Merck today involves increased R&D and the adoption of new technologies with the exercise of considerable control to assure that this R&D does not lead to dead ends and that opportunities are not missed any more than they are leaped on unthinkingly.
A SWOT analysis shows first the strengths on which the company can build. Merck is in a strong position after posting a 17 percent year-over-year fourth-period increase in share earnings in the last quarter of 1993. The full year showed a 13 percent gain, considered especially impressive given a 2 percent negative currency impact and an absence of help from price increases. Two important drugs held by the company were Proscar and Mevacor, both up 22 percent, a gain far better than anticipated. At the same time, the acquisition of Medco reduced overall profits by 6 cents a share.
The drug industry as a whole is seen as a growth industry at this time, with a growing demand from elderly Americans for new chronic-care medicines. The drug market is expected expand over the next several years, and today Merck is one of the healthiest pharmaceutical companies. The com...