Merck

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

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ormation. This includes data on patient use and misuse, such as lapses in taking medication, that can help with the creation of new drugs. The company desires the creation of an electronic information link from patients to Merck marketers and laboratories. Threats Most of the threats are clear to management. The importance of R&D has not diminished for Merck, but its effectiveness has. While the company continues to spend considerable sums on R&D, the corporate bureaucracy has grown in such a way that it has slowed down the pipeline for new products and made R&D less effective at creating new products and sending them through the marketing process. The acquisition of Medco poses a threat if the two companies do not mesh, and many analysts believe they will not. In addition, the acquisition price of $6 billion will put a strain on Merck in the near future. Many of the new products offered by Merck have grown more slowly than desired. The company also faces changes in its traditional markets as managed-care providers, rather than private physicians, decide which drugs doctors may prescribe, and health-maintenance organizations are also pressing for lower prices. All drug companies face this change, but Merck had been

Category: Business - M