Merck (NYSE: MRK) was counting on its new cholesterol drug to help its revenue in the years ahead. It won't work out. The drug, Cordaptive, was turned down by the FDA.
According to The Wall Street Journal, "Merck was counting on Cordaptive to bring in as much as $2 billion a year in sales." The news is likely to hurt the company's stock, which trades at $41.44, well below its 52-week high of $61.62.
Merck's revenue last year was just over $24 billion, so the rejection will hurt, and perhaps hurt a great deal.
Merck is one of a handful of Big Pharma companies that have a number of important drugs coming "off patent." That means that cheap generics will flood the market and margins on the original drugs will disappear. Creating a "blockbuster" drug can take years of R&D, so Merck is left with relatively high costs against falling revenue.
The best way to look at Merck, and the shares of companies like it, is to watch for approval of drugs that are likely to bring in billions of dollars. Without those Merck and its peers will have falling share prices for years to come.
Douglas A. McIntyre is an editor at 247wallst.com and the author of Ten Stocks Under $10.
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Reader Comments (Page 1 of 1)
4-29-2008 @ 10:06AM
Mitchg said...
Big Pharma is now trying to capitalize on niacin.
Apparently, niacin, which is available without prescription for pennies, is more effective than anything else for controlling & improving lipid/blood ratios (and more).
Statin drugs, even though less effective and more dangerous than niacin, have been the most profitable drugs in history. Big Pharma's "education" of physicians has, until recently, discouraged the use of niacin for obvious, bottom-line reasons.
The fact is that niacin's side-effects are not at all as bad as suggested by Big Pharma. Ask anyone who's been using niacin to control cholesterol for a few months.
See www.cholesterolscore.com for many articles and studies on this subject.