Merck (NYSE: MRK) lost a lot of legal cases over whether its arthritis drug caused heart problems in patients. It even spent $4.85 billion to settle a lot of the claims against it. But, that did not end every suit, and the company is faced with new data that raises questions about the dangers of the drug.

Tough for Merck. But, putting out dangerous drugs can have side affects for both patient and company. According to Reuters, " A long-term analysis of people who took the arthritis drug Vioxx confirms it doubles the risk of strokes and heart attacks."

Most of these lawsuits come down to "did the company know of the danger, and, if so when?" Merck probably did not settle so many cases because it believed it was entirely in the right. It is hard to imagine that it did not have some sense that the data from the new study is true. It did test its own drug before it went on the market. But, did it test it well? Or, did it find that there were possible health risks but that they were acceptable? At least from a monetary standpoint.

The cynical observers of drug company practices say that the firms balance litigation costs against the money that they get from sales. If a product has some danger, it does not matter too much if it makes a great deal more money than the cost of legal consequences.

If the cynics are right, Merck has a tough road ahead.

Douglas A. McIntyre is an editor at 247wallst.com.

New Vioxx study: more trouble for Merck (MRK) originally appeared on BloggingStocks on Tue, 14 Oct 2008 09:25:00 EST. Please see our terms for use of feeds.

Merck (MRK) higher on Buy rating despite Vioxx settlement news originally appeared on BloggingStocks on Fri, 18 Jul 2008 15:21:00 EST. Please see our terms for use of feeds.

Continue reading Court overturns Vioxx verdict against Merck -- time to buy?

Court overturns Vioxx verdict against Merck -- time to buy? originally appeared on BloggingStocks on Wed, 14 May 2008 17:01:00 EST. Please see our terms for use of feeds.

It appears that some of the medical reviews of Merck's (NYSE: MRK) controversial drug Vioxx were not written by doctors at all. The company found "ghost writers" to put together evaluations for medical publications. Some physicians appear to have signed those reviews.

According to The New York Times "In an editorial, JAMA (The Journal of the American Medical Association) said the analysis showed that Merck had apparently manipulated dozens of publications to promote Vioxx."

The news marks another hideous chapter in the history of Vioxx, a drug which was found to cause heart attacks. A number of suits were initiated by patients who had suffered this side-effect.

While it is not clear whether Merck will be punished for participating in shaping reports about its own drug, the doctors involved should be charged with fraud, at the very least.

Vioxx turned out to be a dangerous drug. More detailed research may have discovered that. Even if more careful work would not have uncovered the problems with the drug, no one will ever know. The well was poisoned long before the patients taking Vioxx began to get ill.

Douglas A. McIntyre is an editor at 247wallst.com.

Medical ethics outrage: Merck (MRK) writes some doctor reports originally appeared on BloggingStocks on Wed, 16 Apr 2008 09:30:00 EST. Please see our terms for use of feeds.

Merck (NYSE: MRK)'s pain killer Vioxx allegedly caused a number of deaths and illnesses. Eventually 27,000 lawsuits were filed against the company, causing a potentially catastrophic liability.

Today, it appears that Merck will settle most claims for $4.85 billion. According to The Wall Street Journal, "an agreement is expected to be announced Friday morning in New Orleans, where a federal judge is overseeing the litigation." The litigation over the effects of the drug have dragged on for three years. The paper adds that "the company currently has set aside $720 million for its Vioxx legal defense costs, which doesn't include any potential damages to plaintiffs."

Some suits are not part of the settlement, but the accord would end the great majority of cases.

Did Merck pay too much for relief of its litigation problems? Perhaps. Based on the company's financial information, the Vioxx matter was costing the company over $600 million a year. And it might have lost some of the cases. But $4.85 billion covers a lot of legal fees over the next decade, and Merck has won several high-profile Vioxx cases in the last year or so.

But the settlement does give the company some peace and the chance to move forward with its normal business without the cloud of liabilities from Vioxx hanging over its head. From that standpoint, Merck may have gotten off cheap.

Douglas A. McIntyre can is an editor at 247wallst.com.

Merck to pay $4.85 billion for Vioxx settlements originally appeared on BloggingStocks on Fri, 09 Nov 2007 04:07:00 EST. Please see our terms for use of feeds.

The earnings crunch continues to roll along, and here are a some highlights of this past week's earnings coverage from BloggingStocks:

• Aetna Inc. (NYSE: AET) beat expectations and raised its full-year guidance.
• Amazon.com Inc. (NASDAQ: AMZN) beat estimates by a penny and offered a poor outlook.
• American Express Co. (NYSE: AXP) delivered a positive surprise, with profits up 10%.
• Amgen Inc. (NASDAQ: AMGN) beat estimates, but revenue was flat.
• Anheuser-Busch Cos. (NYSE: BUD) beat expectations on strength of international sales and partner brands.
• Apple Inc. (NASDAQ: AAPL) blew past expectations. See our conference call live blog.
• Avery Dennison Corp.'s (NYSE: AVY) net sales up, EPS down, both due to the Paxar acquisition.
• Baidu.com Inc. (NASDAQ: BIDU) beat expectations, but wariness about its growth potential lingers.
• Boeing Co. (NYSE: BA) beat expectations but lowered its guidance.
• Bristol-Myers Squibb (NYSE: BMY) beat expectations on the strength of Plavix sales.
• CNH Global's (NYSE: CNH) profit nearly doubled, beating estimates by 15%.
• Coach Inc. (NYSE: COH) beat estimates by a penny, but offered a conservative outlook for the holidays.
• Comcast Corp. (NASDAQ: CMCSA) met EPS expectations but cut its cash flow forecast.
• Countrywide Financial Corp. (NYSE: CFC) reported a $1.2 billion loss, but predicts a profit in the next quarter.

Continue reading Earnings highlights: Apple (AAPL), Merrill Lynch (MER), UAL (UAUA), and many others

Earnings highlights: Apple (AAPL), Merrill Lynch (MER), UAL (UAUA), and many others originally appeared on BloggingStocks on Sat, 27 Oct 2007 11:40:00 EST. Please see our terms for use of feeds.

The earnings season crunch is underway once more, and among companies reporting next week are Merck & Co. (NASDAQ: MRK) and AT&T Inc. (NYSE: T).

In its second quarter report in July, Merck reported earnings per share of 82 cents, beating Wall Street's expectations by 13.9 percent, up from 73 cents in the same period the previous year. Merck had one-year earnings per share growth of 16.9 percent, which was better than the S&P 500 and the pharmaceutical industry average. For the third quarter, analysts surveyed by Thomson Financial expect Merck to report earnings per share of 69 cents.

Analysts surveyed by Thomson Financial recommend buying Merck: 3 rate it a strong buy, 10 a buy, and 8 a hold. The share price has been creeping back up toward its 52-week high of $55.14 last May, and closed Friday at $53.11.

For more on Vioxx and other pharma news that may affect Merck's results, check out BloggingStocks' Merck coverage.

Continue reading Earnings previews: Merck (MRK) and AT&T (T)

Earnings previews: Merck (MRK) and AT&T (T) originally appeared on BloggingStocks on Sun, 21 Oct 2007 09:40:00 EST. Please see our terms for use of feeds.

Now that Merck & Co. (NYSE: MRK) and Schering-Plough Corp. (NYSE: SGP) both posted better-than-expected second quarter earnings, will investors show some love to big pharma?

Shares of Merck are down about 5% over the past three months while Schering-Plough has eeked out a mere 2.5% gain. Perhaps investors are worried about Merck's Vioxx legal battles, which so far it has largely won, and the controversy surrounding its cervical cancer vaccine Gardisal. Schering-Plough's $14.4 billion acquisition of Akzo Nobel's Oreganon unit may also be concerning some people. Maybe people think that if Pfizer Inc. (NYSE: PFE) is up the creek, all big drug companies are in the same boat.

Regardless, both companies posted impressive numbers that should quell the concerns of investors. Their stocks remain pretty cheap. Merck trades at a forward price-to-earnings multiple of 17, slightly cheaper than Schering-Plough's 20.

Merck, based in Whitehouse Station, New Jersey, reported net income of $1.65 billion or 77 cents, up from $1.5 billion, or 69 cents a year earlier. Revenue jumped 5.9% to $6.1 billion fueled by demand for blockbusters such as the high-cholestoral treatment Vytorin which it makes in a joint venture with Schering Ploug. Excluding some costs, Merck earned 82 cents, beating the 72 cent-average estimate of analysts surveyed by Thomson Financial. The revenue figure also beat the $5.77 billion, analysts had expected.

Vytorin also boosted results at Kenilworth, NJ-based Schering Plough. Net income climbed to $539 million, or 34 cents a share, more than doubling from $259 million, or 16 cents. Revenue jumped 14% to $3.2 billion. Excluding some costs, profit was 41 cents, beating the conesensus forecasts of 35 cents. Revenue also beat expectations of $3.07 billion.

Merck, Schering-Plough earnings show big pharma isn't dead originally appeared on BloggingStocks on Mon, 23 Jul 2007 10:07:00 EST. Please see our terms for use of feeds.

Continue reading Merck & Co. Inc.: A Big Pharma comeback

Merck & Co. Inc.: A Big Pharma comeback originally appeared on BloggingStocks on Mon, 14 May 2007 14:30:00 EST. Please see our terms for use of feeds.

• Hitachi Ltd (NYSE: HIT) Strategic Storage Announcement conference call at 8am.
• Aircastle Limited (NYSE: AYR) to report Q1 earnings; conference call at 11am.
• Another Vioxx trial starts for Merck and Co Inc (NYSE: MRK) in Texas.

• Motorola Inc (NYSE: MOT) mobile experience at 10am.
• Yamana Gold Inc (NYSE: AUY) to report Q1 earnings; conference call at 11am.

• Southwest Airlines (NYSE: LUV) shareholder meeting at 11am.
• Hewlett-Packard Company (NYSE: HPQ) to report Q2 earnings; conference call at 5pm.

• JC Penney Company Co Inc (NYSE: JCP) to report Q1 earnings; conference call at 9:30am.
• Liz Claiborne Inc (NYSE: LIZ) annual shareholder meeting at 10am.
• Biogen Idec (NASDAQ: BIIB) research and development day at 8:30am.

• British Airways (NYSE: BAB) to report preliminary Q4 earnings; conference call at 9am.
• Federated Department Stores Inc (NYSE: FD) shareholder meeting at 11am.

Market highlights for next week: Another Vioxx trial begins for Merck originally appeared on BloggingStocks on Fri, 11 May 2007 15:50:00 EST. Please see our terms for use of feeds.

Continue reading Merck posts strong first quarter

Merck posts strong first quarter originally appeared on BloggingStocks on Thu, 19 Apr 2007 10:50:00 EST. Please see our terms for use of feeds.

When Merck and Co. (NYSE: MRK) took a nose dive upon news of the the Vioxx (TM) 'scandal' and the stock plunged rapidly in the usual panic that besets such stories, I received a call from my mother-in-law. She is a long time Merck shareholder and she asked me what to do. I immediately said buy more - and she did, at $28 if memory serves me correct.

Now to the average contrarian, value investor or fool, buying at this time (catching a falling knife) may result in a less than satisfactory financial position and the risks could be high. But sticking your neck out to make this call when it's your mother-in-laws retirement money and you are making on the spot calculations, could lead to some very unpleasant and long lasting situations. Like on every phone call or family get together forever.

Actually I was recommending Merck to my whole family and have been for some time but this one was both the easiest and the toughest because even if you are right the downside risk was higher than usual.

Oh well, I am right for this moment in time and she still loves me. Things could change, but so far so good...and getting better it seems. A late breaking report by the Associated Press Merck Soars to Post-Vioxx High reviews the days legal events.

Merck Closed today up $3.85 today at 50.21 but reached an interim day high of $50.80, the highest it has been in years. And as I do like to look at the funny analysts from time to time several investment houses either started Merck as a buy or changed their calls from sell to buy. For myself, it is a hold. I hate to buy in the midst of such euphoria and absolutely would not follow any analysts calls.

If you are interested in long-term value investing read Chasing Value.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out my other posts for BloggingStocks here.

Merck buy was more risky for me than you originally appeared on BloggingStocks on Fri, 13 Apr 2007 17:40:00 EST. Please see our terms for use of feeds.

Merck & Co., Inc. (NYSE: MRK) has headed back to the Food and Drug Administration with a drug that is meant to replace Vioxx. [subscription required] The Big Pharma company is still facing a number of lawsuits over whether Vioxx caused heart problems and stroke in some patients.

Merck's new drug is called Arcoxia and it is from the same category of drugs that Vioxx is, but the company has done extensive testing and is already selling the drug outside the US. Still, Arcoxia appears to have problems of its own as it has caused high blood pressure in some patients who are taking it in the trials.

Vioxx brought in $2.5 billion in revenue for Merck in 2003. However, the potential liability of the lawsuits against Merck could be as much as $15 billion.

Merck is left with a tough decision. Even if its new drug is approved for use in the American market, it would appear that it is not without side effects. And, side effects are already costing Merck a bundle, if only in legal fees.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Merck tries to replace Vioxx originally appeared on BloggingStocks on Wed, 04 Apr 2007 14:57:00 EST. Please see our terms for use of feeds.

Merck & Co. Inc.

Merck undaunted by bad drug development news originally appeared on BloggingStocks on Thu, 29 Mar 2007 12:08:00 EST. Please see our terms for use of feeds.

Merck & Co., Inc. (NYSE:MRK) made the decision to litigate any claims that consumers have about the side effects of it drug Vioxx. There were studies that indicated that the drug could cause heart attacks in some patients.

Merck is facing 27,000 lawsuits from patients who posit that Vioxx caused them health problems. The company has decided to try the cases instead of attempting to enter into one large settlement covering all claims. Not unlike Altria Group, Inc.'s (NYSE:MO) Philip Morris and its tobacco litigation, Merck knows that the cost of bringing suit against it is substantial, so if the company wins a number of early cases, other plaintiffs may back off.

A jury in New Jersey has now found that Merck did recklessly promote the drug and awarded a patient $47.5 million. Merck will obviously appeal the case.

The brilliance of Merck's move to try cases with the goal of wearing down Vioxx claims may be the company's downfall. A raft of "wins" against the company could drive its liability into the billion of dollars. At that point, the company's future could be at stake.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Merck's Vioxx strategy starts to look more risky originally appeared on BloggingStocks on Tue, 13 Mar 2007 10:33:00 EST. Please see our terms for use of feeds.

Today in Money & Finance - 3/13 - Top dividend-paying stocks, how to live like a billionaire & $2 billion in unclaimed refunds originally appeared on BloggingStocks on Tue, 13 Mar 2007 09:00:00 EST. Please see our terms for use of feeds.

Merck & Co. (NYSE:MRK) fourth-quarter results could have been much worse. Instead they may indicate that there is some hope for the drug maker to improve its results despite the huge liability it faces because of Vioxx and the expiration of the patent on Zocor, which had been its top seller.

Net income plunged to $473.9 million, or 22 cents per share, versus $1.12 billion, or 51 cents, a year earlier. Revenue jumped 4.8 percent. to $6.04 billion, boosted by strong sales of allergy and asthma. Excluding charges, profit was 50 cents, matching the consensus forecasts. Wall Street was expecting revenue of $5.37 billion. It repeated guidance for the year of $2.51 to $2.59 per share.

A potential bright spot for the Whitehouse New Jersey-based company may be in its $1.1 billion purchase of the biotech firm Sirna. WBB Securities analyst Steve Brozak told the Associated Press that "If it harms this quarter or next quarter, that is not a big deal."

Increased sales of drugs such as Singulair and Vytorin along with gains in the vaccine business softened the blow from the drop off in Zocor revenue.

The company has raised its earnings forecasts three times last year and investors are expecting it to happen again. Merck's shares barely moved after the earnings were issued yesterday. Considering all of the challenges this company is facing, that's saying something.

Also check out some other earnings reports that we're following, and let us know what you're expecting.

All hope isn't lost for Merck originally appeared on BloggingStocks on Wed, 31 Jan 2007 08:10:00 EST. Please see our terms for use of feeds.

Who else but supreme optimists would buy stock in a drug maker facing more than 27,000 lawsuits regarding Vioxx, not including the Pennsylvania woman who recently dropped hers? Their faith that Merck will beat these cases is evident in the stock price.

Shares of Merck have jumped more than 39% over the past year, outperforming Pfizer Inc. (NYSE:PFE) Novartis AG (NYSE:NVS) and Schering-Plough Corp. (NYSE:SGP). Granted, beating Pfizer isn't that much of a victory, but still, that's a decent move.

Wall Street, which is awaiting Merck's fourth quarter results Jan. 30, expects the stock to climb further. The median target for Wall Street analysts is $48.50, according to Thomson Financial. Opinion, though, remains divided. Eleven analysts consider the shares either a strong buy or buy, 10 rate it a hold, and 3 a sell.

Merck has already said earnings this year are going to be lackluster and Wall Street is taking the company at its word. Analysts are forecasting earnings of 50 cents on sales of $5.38 billion, according to Thomson Financial. A year earlier, the company had a profit of 64 cents and revenue of $5.77 billion.

As Douglas McIntyre pointed out, Merck needs to convince investors that it's not Pfizer in the wake of that company's failed anti-cholesterol drugs. The Whitehouse, New Jersey-based company said last month that it will seek approvals for three important drugs this year and would have four more drugs in late-stage trials by mid-2007.

Also check out some other earnings reports that we're following, and let us know your thoughts on earnings expectations.

Merck investors' faith is rewarded originally appeared on BloggingStocks on Thu, 25 Jan 2007 10:39:00 EST. Please see our terms for use of feeds.

Like most of the Big Pharma companies, Merck & Co. (NYSE:MRK) needs a winner. Wall St. is scared witless that generic drug firms like Teva Pharmaceutical Industries (NASDAQ:TEVA) will scoop up all of the customers as drugs come off patent.

With Wal-Mart Stores, Inc. (NYSE:WMT) and every corner store offering $4 prescriptions for generic drugs, the sun may be setting on operations like Merck.

Merck is trying to get its new painkiller [subscription required], Arcoxia, out the door without physicians thinking it has health risks like the company's heart-unhealthy drug Vioxx.

Arcoxia is already controversial and it is not even for sale in the U.S. with some doctors thinking the drug could be as dangerous as Vioxx. However, a study presented at the recent American Heart Association conference indicated that the drug was fairly safe. Only 1% of the people on the drug suffered a heart attack, stroke, or death within the first year.

Great odds if you are not the patient who died.

Douglas McIntyre is a partner at 24/7 Wall St.

Merck's next horse pill originally appeared on BloggingStocks on Tue, 14 Nov 2006 09:30:00 EST. Please see our terms for use of feeds.

Things have gotten so bad at Merck & Co., Inc. (NYSE:MRK) that they are renting ambulances for the company's Vioxx drug patients and MRK shareholders. Merck disclosed yesterday that it was in a dispute over $5.58 billion in taxes it may owe the US and Canada.

Almost any child who reads a newspaper knows that Merck's Vioxx painkiller may cause heart problems and that the company is involved in countless suits that could cost it billions of dollars in damages. And now the taxman cometh.

Merck has $6.2 billion in cash on its balance sheet, so if it had to pay these taxes, it would not have a great deal left to cover Vioxx judgments, although future earnings could generate more cash. It is hard to figure out how the tax number got this high. Merck's revenues are about $22 billion, so it is a pretty hefty bill.

Merck's shares have recovered from the Vioxx shock. Its stock has recovered from a 52-week low of $27.99 to $45.90, near its high for the period. In 2003, the stock traded at $63. The tax issue, however, is bound to send the shares lower.

It is hard, almost impossible to believe that Merck was Fortune's Most Admired Company for six years in a row from 1987 to 1993.

How the mighty have fallen.

Douglas McIntyre is a partner at 24/7 Wall St.

Merck owes $5.5 billion in taxes, may need to revive shareholders originally appeared on BloggingStocks on Wed, 08 Nov 2006 09:35:00 EST. Please see our terms for use of feeds.