Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

CEO on the hot seat: Richard Clark, Merck
It's not just Vioxx -- patent expirations are a big threat. Clark is cutting costs and focusing research efforts to compensate.
By Jon Birger and David Stires, FORTUNE

NEW YORK (FORTUNE Magazine) - Much of Merck's future will be determined in court: The company has reportedly set aside nearly $700 million to cover just the legal fees associated with the flood of lawsuits blaming Vioxx for heart-related ailments and deaths.

And the basic business has big problems of its own: Merck is facing the loss of patent protection on several key drugs over the next five years, including the $4-billion-a-year cholesterol drug Zocor -- with few potential blockbusters coming along to replace them.


CEO Richard Clark laid out his recovery plan in December. He'll cut $5 billion in costs by 2010 and get more aggressive about strategic acquisitions.

He'll focus R&D efforts on nine priority areas, including Alzheimer's, diabetes, cancer, and vaccines.

Stock outlook

Given the uncertain Vioxx liability and the murky outlook for earnings -- Goldman Sachs doesn't expect any growth until 2009 -- we wouldn't buy the stock today.

But if it fell below $30, we'd be tempted by Merck's (Research) dividend ($1.52-a-share) and the potential for a breakthrough drug launch (Gardasil, a vaccine for cervical cancer now awaiting FDA approval, may be Merck's best hope). Top of page

FORTUNE Investor's Guide: 10 CEOs

Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.
Manage alerts | What is this?