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Merck slashes Zocor price
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May 1, 1998: 4:01 p.m. ET
Anti-cholesterol drug significantly discounted in the face of competition
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NEW YORK (CNNfn) - In the face of strong competition from other drug companies, Merck & Co. said it will practically give away its anti-cholesterol drug Zocor, prompting a drop in the company's stock price.
The Whitehouse Station, N.J.-based pharmaceutical maker said it will offer the drug to hundreds of hospitals at a "significant" discount to its wholesale price of between $1.88 and $3.40 a pill.
Zocor accounted for about $3.6 billion of sales in 1997. With an additional $1.1 billion coming from sales of another anti-cholesterol drug named Mevacor, Merck has an estimated 40 percent share of the worldwide market for cholesterol-lowering drugs.
But in recent days Merck officials have acknowledged that competing drugs such as Lipitor, marketed by Pfizer Inc. and Warner Lambert Co., have eaten into its market share.
"I think people are seeing this as a sign of the strength of Lipitor," said Leonard Yaffe, pharmaceuticals analyst at NationsBank Montgomery Securities.
Both Zocor and Lipitor are members of a class of cholesterol-lowering drugs known as "statins." Although Zocor reached the market earlier, Lipitor has been able to win over prescribing doctors due in part to its higher potency.
At latest count, Lipitor has about 32 percent of the market for all cholesterol-lowering drugs as measured by new prescriptions, according to research from ABN-Amro analyst James Keeney.
Since Lipitor's introduction, though, Merck has seen Zocor's market share drop to about 25 percent from 33 percent.
Shares of Merck (MRK) were down 4-5/16, or 3.5 percent, to 116-3/16 in late afternoon trading on the New York Stock Exchange.
Yet many analysts expressed confidence in Merck's new marketing strategy. With Merck's extensive pipeline of drugs under development, the new discount strategy helps to position the company as a long-term supplier to doctors and hospitals.
"Merck is not dumb. They're not in the business of losing money," said Jeffrey Kraws, analyst at Everen Securities.
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Merck
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