Merck (MRK) is a pharmaceutical company known for its developments in vaccines and medication. Its stock currently trades at $38, and the company faces competition from several other major pharmaceutical companies, including Eli Lilly (LLY), GlaxoSmithKline (GSK), Pfizer (PFE), and AstraZeneca (AZN).
In order to compete with other pharmaceutical companies, Merck hopes that increased availability and positive testing results of its shingles vaccine, Zostavax, will bolster its stock value. Additionally, Merck partnered with Sun Pharma, an Indian pharmaceutical company, to meet demands in India's emerging market. Merck joins its competitors GlaxoSmithKline and Pfizer in expanding to emerging markets such as India and China in the hopes of growing revenue.
However, like its competitors, Merck experienced regular financial losses from lawsuits, product recalls, and most recently, updated negative side effect information for a baldness treatment that negatively impacts its stock. Nevertheless, I believe that positive results from the recent shingles vaccine release and foreign market expansion will positively impact Merck. Additionally, the company's updated negative side effect information for its baldness treatment medication is not entirely damaging in comparison to Pfizer's large-scale asbestos lawsuit or Eli Lilly's profit loss from generic prescription releases.
Recently, the journal Clinical Infectious Diseases published a study that stated that Merck's Zoztavax vaccine for the skin condition shingles reduced outbreaks among patients in their fifties by as much as 70%. Shingles is a skin condition caused by the chicken pox virus that largely targets people over fifty. Merck also overcame production difficulties for the vaccine that caused shortages for the growing senior population. Because of the advances in Zoztavax production, Merck recently restored production for the vaccine and aimed to fill back orders caused by its production difficulties. According to the same article posted on the Wall Street Journal health news blog, the FDA also approved reducing the recommended age range for patients in need of Merck's shingles vaccine from patients over age sixty to patients over fifty. Based on Zoztavax's positive clinical results and increased production, Merck may hope to experience some positive stock prospects from financial gain.
Additionally, Merck joined its competitors in teaming with foreign pharmaceutical companies in emerging markets (such as China and India) to meet increasing demands for brand-name prescription medication. Like rival pharmaceutical companies GlaxoSmithKline and Pfizer, Merck partnered with an Indian pharmaceutical company, Sun Pharma, in order to mass-produce medicine. As indicated in above linked article, online financial analysts state that Merck, like its competitors, hopes to compensate for large financial losses from generic drug releases for mass profit gain from large-scale pharmaceutical production in emerging foreign markets.
Merck's competitors also announced new developments in their pharmaceutical research and medication release. AstraZeneca recently launched its new blood pressure drug, Dutoprol. The company also introduced a new method of direct prescription delivery and pricing with Dutoprol. It announced that both insured and uninsured patients will receive a thirty-day supply of the blood pressure medication for $18.33 per month. AstraZeneca expects increased profits as a result of the Dutoprol's new direct prescription delivery method and its competitive pricing for uninsured patients. I feel that AstraZeneca's new methods of pricing and delivery will be beneficial to it as other pharmaceutical companies follow its action plan in the near future.
Additionally, the FDA approved Amyvid from Eli Lilly as an injection used in conjunction with brain imaging to detect development of Alzheimer's disease in patients. Eli Lilly may experience a profit increase from Amyvid and its other research on Alzheimer's treatments. The experimental Alzheimer's drug solanezumab is in its final rounds for testing necessary for "regulatory approval." Although the Lilly CEO described the experimental drug's prospects as "high risk," the drug's clearance could potentially be worth up to $9 billion by 2020. In spite of Lilly's experimental drug's volatile future, I believe that Lilly-- like Merck with its shingles virus research-- will continue to profit from its research on diseases affecting the country's growing senior population.
GlaxoSmithKline also experienced steady profits from its prescription asthma medication Advair. Although rival pharmaceutical companies developed generic versions of Advair, two generic pharmaceutical companies admitted that Advair performed more effectively than their versions of the medication.
However, like most pharmaceutical companies, Merck recently suffered a setback after it had to update consumer information regarding a negative side effect from a popular medication. The company updated negative side effects for a popular male baldness medication called Propecia to include sexual dysfunction. According to Merck's study on sexual dysfunction and Propecia, some cases involving the drug reported negative side effects lasting up to three months after treatment ended.
Nevertheless, I believe that Merck's recent setback will not negatively impact the company's prospective stock value. Other pharmaceutical companies such as Eli Lilly and Pfizer currently have more negative factors affecting their stock value. For example, Eli Lilly faced a large profit loss after generic drug companies were able to produce two of its top-selling drugs. Additionally, a federal court recently ruled that Pfizer is liable in state court cases with a thirty-year asbestos case involving a subsidiary manufacturer. Since Pfizer paid $430 million over the duration of the lawsuit, the recent court ruling may prove to be detrimental to the company. Like Eli Lilly, Pfizer faced large losses in profit after generic versions of its cholesterol pill Lipitor were released. However, Pfizer also pledged to trim back $1 billion in its business operation costs.
I feel that Eli Lilly and Pfizer face more drastic circumstances compared to Merck. Like Eli Lilly and its promising Alzheimer's drug development, Merck proved that it remains profitable by developing a vaccine targeted to the country's senior population. Additionally, unlike Pfizer, Merck did not report drastic measures in cost-cutting due to loss of profits from competition or large-scale lawsuits. I believe that although Merck has a lower stock value than its competitors, its current freedom from major financial restraints are beneficial to the company's potential financial gain.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.