BUAD110 Importance of Vioxx

BUAD110 Importance of Vioxx - With eight years remaining...

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BUAD 110 September 25, 2007 A Bitter Pill to Take (B2) Vioxx is an exceptionally important product for Merck in the United States. Despite problems with side effects that may cause its recall, Vioxx has remained a top seller in its market. It is Merck’s second best-selling drug, behind Zocor, the market-leading statin for cholesterol reduction. Vioxx is also the second best-selling Cox-2 inhibitor on the market, behind Pfizer’s Celebrex. Vioxx generated $2.5 billion in annual revenue for the company, which reported total revenue of $6.8 billion in 2004. 1 A large portion of Merck’s sales come from this drug as Vioxx sales accounted for some 37% of Merck’s total revenue in 2004. It is fairly easy to see that a recall of Vioxx would considerably affect the company. The loss of Vioxx would pose a significant threat to the profitability of the company as well as Merck’s position as an industry leader in pharmaceutical research and development.
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Unformatted text preview: With eight years remaining before the patent expires, Vioxx represents $20 billion in potential sales that would be lost if the drug is pulled from the market. 2 Merck cannot afford to lose Vioxx as a future staple drug for the company as it appears that nothing else can pull the same weight in numbers that Vioxx potentially could. New products scheduled for release in the coming years lack the sales potential to compensate for the lost revenue following a Vioxx recall. The importance of Vioxx to Merck will grow in upcoming months, making the recall more and more drastic and disastrous for the company as a whole. 1 Arthur A. Thompson, Merck and the Recall of Vioxx (2004) 2 Aaron Smith, Merck Shareholders Feeling the Pain of Plunging Stocks (2005) <http://money.cnn.com/2005/06/30/news/fortune500/vioxx/index.htm>...
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BUAD110 Importance of Vioxx - With eight years remaining...

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