Restructuring / Turnaround Strategies Case Study

Restructuring at Merck

Abstract:

In 2005, Merck was the world’s sixth-largest global pharmaceutical company. In November 2005, Merck announced a global cost-cutting campaign. Several factors prompted this move, including uncertainty in its discovery pipeline and the loss of sales revenue from the pain-reliever Vioxx, which was recalled in September 2004. Tens of billions of dollars in potential liability arose from the recall of Vioxx. Moreover, the company’s top-selling product, Zocor, would lose patent rights in mid-2006. When the flow of new medicines from Merck’s research and development pipeline dried up, analysts criticised the company for concentrating too much effort on a limited range of cures.

The case discusses the restructuring plan of a pharmaceutical company which is facing problems like unimpressive growth in R&D, blockbuster product recall, loss on patent rights on its top selling drugs.

Pedagogical Objectives:

• To discuss the restructuring plan of a pharmaceutical company which is facing problems like unimpressive growth in R&D, blockbuster product recall, loss on patent rights on its top selling drugs
• To understand the structure of Pharmaceutical industry.

Keywords : Merck; Pharmaceutical Industry; North America; Restructuring; cost-cutting; Vioxx; Restructuring / Turnaround Strategies Case Study; Zocor; Gardasil; Rotateq; Zostavax; Patent; Rofecoxib; FDA; Research and Development; Downsizing; Drug Development; Pre-clinical test; Product Recall; Prescribed Drug; Generic Drug