Trenton, N.J. • Merck & Co.’s CEO said setbacks in drug development and other problems made his just-ended first year a tough debut.
But Kenneth Frazier expects better news in 2012 for the maker of diabetes blockbuster Januvia and Singulair for asthma and allergies.
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Speaking to analysts last week at the Goldman Sachs’ Healthcare CEO’s Unscripted conference in New York, he said some important new drugs are on the horizon and Merck is pursuing deals for others in late testing. Those are more likely to pan out and make it to the market.
That shift might hint at trouble, according to Erik Gordon, an analyst and professor at University of Michigan’s Ross School of Business.
"Looking for late-stage deals is not a sign of confidence in the internal late-stage pipeline," he noted. "Nothing is more expensive than a late-stage deal."
Until now, the Whitehouse Station, N.J., company has mainly pursued acquisitions of experimental drugs that are early in testing, when the deals are cheaper and there is less chance of getting into a bidding war.
Merck unexpectedly ended two drug studies last year.
Meanwhile, Merck’s 2011 return to shareholders — quarterly dividend payments plus stock-price appreciation — was the lowest among its peers.
Merck resolved arbitration with Johnson & Johnson over rights to two important drugs for immune disorders, retaining most of the revenue its Schering-Plough unit had been receiving for helping to market Remicade and Simponi. Merck also made two key deals to increase its manufacturing and product sales in Asia.
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