BUSINESS ANALYSIS

Merck & Co. Business Analysis

Introduction

Fund managers are responsible for implementing a consistent investment strategy that reflects the goals and objectives of the fund. Normally, fund managers monitor market and economic trends and analyze securities in order to make informed investment decisions. Mutual funds are managed and supervised by investment professionals.  The mutual fund manager has to decide when to buy or sell securities.  This eliminates the investor of the difficult task of trying to time the market.  Furthermore, mutual funds can eliminate the cost an investor would incur when proper due diligence is given to researching securities.  This cost of managing numerous securities is dispersed among all the investors according to the amount of shares they own with a fraction of each dollar invested used to cover the expenses of the fund.  What does this mean?  Fund managers have more money to research more securities more in depth than the average investor.  In this essay we conduct SWOT analysis of Merck and Co. from mutual fund manager's perspective and make investment decision on this analysis.

Merck & Co. SWOT Analysis

Merck & Co., is one of the largest pharmaceutical companies in the world. The merger with Schering-Plough has enhanced the company's stance among the Big Pharma peer set. The prolific R&D output for the last four years has enhanced the company's top-line growth. However, failures in drug development processes could affect its revenue growth. (www.bloomberg.com)

Strengths

Impressive record of new product launches, delivering seven new products to the market since 2006

Merck has successfully launched seven new therapeutics since the start of 2006, namely RotaTeq (2006), Zostavax (2006), Gardasil (2006), Januvia (2006), Zolinza (2006), Janumet (2007) and Isentress (2007). In addition, the company has launched a number of new formulations for mature brands such as Fosamax Plus D (2005) and Emend IV (2008). This successful period in Merck's NDA efforts has proved critical in helping the company overcome the downturn associated with the withdrawal of Vioxx and also the patent expiry of Zocor. Merck & Co. also continues to demonstrate an ability to deliver first-to-market launches, thereby gaining a competitive advantage over other would-be-market entrants. This trait is exemplified by the Gardasil, Januvia/Janumet and Isentress franchises in particular. Looking ahead, the prospect of generic erosion facing Merck's three highest selling prescription drug brands—Fosamax, Cozaar/Hyzaar and Singular—means that successful drug development will remain crucial in securing Merck's long-term commercial success. (Pozen and Theresa, 2011)

Proven resilience in the face of sizable setbacks

As recently as 1999, Merck & Co. was the largest pharmaceutical player in the world. Having conceded ground to a number of its close rivals which gained considerable scale via large M&A activity (Pfizer, GlaxoSmithKline and Sanofi-Aventis), Merck & Co. faced a number of commercial setbacks which further damaged its revenue growth, primarily the market withdrawal of Vioxx in 2004 but also the subsequent impact that this had on the company's follow-up product Arcoxia. It must be recognized, however, that Merck & Co. was able to mount a rapid recovery from this setback, securing an ...