Thursday, September 30, 2004

game over for vioxx

merck volunatrily recalled its blockbuster $2.5B arthritis drug vioxx after longstanding concerns about increased risk of heart disease and stroke were confirmed in a study ... merck (Dow: MRK) shares went into a tailspin on wall street, sending the dow jones index down with it.

this puts pfizer's celebrex at the top of the market. i suppose this is good news for folks over at pfizer .... !! the stock (PFE) would probably do well in the short term because of this announcement.

15 comments:

SBR said...

MRK went down by 25%. Surprisingly, no change in PFE and NOVN.

Aditya said...

perhaps because of this:

While Celebrex and others have not been shown to cause cardiovascular damage, some observers say the withdrawal of Vioxx casts a cloud over the entire class. The U.S. Food and Drug Administration (news - web sites) said it would watch other COX-2 inhibitors closely.

"This has implications for all members of this class," said Dr. Garret FitzGerald, chairman of the Department of Pharmacology at the University of Pennsylvania.

SBR said...

I wonder how would those people feel who, after the dotcom bust and the slowing hi-tech industry, invested in pharmaceutical stocks.

Anonymous said...

Instead of worrying about investors, I am more concerned about the people affected by this, and those who are likely to be affected due to trigger-happy lawyers why might jump at this opportunity to dig out a pot of gold from MERCK. I don't know if Merck tried to obfuscate any info they had about Vioxx... but merely waiting till studies confirm the reports of the stated risks of the drug should not amount to long drawn lawsuits.

The good part of the story is that with any lesser vigilance, Merck would have continued to sell Vioxx. The bad part of the story is that it might be now open to lawsuits. For the sake of the people already paying an order of magnitude higher for drugs, I hope this issue settles quickly. The shares going into a tailspin is just an over-reaction... no wonder the Indian PM doesn't think too much about the oscillations of the stock market.

- Niket

Aditya said...

niket - the selling of merck shares is not in response to some speculative news. the company just declared that it was foregoing a drug that yielded about 2.5B$ - almost 10 percent of merck revenue - and promptly lowered expectations on earnings. this panic selling is not from individual investors like you and me, but by large institutional investors (banks, MFs etc.) for whom a loss of revenue of a few cents per share amounts to a tremendous amount of money ... and once th e selling starts, no point in blaming the institutional investors for trying to salvage what they can, and cut the losses.

merck is still a company based on fundamental solid science ... its not going to buckle under because of this ... but its stilla very heavy price to pay ...

the panic selling at the thought of a leftist govt in india was way beyond this though ...

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Vioxx health - Merck Earns Fall After Vioxx Withdrawal NEW YORK (Reuters) -

Merck Earns Fall After Vioxx Withdrawal
NEW YORK (Reuters) - Merck & Co. MRK.N on Thursday said first-quarter profit fell 15 percent following the withdrawal of its arthritis drug Vioxx last year. Link to original article
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