Merck Withdraws Arthritis Drug Vioxx

From: MrPepper11 (MrPepper11_at_go.com)
Date: 09/30/04 

Date: 30 Sep 2004 08:01:27 -0700

Lesson: The newer the drug - and the more TV commercials - the less
data they have.

Associated Press 9/30/04
Merck Withdraws Arthritis Drug Vioxx

TRENTON, N.J. - Pharmaceutical giant Merck & Co. is pulling its
blockbuster arthritis drug Vioxx from the market worldwide because new
data from a clinical trial found an increased risk of heart attack and
stroke. Its stock price plunged more than 25 percent as the company
said the recall will hurt its earnings.

Merck said Thursday that data from the trial showed the increased risk
of heart attack and other cardiovascular complications began 18 months
after patients started taking Vioxx.

The data comes from a three-year study aimed at showing that Vioxx at
a 25 milligram dose prevents recurrence of polyps in the colon and
rectum. Such polyps can turn cancerous. The trial was stopped after
Merck discovered the higher heart risk compared to patients taking
dummy pills.

"It's a disaster for Merck, coming at the worst time," said
independent health care analyst Hemant Shah of HKS & Co. in Warren,
N.J.

Vioxx is one of Merck's most important drugs, with $2.5 billion in
sales in 2003. But sales dipped 18 percent in the second quarter of
this year to $653 million, partly due to increasing concerns about the
drug's safety.

"We're taking this action because we believe it best serves the
interest of patients," Ray V. Gilmartin, Merck's chairman, president
and chief executive, said in a prepared statement.

"Although we believe it would have been possible to continue to market
Vioxx with labeling that would incorporate these new data, given the
availability of alternative therapies and the questions raised by the
data, we concluded that a voluntary withdrawal is the responsible
course to take," he said.

Merck, the world's third-biggest drug maker, announced the news before
the stock market opened. In early trading on the New York Stock
Exchange, Merck shares plunged $11.40, or more than 25 percent, to
$33.67.

The analyst Shah said the withdrawal of Vioxx comes "at a time when
they really need to get ready for expiration" of its patent for Zocor,
a high cholesterol drug which is Merck's top-selling drug. Zocor loses
patent protection early in 2006 and sales are expected to plunge when
generic competition begins. In an effort to replace those revenues,
Merck recently launched a drug with partner Schering-Plough Corp.,
Vytorin, that combines Zocor and Schering-Plough's Zetia to attack
cholesterol levels in two complementary ways.

"This makes it almost inevitable for the company to find a merger
partner for them to continue to grow," Shah said.

Merck's announcement stands to benefit rival Pfizer Inc., the world's
biggest drug maker. The two companies have been battling for market
share, with Pfizer's Celebrex dominating the market with about $5
billion in U.S. sales alone last year. Pfizer shares were up 68 cents,
or more than 2 percent, to $30.86 in early trading on the NYSE.

"I think Celebrex sales are going to significantly increase," Shah
said.

Vioxx, launched in the United States in 1999, and a successor drug
called Arcoxia, approved in some other countries and awaiting Food and
Drug Administration approval here, are part of a class of
anti-inflammatory drugs heavily touted by the pharmaceutical industry
as being more effective and having less side effects, particularly on
the gastrointestinal system, than older drugs.

Pfizer's Celebrex and its successor drug, Bextra, which already is on
the market in the United States, also are in that class, called cox-2
inhibitors.

"This has never been the massive innovation which was promoted to be,"
Shah said of the drug class. "In terms of pain relief, these drugs are
no better than ibuprofen and they cost 10, 15 times more."

He said it is possible the news, along with some prior reports about
heart risk and gastrointestinal bleeding linked to the drugs, could
push some patients to go back to older, cheaper drugs.

Shah also said physicians prefer ibuprofen more than Celebrex and
Vioxx combined.

The company said the Vioxx recall will slash about 50 cents to 60
cents a share from its earnings for the rest of this year. That
includes foregone sales, writeoffs of inventory held by Merck,
customer returns of product previously sold and other costs of the
pullback. Merck expects foregone fourth quarter sales of Vioxx of $700
million to $750 million alone.

Merck, which is based in Whitehouse Station, N.J., had previously been
expecting 2004 earnings per share of $3.11 to $3.17.

Merck is scheduled to release financial results for the third quarter,
which ends today, on Oct. 21.

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On the Net: http://www.merck.com

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