Merck Positioned to Drive Growth Through Innovative Portfolio, Pipeline and Strategy

Wednesday, 12 May 2010

With a diverse product portfolio, robust pipeline and expanded worldwide presence, the company is well positioned to continue to grow and achieve its goal of becoming a global leader in health care, Merck Chairman and Chief Executive Officer Richard T. Clark told investors and analysts at the briefing.

"Our recent performance demonstrates that Merck is able to maintain business momentum and drive growth even as we continue to integrate our operations and navigate the ever-changing health care environment," said Mr. Clark. "Our broader product portfolio and pipeline, greater presence in global markets and customer-centered commercial model should enable us to achieve sustainable performance and growth in both developed and emerging markets."

Emerging Market Strategy Will Drive Growth and Fulfill Merck's Mission
Elaborating on the company's strategy to drive growth in its emerging markets business, President Kenneth C. Frazier noted, "Merck's long-term investment in science and innovation has yielded a leading portfolio of valuable medicines and vaccines. Given our expanded global reach, Merck is now better positioned to address the serious burden of disease in emerging markets and provide expanded access to our products. We expect that these markets will be a key contributor to our long-term performance."

Today, for example, Merck is the second leading pharmaceutical company in Latin America, where the company markets six of the 20 most widely sold medicines in the region. Merck also is redeploying its resources and leveraging its financial strength to grow further in emerging markets. Since 2007, Merck has increased the number of sales representatives in China by approximately 90 percent to about 3,000 today, which is one of the largest pharmaceutical sales forces in the country.

Merck's current portfolio - with newer brands like JANUVIA (sitagliptan) and NUVARING (etonogestrel/ethinyl estradiol vaginal ring) and mature brands like ZOCOR (simvastatin) and CLARITIN (loratadine) - is ideally suited to help address major challenges in emerging markets, such as cardiovascular disease, diabetes and women's health. JANUVIA and JANUMET (sitagliptin/metformin HCI) are already generating more than $200 million in sales from emerging markets and are the second largest brands in Korea and India among oral diabetes medicines.

Merck anticipates that its sales from emerging markets will grow to represent more than 25 percent of the company's total pharmaceutical and vaccine sales by 2013 based on the implementation of the company's emerging market strategy. To accomplish this, the company intends to continue to successfully launch new products, optimize Merck's robust in-line portfolio of medicines and vaccines and consumer care products, and fully leverage the market for branded generics with the company's portfolio of mature brands as well as targeted business development. Merck plans to expand its local presence by conducting and investing in new research and actively seeking public-private partnerships as well as local low-cost manufacturing, licensing, co-marketing networks and projects to leverage its global capabilities.

Broad Portfolio of Market-Leading Medicines and Vaccines Grows
"Merck's portfolio now includes nearly 50 marketed medicines and vaccines in targeted therapeutic areas, with many brands, such as SINGULAIR (montelukast) and JANUVIA, that are established leaders in markets around the world," said Mr. Frazier. For example:

• Merck's respiratory franchise includes five growing global brands, and the company expects to launch two new products in 2010 alone – mometasone/formoterol combination for asthma in the United States and Europe, and DAXAS (roflumilast) in Europe for chronic obstructive pulmonary disease.
• In cardiovascular disease, Merck's expanded portfolio and late-stage pipeline - some of which grew out of recent external licensing agreements - addresses medical needs in dyslipidemia, thrombosis, cardiac arrhythmia, hypertension and cardiac reperfusion that together represent a potential global market of approximately $80 billion.
• JANUVIA and JANUMET continue to have a significant lead in the dipeptidyl peptidase-4 (DPP-4) market in markets around the world. The two products are on track to continue driving growth in 2010.

Commercial Model Drives Performance, Rapid Integration, Greater Efficiency
Mr. Frazier emphasized that the timely and efficient integration of its commercial operations is critical to enabling the company to leverage its broader portfolio and pursue new growth opportunities while reducing costs. To date, Merck has integrated the majority of the company's top 20 major markets, from which Merck generates the vast majority of its revenue.

Merck implemented its new commercial model based on the principle that working more closely with our customers and creating trust and value will, in turn, translate to improved business performance. Mr. Frazier shared data regarding the effectiveness of Merck's new commercial model, which is now in place in more than 30 markets:

• In the United States through the end of 2009 and in the most recent data following integration, Merck scored significantly higher on trust and value than any of the other 12 major pharmaceutical companies evaluated.
• In the United Kingdom, SINGULAIR grew by 14 percent during the implementation of the new model while the company decreased promotional support for SINGULAIR by 40 percent.
• In Germany, JANVUIA continued its growth and achieved a leadership position in the market while MSD Germany implemented the new model.

Positioned to Drive Continued Growth and Innovation
"Looking ahead, Merck is well positioned to drive continued growth and customer innovation through the company's broad product portfolio and promising near-term pipeline of medicines and vaccines," Mr. Frazier said.

Merck reported revenue growth in eight of its top 10 product families and in nine of the 10 top markets in the first full quarter following the merger.

"Our global growth will be driven from key medicines such as JANUVIA/JANUMET, REMICADE (infliximab), SIMPONI (golimumab), ISENTRESS (raltegravir) and ZETIA (ezetimibe)/VYTORIN (ezetimibe/simvastatin) as well as flawless execution of near-term potential launches following regulatory approvals for boceprevir, vorapaxar, TREDAPTIVE (ER niacin/laropiprant) and odanacatib. These products have the potential to change the current treatment paradigms and help millions more people live longer, healthier and more productive lives," said Mr. Frazier.

Additional information about Merck's R&D and Business Briefing can be found on www.merck.com.

About Merck
Today's Merck is working to help the world be well. Through our medicines, vaccines, biologic therapies, and consumer and animal products, we work with customers and operate in more than 140 countries to deliver innovative health solutions. We also demonstrate our commitment to increasing access to health care through far-reaching programs that donate and deliver our products to the people who need them. Merck. Be Well. For more information, visit www.merck.com.