Recently, Merck (MRK) and Schering-Plough (SGP) received approval from the US Federal Trade Commission (FTC), the Swiss Competition Commission and the Canadian Competition Bureau for their proposed merger. However, the transaction has yet to receive approval from other regulators, including China and Mexico. The deal was approved by the European Union antitrust regulators last week. Shareholders of both the companies have already approved the deal in August. Merck expects to close the proposed merger by year end. The FTC approval has come with the condition that both companies will sell some assets. As a result, Schering-Plough has agreed to sell its rolapitant drug, meant to be used for the treatment for nausea and vomiting in chemotherapy patients to Opko Health Inc. In addition, Merck agreed to sell its interest in Merial Ltd, an animal health joint venture, to its French partner, Sanofi-Aventis ...

The existing alliance between Merck (MRK) and Belgian biotech company Galapagos over metabolic diseases was recently expanded to develop new therapies for atherosclerosis, or hardening of arteries due to cholesterol build-up.

Following the deal, Galapagos will be eligible to receive potential milestone payments exceeding €400 million (approx $597 million). Additionally, the company will receive royalties on commercialization of the products.

Merck and Galapagos entered into a diabetes and obesity drug alliance in January this year. Galapagos was eligible to receive an upfront payment of €1.5 million (approx $2.23 million) and potential milestone payments totaling €170 million (approx $253 million).

Earlier, in October last year, Merck decided to terminate its late-stage obesity drug taranabant after determining that the drug was effective in high doses, which in turn triggered side effects.

Merck entered into another deal with Galapagos in April 2009, under which Galapagos will be using its Silence Select target discovery platform to

...

With the merger of Merck (MRK) and Schering-Plough (SGP) scheduled to be completed by the fourth quarter this year, Merck is busy with the necessary groundwork. Yesterday, the company announced the new management structure post merger. The current chairman, president and CEO of Merck, Richard T. Clark, will continue to head the combined company. The merged entity will comprise five main divisions -- Global Human Health, Animal Health, Consumer Healthcare, Research and Manufacturing. Global Human Health, the combined company’s largest segment, will be headed by Kenneth Frazier, who is currently heading that division of Merck. This division will include prescription drugs, biologics and vaccines along with an emerging-markets group. Both the Research and Manufacturing segments will be headed by the respective current heads at Merck. The Animal Health and Consumer Health businesses will be headed by executives from Schering-Plough. In the merged entity, about ...

On a stand-alone basis we expect Schering-Plough's (SGP) sales to fall 2% in 2009 due to a significant foreign exchange headwind. Increased competition to prescription Claritin/Clarinex and consumers shifting discretionary spending away from Animal Health and Consumer products will also impact sales growth.We expect EPS to fall 1% in 2009, a more moderate drop than revenues as operating margins benefit from foreign exchange. Gross margins and SG&A and R&D expenses showed a significant benefit from foreign exchange in the first quarter, helping push up EPS 5% on a revenue decline of 6%.While we do not expect the same degree of benefit in the remainder of the year, we believe foreign exchange will help widen operating margins by about 250 basis points in 2009 versus 2008 levels. Operating margins will also benefit from cost-containment from the PTI program.The proposed merger with ...

For Immediate Release

Chicago, IL - June 16, 2009 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Community Health Systems Inc. (CYH), Universal Health Services Inc. (UHS), Merck & Co., Inc. (MRK), Schering-Plough (SGP) and Johnson & Johnson (JNJ).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Monday's Analyst Blog:

Cuts in Healthcare Spending

The actual breakdown of the $313 billion proposed cuts includes: $110 billion in productivity adjustments to Medicare payment updates; $106 billion in reduced hospital subsidies for treating the uninsured as coverage increases; $75 billion from Medicare

...

Based on our earnings model, we expect Merck & Co., Inc. (MRK) to post flat EPS growth from 2008 - 2013 due to the combination of patent expirations of key drugs, recent pipeline failures and softening sales of Gardasil and Singulair.The proposed merger with Schering-Plough (SGP) is clearly an attempt to address Merck's slowing sales and EPS growth. Schering-Plough has relatively little exposure to patent cliffs through 2013 and possesses one of the strongest late-stage pipelines in big-pharma.The deal will add immediate synergies relative to the Vytorin/Zetia joint venture and should offer little overlap in currently marketed products and pipeline compounds. Given the minimal product overlap and relative ease in combining the cholesterol business, we would expect the combination to provide significant synergistic opportunities with combining sales, marketing, research and other back-office functions.The merger is expected to be slightly accretive to ...

Highlights include Merck & Co. (MRK), Schering-Plough Corp. (SGP) and Johnson & Johnson (JNJ).Based on our earnings model, Merck & Co's (MRK) 5-year (2008 - 2013) EPS CAGR [compound annual growth rate] on a stand-alone basis is 2% -- well below the average 6% we see the entire pharmaceutical industry growing over the same period -- due to the combination of patent expirations of key drugs, recent pipeline failures and softening sales of Gardasil and Singulair.The proposed merger with Schering-Plough (SGP) is clearly an attempt to address Merck's slowing sales and EPS growth. Schering has relatively little exposure to patent cliffs through 2013 and possesses one of the strongest late-stage pipelines in big-pharma.The deal will add immediate synergies relative to the Vytorin/Zetia joint venture and should offer little overlap in currently marketed products and pipeline compounds. Given the ...

Highlights include Schering-Plough Corp. (SGP), Merck & Co. (MRK) and Johnson & Johnson (JNJ).Schering-Plough/Merck & Co. Merger Makes SenseOn a stand-alone basis, we expect Schering-Plough's (SGP) sales to increase only 2% in 2009 as increased competition to prescription Claritin/Clarinex comes online and consumers shift discretionary spending away from Animal Health and Consumer products. We expect EPS to fall 5.2% in 2009 to $1.68 as gross margins contract from 2008 levels as a result of a reduced benefit from foreign exchange. SG&A expenses should remain in check as additional benefits are reaped from the PTI program.The proposed merger with Merck & Co. (MRK) is currently expected to close in the fourth quarter. However, we believe Johnson & Johnson (JNJ) will raise some form of challenge relative to rights to Remicade and golimumab, which could potentially delay consummation of ...