Tags: US | Merck | Shareholders

Merck Shareholders Ask About Dividend, Stock Price

Tuesday, 25 May 2010 04:17 PM

Shareholders of drugmaker Merck & Co. peppered its CEO at their annual meeting Tuesday with questions about what the company will do to boost its lagging stock price, raise dividends and improve performance.

The questions came after Chief Executive Richard T. Clark's upbeat presentation about progress in integrating Schering-Plough Corp.

Merck bought its New Jersey neighbor last fall, vaulting from eighth to second in the global pharmaceutical industry by revenue — now about $40 billion a year — behind No. 1 Pfizer Inc.

The $41 billion deal boosted Merck's pipeline of experimental drugs and gave it new businesses in biologic medicines and consumer health products, among other benefits.

Clark said there are no immediate plans to raise the dividend but that Merck's overall strategy should push up its share price.

"The whole pharmaceutical sector right now is lower than it was in the past, and we're about average," Clark responded to an unidentified man at the meeting, held at Raritan Valley Community College near Merck's Whitehouse Station, N.J., headquarters.

Merck shares sold for more than $90 in 2001 and for $60 a few years ago.

They were down 5 cents at $31.81 in late afternoon trading, as the broader markets recovered from a steep drop earlier.

Clark said the share price should be helped by Merck's efforts to expand operations in emerging markets such as China and further diversify its product lines. In addition, Merck could seek approval from regulators for 20 new medicines or drug combinations "in the near future," Clark said.

"I believe we are uniquely positioned to excel in the changing health care market," he said.

Clark repeatedly called the company "shareholder friendly," saying that if possible Merck would buy back shares, raise the dividend or take other steps. But when pressed by another shareholder, Clark conceded, "we do not have plans in the near future to increase the dividend."

Merck research head Peter Kim said the research pipeline from combining the best experimental drugs from Merck and Schering-Plough focuses on medicines for unmet needs, such as hepatitis C, insomnia and cardiovascular disease. Four products are under review by regulators and several biologic drugs are in human testing.

"We are committed to becoming an industry leader in biologics," Kim said, referring to drugs produced by living cells rather than synthesized by mixing chemicals.

When one shareholder later asked how Merck would compete with companies with a head start on producing generic versions of biologic drugs in Europe, Clark said that will depend on the technology involved in each drug, plus how far ahead competitors are. He said the company also will produce novel biologic drugs that will be important for patients.

Another man asked how Merck's bottom line will be affected by an April Supreme Court ruling that investors who lost millions can sue Merck over whether it provided enough information about the cardiovascular risks of blockbuster painkiller Vioxx before it was pulled from the market in 2004.

Clark would only say that executives are "confident in our position (and) will continue to fight these cases."

He declined to answer when a shareholder asked what financial impact there would be if Merck loses arbitration over rights to the biologic drug Remicade, a treatment for rheumatoid arthritis and other immune disorders. Schering-Plough got more than $2 billion a year under its contract to share sales with Johnson & Johnson, which claims Schering-Plough is no longer entitled to that due to its acquisition.

A hearing is scheduled for September.

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Shareholders of drugmaker Merck Co. peppered its CEO at their annual meeting Tuesday with questions about what the company will do to boost its lagging stock price, raise dividends and improve performance.The questions came after Chief Executive Richard T. Clark's upbeat...
Tuesday, 25 May 2010 04:17 PM
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