The Recall of Vioxx

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Case Details:

Case Code : BECG046
Case Length : 13 Pages
Period : 1998-2004
Pub. Date : 2005
Teaching Note :Not Available
Organization : Vioxx
Industry : Pharma
Countries : US

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

Merck's business operations include the discovery, development, manufacturing and marketing of a broad range of medical products. The company's origin dates back to 1688 when Friedrich Jacob Merck purchased a small pharmacy shop in the city of Damstadt in Germany.

Two hundred years later, in 1887, Merck started its operations in the US when chemist Theodore Weicker came from Germany to establish a branch. In 1891, George Merck (great-grandson of Jacob Merck) formed a partnership with Weicker. Initially, the company imported and sold drugs and chemicals from Germany. In 1903, Merck opened a plant at Rahway, New Jersey to manufacture alkaloids. Over the decades, Merck has emerged as the leading drug company in the US. Headquartered in Whitehouse Station, New Jersey, Merck's researchers had enjoyed phenomenal success over the years discovering new medicines to treat hypertension, osteoporosis, asthma, HIV and baldness.

In 1994, Raymond V Gilmartin (Gilmartin) became the CEO of Merck. The company launched 13 new drugs between 1995 and 2001. In 1995, Merck launched Fosamax for treatment of osteoporosis.

In its first year, the drug generated $280 mn in revenues and by 2003 it was a $2.7 bn brand. In 1996, Merck launched Crixivan for HIV. In the next year, Merck developed Singulair for asthma and Propecia for baldness. The launch of these successful drugs boosted Merck's stock price which appreciated 188% between 1995 and mid-1999. In 1996, FDA threatened to revoke its approval for osteoporosis drug Fosamax since it was causing worse-than-expected gastrointestinal side effects. Later, the FDA agreed to continue it in the market, requiring Merck to include a warning label that instructed patients to sit upright for an hour after taking the medicine. In November 1998, Merck submitted an application to the FDA seeking approval for Vioxx.

The application included data on approximately 5,400 osteoarthritis patients who participated in eight double-blind, placebo-controlled and active-comparator studies.

Merck maintained that the rates of cardiovascular risk were 'similar' among patients taking Vioxx and those using other pain relievers...

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