Reply #23: Merck's Uncertain Future [View All]

[ozymandius]

It's still too early to give a prognosis for Merck, but it is still having some worrisome symptoms a year and a half after it pulled the pain pill Vioxx.

A split verdict in New Jersey state court yesterday gives only a few hazy clues to the future of the he Whitehouse Station, N.J., drug giant. One plaintiff was given a settlement of $4.5 million, with punitive damages yet to be decided. Merck (nyse: MRK - news - people ) won in the second case because Vioxx was deemed not to have been a deciding factor in the other plaintiff's heart attack.

Merck faces more than 9,000 lawsuits related to the withdrawn painkiller, and the number is constantly rising. Vioxx, once one of Merck's biggest drugs with peak sales of $2.5 billion, was pulled from the market in 2004 after a Merck-funded study linked it with an increased risk of heart attack and stroke; the link became statistically significant after a year-and-a-half.

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Merck itself has acknowledged that long-term exposure to Vioxx can pose a cardiovascular risk. The big question that investors are trying to divine from the trial is how many of the thousands of cases it faces Merck will eventually lose or settle. Drug giants like Pfizer (nyse: PFE - news - people ) and Eli Lilly (nyse: LLY - news - people ) have set aside hundreds of millions to cover drug liability claims with little long-term damage. The worry is that there will be a mega-award.

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