Merck share value slips over Gardasil setback.

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Merck Reshuffles After Gardasil Setback

Matthew Herper, 01.11.09, 06:00 AM EST

http://www.forbes.com/business/2009/01/10/merck-gardasil-setback-biz-healthcare-cx_mh_0111gardasil.html

The senior vice president in charge of the top-selling vaccine will move to heart drugs.

 

Merck reassigned the executive in charge of developing and selling Gardasil, its $1.5 billion vaccine against cervical cancer, just as the Food and Drug Administration rejected an application to broaden the vaccine's use.

Executives at the drug maker seem to be betting that the switch-up can help return Gardasil to growth. No new cardiovascular drugs are due to be launched for at least the next year.

 

The move also shows how Merck (nyse: MRK - news - people ) Chief Executive Richard Clark hopes to fix the problems he described at a recent Goldman Sachs (nyse: GS - news - people ) conference as making 2008 a "disappointing" and "in many ways, an unacceptable year." Merck shares, which closed at $28.73 Friday, are down more than 50% in the past 12 months. The changes were announced in a memo distributed to Merck executives Friday and obtained by Forbes.

 

The memo, from Merck executives Margaret McGlynn, head of vaccines, and Adam Schechter, president of global pharmaceuticals, says the changes "will enable us to continue the progress we have made" and "to drive growth in these two important franchises."

 

Gardasil has been one of Merck's big success stories, but fell short of expectations in 2008 as reaching women between the ages of 18 and 26 proved more difficult than expected. Merck has told Wall Street not to expect a big growth contribution from Gardasil this year, either.

 

The FDA decision announced Friday will prevent Merck from marketing Gardasil to women between the ages of 27 and 45, making it even tougher to expand usage of the vaccine.

Bev Lybrand, the senior vice president who has led Merck's Gardasil efforts since 2004, will now run the company's cardiovascular business, according to the memo. Heart medicines were once a major area for Merck, but blood pressure drug Cozaar could lose patent protection in two years, and Cordaptive, a cholesterol medicine, has been delayed five years until 2013. The memo says Lybrand's experiences launching new products like Gardasil "will be important assets as we look to return our cardiovascular and atherosclerosis franchise to leadership."

 

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Lybrand will be replaced by Soren Bo Christiansen, another senior vice president who, until now, ran the division that oversaw the osteoporosis drug Fosamax and the allergy pill Singulair, which has also seen sales slip due to concerns about side effects. Christiansen headed Merck's operations in Denmark for seven years and previously oversaw Merck's cholesterol joint venture with Schering-Plough (nyse: SGP - news - people ) in Europe, the Middle East, and Asia.

 

 

 

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Christiansen will also have oversight of other adult vaccines, including Zostavax for shingles. There is plenty of demand for Zostavax, but it is on backorder because of manufacturing problems, which Merck has said it expects to have solved very soon.

Last year, Christiansen was in the news when Congressional investigators revealed he had clashed with Schering-Plough executive Enrico Veltri over a key trial of the cholesterol drug Zetia (known as Ezetrol in Europe). Results of the study, called ENHANCE, had been delayed by more than a year.

In an e-mail dated Sept. 14, 2007, Christiansen, complained about the way Schering was treating John Kastelein of University Medical Center in Amsterdam, who was running the ENHANCE program. Christiansen wrote that Schering had failed to set up a promised meeting aimed at ending the delay.

The e-mail was forwarded to Enrico Veltri, the Schering-Plough executive helping run the trial. Veltri wrote to a colleague, "Soren is a prick. How's that for staying calm. Tell him to f--- off."

Forbes first reported on the ENHANCE delay in November 2007. Results released in January 2008 showed no added benefit in reducing artery thickness, a measure of cardiovascular health, when Zetia was added to the generic cholesterol drug Zocor. U.S. prescriptions of Zetia and Vytorin, a Zetia-Zocor combo pill, have dropped more than 40%. Jan. 8, 2008, the FDA issued its own review of ENHANCE, generally supporting the continued use of Zetia and Vytorin.

Friday's memo says the job changes for Lybrand and Christiansen will be announced more widely within Merck on Monday. Christiansen's successor will be named later. The changes will take effect Jan. 20

 

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