Merck and R&D setbacks

Merck & Co needs to undertake a "major restructuring" in the wake of lacklustre sales and recent R&D setbacks, according to analysts at Leerink Swann.

 

The note comes shortly after Merck cuts its earnings forecasts for 2013 in the face of continued pressure from patent expiries on big-selling brands such as asthma treatment Singulair (montelukast), as well as greater competition to growth products such as diabetes treatment Januvia (sitagliptin).

 

Chief executive Kenneth Frazier insisted last month that Merck was continuing to manage costs effectively, but the analysts would like to see $1 billion or more carved off operating expenses.

Merck has traditionally been a big spender on R&D, but has suffered a series of disappointments in its late-stage pipeline of late, including delays to osteoporosis candidate odanacatib and neuromuscular blocker Bridion (sugammadex) and a narrower-than-hoped FDA approval for insomnia drug suvorexant.