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Derek Lowe The 2002 Model

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Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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November 8, 2004

Merck's State of Mind

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Posted by Derek

It may not be known outside the industry, but what Merck is going through right now must be particularly painful just because it's happening to Merck. Now, as I mentioned the other day, I have a lot of respect for the company and for many of the people who work there. (See "Let's See What the Sharks Think of These Steaks!" on Nov. 2nd, below.) But no one in the business would deny that Merck has always considered itself a bit elevated from the common herd. Sometimes that's been justified, sometimes not. But with that attitude in place, which it has been for decades, the company's troubles must be even harder to confront.

Other companies have had painful near-death experiences, of course, and their corporate cultures reflect it. At a place that's been through a major episode, you can pick up defiant we-survived-that-and-we'll-survive-this-too music, and philosophical all-things-must-pass stuff, too. But the one thing that everyone at such a company knows is that all things can come to pass, that terrible problems can come flapping and screeching down with no warning. They know that they're not immune.

I'm not completely sure that everyone at Merck had internalized that. To be sure, the last couple of years have been pretty rocky over there, with several advanced clinical candidates disappearing amid bonfires of money. But those are jsut the normal breaks of the drug-discovery game, unfortunately, and they probably weren't enough to shake Merckian confidence. After all, if a compound runs into esoteric trouble late in the clinic, how were you to know? That's what research is for!

But Vioxx, now that's a different story. "How were we supposed to know?" is not a rhetorical question any more. Highly motivated lawyers are lining up to try to prove just how Merck was supposed to know. They'll be hammering away at themes of negligence and incompetence, of conspiracy and culpability. I don't know if the effort will succeed, (although those internal memos that have surfaced makes rethink the odds), but the pummeling that Merck is going to get will surely have an effect.

In the end, Merck is likely going to have to emit ten to twenty billion dollars. But that's not the effect that I was talking about. That's just money - well, just an awful lot of money - and they could conceivably earn it back, given the time and luck for a brutal retrenchment. (We'll leave aside for now the question of whether there's enough of either available.) But Merck's good name is in for a trampling, as is Merck's confidence. There are probably plenty of people there who don't realize yet just how thoroughly both of those are being lost.

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