Ten years of litigation could cost pharmaceutical company $50bn

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The Independent US

Yet even before the catastrophic Vioxx scandal broke last year, the company's crown had begun to slip. After a series of mega-mergers in the global pharmaceuticals sector, it had fallen back to number three in the industry, behind US rival Pfizer and the UK's GlaxoSmithKline.

The company was heavily criticised for its refusal to countenance major acquisitions. And analysts also said Merck was being damaged by a reluctance to sign partnerships with the small biotechnology firms developing many of the world's most promising new medicines.

The man blamed for these strategies, Richard Gilmartin, resigned as chairman and chief executive of Merck in May. But critics of the company were disappointed when Merck announced it would appoint an insider, Richard Clark, president of its manufacturing division, as Mr Gilmartin's successor.

But last October, quiet concerns about the company's progress were transformed into a full-blown panic. The day Merck said it would stop selling the arthritis drug, its value fell by a quarter, with $26bn (£14.5bn) knocked off its shares.

Although Vioxx accounted for just 10 per cent of Merck's sales, shareholders realised the company faced huge legal bills. In January, Merck said it had set aside $675m (£375m) simply to pay the lawyers it would need to fight claims from at least 1,400 patient groups. And next year, Merck's patent on its best-seller, the anti-cholesterol drug Zocor, expires. Rivals will then be able to produce their versions, hitting Merck's market share.

Analysts believe Merck faces 10 years of litigation, and claims of up to $50bn. The company said that it would appeal against the Texas verdict and fight every case brought against it.