-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SGF6e6ZV83+bpqu9xljxixkbJXEkd0hEUs2Yv8++zwlWLWxULKwzQj2iXlOPF8t8 EDnQCfbJI2ji0kgixQX29g== 0000950123-02-011685.txt : 20021210 0000950123-02-011685.hdr.sgml : 20021210 20021210172446 ACCESSION NUMBER: 0000950123-02-011685 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20021210 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20021210 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERCK & CO INC CENTRAL INDEX KEY: 0000064978 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 221109110 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03305 FILM NUMBER: 02853968 BUSINESS ADDRESS: STREET 1: ONE MERCK DR STREET 2: P O BOX 100 CITY: WHITEHOUSE STATION STATE: NJ ZIP: 08889-0100 BUSINESS PHONE: 9084234044 MAIL ADDRESS: STREET 1: ONE MERCK DR STREET 2: PO BOX 100 WS3AB-05 CITY: WHITEHOUSE STATION STATE: NJ ZIP: 08889-0100 8-K 1 y66610e8vk.txt MERCK & CO., INC. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) December 10, 2002 MERCK & CO., Inc. --------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) New Jersey ------------------------------------------------------------ (State or Other Jurisdiction of Incorporation) 1-3305 22-1109110 ------------------------ ----------------------------------- (Commission File Number) (I.R.S. Employer Identification No.) One Merck Drive, PO Box 100, Whitehouse Station, NJ 08889-0100 ------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (908) 423-1000 --------------- Item 7. Financial Statements and Exhibits (c) Exhibits Exhibit 99(a) Opening remarks given at the 2002 Annual Filed with Business Briefing, by Raymond V. Gilmartin, this document Chairman, President and Chief Executive Officer of the Registrant Exhibit 99(b) Closing Remarks given at the 2002 Anuual Filed with Business Briefing by Raymond V. Gilmartin, this document Chairman, President and Chief Executive Officer of the Registrant Exhibit 99(c) Press release issued December 10, 2002 Filed with regarding business briefing to analysts this document
Item 9. Regulation FD Disclosure Incorporated by reference are opening and closing Remarks given at the 2002 Annual Business Briefing by Raymond V. Gilmartin, Chairman, President and Chief Executive Officer of the Registrant, attached as Exhibit 99(a) and Exhibit 99(b), respectively. Also incorporated by reference is a press release issued by the Registrant on December 10, 2002, attached as Exhibit 99(c), concerning the Registrant's business briefing to analysts. This information is not "filed" pursuant to the Securities Exchange Act and is not incorporated by reference into any Securities Act registration statements. Additionally, the submission of this report on Form 8-K is not an admission as to the materiality of any information in this report that is required to be disclosed solely by Regulation FD. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MERCK & CO., Inc. Date: December 10, 2002 By: /s/ Debra A. Bollwage ----------------------------- DEBRA A. BOLLWAGE Assistant Secretary EXHIBIT INDEX
Exhibit Number Description - ------ ----------- 99(a) Opening Remarks given at the 2002 Annual Business Briefing, by Raymond V. Gilmartin, Chairman, President and Chief Executive Officer of the Registrant 99(b) Closing Remarks given at the 2002 Annual Business Briefing, by Raymond V. Gilmartin, Chairman, President and Chief Executive Officer of the Registrant 99(c) Press release issued December 10, 2002 regarding business briefing to analysts
EX-99.A 3 y66610exv99wa.txt OPENING REMARKS GIVEN BY RAYMOND V. GILMARTIN 1 Exhibit 99(a) Remarks by Raymond V. Gilmartin Chairman, President, and Chief Executive Officer Merck & Co., Inc. 2002 Annual Business Briefing December 10, 2002 Thank you, Mark. Thank you all very much for coming out today. Welcome to Merck. I'm going to start the day by talking about the environment in which we discover medicines and bring them to market. The forces that are shaping the future of this industry fall into three major categories: market, scientific, and political and regulatory. First, the market. Drug spend is increasing at a rate of 15 to 20 percent a year. Corporations see this as a major issue, particularly in these tough economic times. They're giving health plans more latitude to use a wide array of tools to bring down the rate of increasing drug spend and to ensure that they are getting value. The industry faces tougher competition for position on formularies. At the state level, states are facing budgetary pressures. They are asking for supplemental rebates as a condition to being on formulary. They also use prior authorization before doctors can prescribe... to favor the drugs on formulary. Internationally, governments around the world are under pressure to control budget deficits. They're putting pressure on the industry through price reductions and tough negotiations on reimbursement. The only way to succeed in this environment - the only way to deal with these issues - is to have novel medicines that are true advances in patient care with proven clinical outcomes...that are priced competitively. Merck is distinguished in its ability to turn cutting-edge science into novel medicines that are true advances in patient care with proven clinical outcomes. In other words breakthroughs: medicines based on new knowledge about the pathways of disease. At Merck, we are turning excellence in our labs into value for our shareholders. ZETIA for example, is first in its class - a brand new cholesterol-lowering drug that comes from our partnership with Schering-Plough. Last month I attended Merck's Northeast Sales Region Business Review - which took place about a week after the launch of ZETIA. 2 In the Northeast, a large number of people are members of high-control managed care plans - which makes it a challenging market. Despite that, physicians are so interested in ZETIA that they might spend 15 to 20 minutes beyond the time they would normally spend with our sales reps. As some doctors express it, they have "hit the wall" with patients who are not getting to goal with statins and see ZETIA as the answer. Managed care plans are receptive and are putting ZETIA on formulary. So when I ask, "Why do you think we're doing so well?", sales managers respond: "We bring clinical benefit." Of course, these are early days for ZETIA. But this anecdotal evidence is somewhat representative of the rest of the country, and it's certainly representative of the experiences we've had with ZOCOR, VIOXX, FOSAMAX, SINGULAIR and COZAAR, which, at this point, represent more than 65 percent of Merck sales. These medicines represent true advances in patient care, combined with proven clinical outcomes. These characteristics: - - lead to greater market potential; - - drive growth; - - strengthen competitive advantage; - - provide wide access to formularies; - - and are very important when we engage in price negotiations with managed care accounts and with countries around the world. Providing clinical benefit is important, but how you bring these products to market is also important. We hold our sales representatives to the highest standards of ethics and integrity. Our approach is based on science and fair balance of risk-to-benefit. And it's successful. For example, ZOCOR, VIOXX, COZAAR, SINGULAIR and FOSAMAX are either Number 1 or 2 in worldwide sales in their class - and this is in therapeutic categories that are among the most competitive in the industry. Based on our current experience, sales and promotion muscle is no longer a source of competitive advantage. The industry is essentially at a stalemate. Every company can match every other company in sales force and promotion. What matters most today is what you bring to the market in terms of value. The question is, do you offer true advances in patient care at a competitive price? Therefore, it's also important to have a cost structure that allows you to price competitively and still protect your profitability. 3 Manufacturing productivity and quality have been a major focus at Merck for a number of years. But we have expanded that focus to strive for productivity throughout the entire organization. We have a number of projects under the banner of Operational Excellence that are designed to improve efficiency and effectiveness in how we do work. For example, our sales force grew by about 1,000 last year, and it grew again this year by more than 500. And we continue to strongly promote key medicines. At the same time we're showing no growth in SG&A. Merck's pharmaceutical business has among the highest profit margins - if not the highest profit margin - in the industry, and we're maintaining it. Again, the market is tough, and it's likely to get tougher, but if you have the scientific capability to discover great medicines - defined as true advances in patient care - you'll do well. Or, as the Northeast Sales Team said, simply: Bring clinical benefit. Clinical benefit begins in Merck labs. We work in areas where there is new knowledge about the pathways of disease - which increases the probability that the medicines we discover will be novel and true advances in patient care. To follow this strategy, we have to stay on the leading edge of science. That brings us to the second category of forces shaping the industry: Science. There's a revolution underway - and it's being driven by an explosion in knowledge in the neurosciences; in diabetes; cancer; obesity; and other disease areas. It's being driven by new knowledge from the human genome project. And it's being driven by advances in drug discovery tools, such as combinatorial chemistry, high through-put screening, and gene expression analysis. This revolution will change how biomedical research is done in a fundamental way. In the words of Peter Kim, it means cracking open a cell and pouring the contents out on a gene chip with probes for 25,000 genes on it... and looking at the pattern of those genes that are turned on and turned off, rather than looking at one gene or one protein at a time. To ensure that we stay on the leading edge, we have three initiatives. First, to continue to attract the best talent. Second, to locate our new research facilities where some of the best science is being done. Third, to expand our outreach to excellent science through external alliances, covering the entire spectrum - from early stage science to early- and late-stage compounds, joint ventures and targeted acquisitions. Last week we announced that Dr. Peter Kim will succeed Ed Scolnick as President of Merck Research Labs. Peter was appropriately described in the press as Ed's hand-picked successor. In Peter's conversations with me, he said he was joining Merck because of our scientific excellence, because of our talented scientists, and because we work on the leading edge. Since he was changing careers from fundamental research at MIT to drug discovery, Peter saw Merck as the only place to do that. 4 Peter Kim is just one example of Ed's commitment to recruiting the nation's best talent. And Peter is continuing in that tradition. Ed's scientific leadership and commitment to patient safety have clearly contributed a great deal to Merck's success. During his tenure, he led the development and introduction of 29 new medicines and vaccines. Twenty of those were considered new chemical entities under FDA guidelines. An extraordinary achievement. Our second initiative is to locate new research facilities where great science is being done. We are in the process of building a major new research facility in the heart of Boston - a great draw for talent because of its key location. And our acquisition of Sibia Neurosciences provides us with a great research facility in Southern California, near the University of California at San Diego (UCSD). Our third initiative is to develop external alliances. In 2000, we redefined our licensing and business development program at Merck. We want to take advantage of the wealth of excellent research being done outside the company. We want to give our scientists access to the best science, wherever it is, and make sure they have access to the latest in discovery tools to practice it. Licensing compounds and developing them has always been an important part of our strategy. For example, two of our top largest products, FOSAMAX and COZAAR, came from outside. PRILOSEC came from an agreement with Astra, and ZETIA, again, came from a partnership agreement with Schering Plough. Going forward, we are developing an important diabetes compound from Kyorin. As a result of redefining the structure of licensing and business development, our outside relationships have grown significantly. Merck's reputation for scientific excellence is an important factor in what draws others to work with us. Let's consider the third category of forces shaping the industry - political and regulatory. The political debate and the regulatory environment are both concerned with access and affordability of medicines and their safety and efficacy. In the U.S., access and affordability includes making medicines available to the uninsured and those on Medicare who do not have prescription drug benefits. Internationally it includes making medicine available in countries that are experiencing health crises because of epidemics such as TB, Malaria and HIV/AIDS. Merck's approach to these public policy issues is straightforward: If we serve the public interest, Merck's interests will be served. 5 Consequently, we are actively engaged in the Medicare debate in Washington. We support a program that allows seniors to choose their coverage from qualified, private health plans that rely on market competition, not government price controls, to improve quality, integrate care, and manage costs. The Federal Employee Health Benefits program is an excellent model of competition and choice. It's the plan members of Congress designed for themselves and their families and all federal employees. We advocate this plan for America's seniors as well. Now that the elections are over, the President and the leaders of the new Congress say they intend to make prescription drug coverage for seniors an early and high priority. I believe we will see meaningful legislation passed through Congress and signed by the President. We're optimistic that this legislation will benefit companies - - like Merck - whose strategies are based on winning in a competitive market and developing breakthrough medicines. On the international front, Merck is again taking an active role. We are providing HIV/AIDS drugs at the lowest possible prices to developing countries. Merck has a partnership with the Bill and Melinda Gates Foundation and the Government of Botswana to attack HIV/AIDS with a comprehensive program that ranges from prevention to treatment. The Gates Foundation is providing $50 million dollars; the Merck Foundation is also providing $50 million dollars to the program. Merck is also providing our antiretrovirals at no cost. In the course of our work, we have confirmed that, even when offered at very low prices (or free), medicines do not reach people in developing countries. It's increasingly recognized that the principle barrier is the lack of enough doctors, nurses, and supporting infrastructure to deliver these medicines. As far as the FDA is concerned...You might have been hearing that the FDA has changed its standards for drug approval, and that's why fewer drugs are being filed with the FDA. We see no evidence to support that there has been any change, and it doesn't match our experience in working with the FDA. They continue to be tough on safety and efficacy. The FDA has changed the way it looks at manufacturing. It has instituted a new approach called Quality Management Systems. And it makes a lot of sense - but it has required the industry to adapt to a significantly different approach. Since the early 90s, manufacturing and quality have been important to Merck, and both continue to be a key priority for management. We pay a great deal of attention to quality, safety, protecting the environment and productivity. Consequently, we have a strong culture of compliance, attention to detail, and execution. These attributes have served us well. 6 In short, the environment I am describing today is one in which we see more opportunity than threat, and to be clear, it's an environment that we are strongly advocating through our public policy initiatives. Greater demand for clinical benefit at the right price and a regulatory approach that supports and rewards safety, efficacy, quality and responsible sales and promotion practices serves the patient interest; serves the public interest; serves Merck's interests; and serves your interests. Merck's strategy of discovering drugs that provide significant clinical benefit and bringing them to market in an efficient, responsible and ethical way provides the maximum benefits for patients and creates the greatest value for shareholders. In today's environment, the successful companies will be those who have the best science and conduct themselves ethically and with integrity. We are resuming growth in 2003, and we believe we have the potential to achieve our long-term growth goals. And our guidance for 2003 demonstrates this belief. Merck anticipates full-year 2003 consolidated earnings per share of $3.40 to $3.47. The full-year guidance reflects the company's continued expectation for double-digit EPS growth in the core pharmaceuticals business in 2003; an expectation that we have been reaffirming throughout the year as we look forward to our expanded product portfolio in 2003. The guidance also includes a full year of net income from Medco Health Solutions, Inc. However, the company's intention to separate the Medco Health business in mid-2003, subject to market conditions, remains unchanged. And now, I'd like to introduce Per Wold-Olsen, who will talk about Merck's current drug portfolio. # # # EX-99.B 4 y66610exv99wb.txt CLOSING REMARKS GIVEN BY RAYMOND V. GILMARTIN Exhibit 99(b) 1 Closing Remarks for Raymond V. Gilmartin Chairman, President and CEO, Merck & Co., Inc. 2002 Annual Business Briefing December 10, 2002 Again, thank you for coming to Merck today. To sum up, I would note the following: The market forces that are shaping this industry are leading to increased demand for value from payers - are their employees and members getting the health outcomes from their prescription drugs that are promised and are they getting them at the right price? The competitive advantage is with those companies who can deliver clinical benefit at a competitive price. Our research is directed to areas where there is new knowledge about the pathway of the disease, which increases significantly the probability that the medicines we discover will be novel, will be important advances in patient care, and will have proven clinical outcomes. Our focus on efficiency and productivity throughout the entire company should allow us to price these advances competitively and still protect our profitability. Our long-term financial goal is top tier growth in earnings per share. Our financial strategy is in alignment with our growth strategy and with the risk profile of the pharmaceutical business. We have an exceptionally strong balance sheet and cash flow to fully support our growth strategy and to provide returns to our shareholders in the form of dividends and stock buyback. The scientific forces that are shaping our industry offer great opportunity to improve the productivity of drug discovery and to open up whole new approaches with which to combat disease and to develop treatments that were previously beyond our reach. Merck has continued to invest in research, both inside and outside the company, to add to the pipeline of new discoveries, but also, importantly, to increase our research talent and capabilities. Our expanded outreach to excellent science outside the company plays a key role, and our reputation for scientific excellence is an advantage as we pursue external alliances. We see no shortage of opportunities for new medicines. The flow of new discoveries, industry wide, tends to be somewhat cyclical, but Merck is in the beginning phase of a whole new cycle of product filings and launches between now and 2006. We are resuming growth in 2003 and we believe we have the potential to achieve our long-term growth goals. 2 In our view, the FDA has not been, and is not now, an obstacle to the filing of new molecular entities or their approval. The FDA will continue to be tough on safety and efficacy, and they will continue to be vigilant about manufacturing quality and sales and promotion practices. Adding prescription drug coverage to Medicare will increase access to these discoveries in the US and make them more affordable, but a greater allocation of resources and a much greater commitment to the building of health care delivery systems will be required to increase access to medicines in the developing world. As I said before, the environment I am describing today is one in which we see more opportunity than threat, and to be clear, it's an environment that we are strongly advocating through our public policy initiatives. Greater demand for clinical benefit at the right price and a regulatory approach that supports and rewards safety, efficacy, quality and responsible sales and promotion practices serves the patient interest; serves the public interest; serves Merck's interests; and serves your interests. Merck's strategy of discovering drugs that provide significant clinical benefit and bringing them to market in an efficient, responsible and ethical way provides the maximum benefits for patients and creates the greatest value for shareholders. In today's environment, the successful companies will be those who have the best science and conduct themselves ethically and with integrity. ### EX-99.C 5 y66610exv99wc.txt PRESS RELEASE Exhibit 99(c) Press Contact: Janet Skidmore Investor Contact: Mark Stejbach (908) 423-3046 (908) 423-5185 Chris Loder (908) 423-3786 BROADENED PORTFOLIO OF BREAKTHROUGH MEDICINES WILL DRIVE MERCK'S GROWTH - - LARGE IN-LINE FRANCHISES RANK NO. 1 OR NO. 2 IN WORLDWIDE SALES IN THEIR CLASS; OUTCOMES STUDIES CONTINUE TO DEMONSTRATE CLINICAL BENEFITS - - COMPANY PLANS TO EXPAND ITS EXISTING FRANCHISES AND ENTER NEW THERAPEUTIC CATEGORIES WITH NOVEL COMPOUNDS - - NEW CYCLE OF MEDICINES AND VACCINES EXPECTED TO BE FILED OR LAUNCHED BY 2006 WHITEHOUSE STATION, N.J., Dec. 10, 2002 - Merck & Co., Inc. expects to deliver double-digit growth in its core pharmaceutical business in 2003 by continuing to demonstrate the clinical benefits of its in-line franchises and broadening its portfolio of breakthrough medicines, Merck Chairman, President and CEO Raymond V. Gilmartin told more than 300 securities analysts today at the company's Annual Business Briefing. "Merck's strategy of discovering drugs that provide significant clinical benefits and bringing them to market in an efficient, responsible and ethical way provides the maximum benefits for patients and creates the greatest value for shareholders. In today's environment, the successful companies will be those who have the best science and conduct themselves ethically and with integrity," Mr. Gilmartin told the analysts. "Our large in-line franchises - ZOCOR, VIOXX, FOSAMAX, COZAAR/HYZAAR and SINGULAIR - are successful because we have demonstrated their clinical benefits to physicians, patients and payors," Mr. Gilmartin added. "Together, these products will drive our growth in 2003. Moving forward, we plan to broaden our portfolio of medicines by expanding our current franchises and moving into new therapeutic categories." Merck expanded its cholesterol-modifying franchise in October with the approval of ZETIA, a cholesterol absorption inhibitor from Merck/Schering-Plough Pharmaceuticals, and the partnership anticipates filing a New Drug Application (NDA) with the U.S. Food and Drug Administration (FDA) for a ZETIA/ZOCOR combination tablet in late 2003. Merck also plans to expand its respiratory franchise early next year with a seasonal allergic rhinitis indication for SINGULAIR - SINGULAIR AR - that is expected to be the first new treatment class for allergic 2 rhinitis in more than a decade. The FDA currently is reviewing a supplemental New Drug Application for SINGULAIR AR and Merck anticipates receiving regulatory approval by early 2003. Merck also has broadened its arthritis and pain franchise with ARCOXIA, which has been launched in 19 countries in Europe and Latin America and is expected to launch in other countries throughout 2003. Merck anticipates filing an NDA in the United States for ARCOXIA in the second half of 2003. In addition to expanding existing franchises, Merck plans to increase its product portfolio by developing novel mechanisms in new therapeutic areas. Merck's late-stage pipeline includes EMEND (aprepitant) for the treatment of Chemotherapy Induced Nausea and Vomiting (CINV), which recently received priority review by the FDA, as well as compounds in Phase III testing -- MK-767, a diabetes compound licensed from Kyorin, aprepitant (depression), ARCOXIA (arthritis and pain), ZOCOR/ZETIA, (cholesterol management), Human Papillomavirus vaccine (cervical cancer), ROTATEQ (rotavirus) and shingles vaccine (zoster). Earlier stage pipeline products include novel compounds in new therapeutic areas, including a GABA-A a2/a3 agonist for anxiety and a PDE-4 inhibitor for respiratory disease. Merck also announced that its HIV/AIDS programs, an integrase inhibitor and an HIV vaccine, continue to show promise in development. Presenting data on some of the company's early-stage pipeline, Dr. Peter Kim, executive vice president of Merck Research Laboratories and successor to MRL President Dr. Edward M. Scolnick, said, "We are driving productivity in our pipeline by leveraging our talent, new technologies, and improved processes." Dr. Kim also described a series of new approaches being implemented throughout the Merck laboratories to improve the probability of success in the development process. Using new strategies and advanced technologies, such as molecular profiling, researchers can make decisions earlier in development to determine which compounds are the most promising candidates. Through these efforts, Merck has demonstrated pharmacological proof-of-concept in humans -- a key biomarker in determining whether to move forward in clinical development -- with new compounds in cancer, Alzheimer's disease, obesity, HIV and diabetes. Merck's approach to external alliances continues to demonstrate its success. Two of Merck's large in-line franchises - FOSAMAX and COZAAR/HYZAAR - resulted from external collaborations. ZETIA was developed in partnership with the Schering-Plough Corporation and MK-767 was licensed from Kyorin at an early stage. Merck already is taking advantage of the technological and scientific potential of Rosetta Inpharmatics, a Seattle-based genomics company that Merck acquired last year, by integrating genomics tools throughout the research process. In addition, the acquisition of Sibia Neurosciences, a San Diego company, allowed Merck to expand its neurosciences expertise. Merck will continue to pursue opportunities to develop external collaborations. 3 "At Merck, we're turning excellence in our labs into value for our shareholders," Mr. Gilmartin said. "Our focus is on developing true advances in patient care with proven clinical outcomes. In this environment, scientific innovation and excellence will prevail. Our track record in recruiting and hiring the best talent, locating our research facilities near academic centers and expanding external alliances speaks for itself." IN-LINE FRANCHISES DEMONSTRATE SUCCESS OF THE MERCK STRATEGY In a highly competitive and ever-changing environment, where managed care organizations in the United States and governments throughout the world are demanding greater value, Merck is achieving success by demonstrating advances in patient care through outcomes studies. "ZOCOR, VIOXX, FOSAMAX, SINGULAIR and COZAAR/HYZAAR are either No. 1 or No. 2 in worldwide sales in their class," Mr. Gilmartin said. "They represent true advances in patient care and they have proven clinical outcomes. As a result, these medicines expand market potential, drive growth, strengthen our competitive advantage, provide access to formularies and improve our ability to negotiate price with managed care accounts and major European countries." ZOCOR, Merck's largest-selling medicine and one of the most prescribed cholesterol-modifying medicines worldwide, currently is experiencing growth in Europe because of the results of Oxford University's Heart Protection Study (HPS), the largest study ever using a cholesterol-modifying medicine. HPS found that ZOCOR 40 mg saved lives by significantly reducing the risk of heart attack and stroke in a broad range of high-risk patients. Merck has filed a supplemental NDA with the FDA to incorporate data from HPS in the label for ZOCOR in the U.S. ZETIA, from Merck/Schering-Plough Pharmaceuticals, is the first new approach to lowering cholesterol in 15 years. ZETIA offers a new treatment paradigm, lowering cholesterol by a different but complementary action to ZOCOR and other statins. In clinical studies, ZETIA added to a statin has demonstrated superior efficacy in comparison with a statin alone in helping patients reach their cholesterol goals. ZETIA was just launched in November in the U.S. and in Germany where it is marketed under the trade name EZETROL. VIOXX, Merck's once-a-day COX-2 selective medicine, is the No. 1 prescribed arthritis pain medication in many markets worldwide. VIOXX offers powerful relief with once-a-day dosing and is the only coxib proven to reduce the risk of clinically important gastrointestinal (GI) side effects compared to naproxen. VIOXX has achieved exclusive formulary status covering an additional 15 million lives since the GI outcomes data from the landmark 8,000-patient VIOXX Gastrointestinal Outcomes Research (VIGOR) study were added to its label. The label 4 also was revised to include cardiovascular data from VIGOR. Merck will gain additional cardiovascular data with VIOXX through ongoing and new clinical trials. ARCOXIA has been launched in 19 countries throughout the world including the United Kingdom, Sweden, Ireland, Mexico, Peru, Brazil, Ecuador, Singapore and New Zealand. It is currently in development for a wide range of indications, including osteoarthritis, rheumatoid arthritis, chronic pain, acute pain, dysmenorrhea (menstrual pain), acute gouty arthritis and ankylosing spondylitis. FOSAMAX, the No. 1 prescribed osteoporosis medicine worldwide for the treatment of postmenopausal osteoporosis, is the only medicine indicated to reduce the risk of osteoporotic hip and spine fractures. FOSAMAX Once Weekly continues to drive growth in the large, undertreated osteoporosis market around the world. In addition, FOSAMAX has achieved formulary access with 95 percent of major managed care organizations in the United States. SINGULAIR, Merck's once-a-day tablet for asthma control, is the No. 1 asthma controller in terms of total prescriptions in the United States and is the most widely used medicine of its kind (leukotriene antagonist) in the world. COZAAR and HYZAAR are the No. 1 prescribed AIIAs worldwide in the treatment of hypertension. COZAAR is experiencing new growth in Europe based on the results of the Losartan Intervention for Endpoint Reduction in Hypertension (LIFE) study, which found that use of COZAAR significantly reduced the combined risk of cardiovascular death, heart attack and stroke in patients with hypertension and left ventricular hypertrophy (LVH) compared to the beta-blocker atenolol. An analysis of the treatment effect by ethnicity suggested that black patients treated with atenolol were at a lower risk of experiencing cardiovascular death, heart attack and stroke compared to patients treated with COZAAR, even though both drugs lowered blood pressure to a similar degree. Merck has submitted a supplemental NDA to the FDA for COZAAR based on the results of the LIFE trial. BROADENING THE PORTFOLIO WITH NOVEL COMPOUNDS IN NEW THERAPEUTIC CATEGORIES Merck's late-stage development pipeline includes novel compounds in new therapeutic categories. These investigational medicines are progressing in Phase III and have the potential to address large markets with unmet medical needs. They also represent significant commercial opportunity. EMEND (aprepitant), which is in Phase III for ACUTE AND DELAYED CINV, represents the first new option to prevent CINV in 10 years. EMEND, which offers a new approach to an existing but unsatisfied market, is expected to receive regulatory approval in 2003. Merck's Substance P Antagonist is also in Phase III for DEPRESSION. It potentially will be the first new option to treat depression in more than a decade, and studies have demonstrated 5 proof of efficacy and tolerability. Some 45 million Americans (17 percent of the population) suffer from depression. Also in Phase III is MK-767, the former KRP-297 that is being developed with Kyorin. MK-767 will potentially be the first of its class to treat GLUCOSE CONTROL and DYSLIPIDEMIA in patients with Type 2 diabetes. Approximately 120 million patients worldwide suffer from diabetes, including some 16 million Americans. More than 80 percent of mortalities in diabetics are the result of cardiovascular disease. Merck's investigational HUMAN PAPILLOMAVIRUS (HPV) VACCINE has the potential to be the first vaccine to prevent HPV infection and is expected to have the broadest HPV coverage of vaccines currently known to be in development. HPV infection can lead to the development of cervical cancer. In a study published in the Nov. 21 edition of The New England Journal of Medicine, an analysis of two years' data showed that the vaccine reduced the incidence of HPV 16 infection in 100 percent of women who had not been previously infected with HPV 16. There are approximately 470,000 cases of cervical cancers worldwide and 225,000 women die from cervical cancer each year. About 50 million adolescent and adult females in the United States are at risk for HPV infection. Dr. Kim noted that there are competing claims to intellectual property in the HPV field, but the company is confident that the claims will not delay Merck's program. The company is also in Phase III clinical trials for its SHINGLES (ZOSTER) VACCINE and ROTAVIRUS VACCINE. The shingles vaccine is being developed for the prevention of herpes/zoster, which affects up to one million adults each year in the U.S. The rotavirus vaccine is being developed for the prevention of infant diarrhea and dehydration caused by rotavirus. There currently are no rotavirus vaccines or anti-viral treatments on the market. Each year in the U.S. more than $1 billion in direct and indirect costs are associated with rotavirus. Merck is in Phase II clinical development with its novel GABA-A a2/a3 Agonist, potentially the first in class, for the treatment of ANXIETY. Approximately 40 million Americans suffer from anxiety. Merck's Phosphodiesterase-4 Inhibitor, a novel anti-inflammatory, oral, once-daily treatment for ASTHMA, is in Phase II clinical development and the same agent is in Phase II testing for the treatment of CHRONIC OBSTRUCTIVE PULMONARY DISEASE (COPD). Asthma and COPD each affects approximately 20 million Americans. Merck's HIV INTEGRASE INHIBITOR is now in Phase I and the company expects to begin Phase I trials worldwide in 2003 for an HIV VACCINE that expresses multiple HIV-1 genes. 6 MERCK'S EXTERNAL ALLIANCES AND FINANCIAL STRATEGY CONTRIBUTE TO SHAREHOLDER RETURNS Merck has a successful history of external alliances, which have enhanced the company's product portfolio and contributed to shareholder returns. Going forward, the company plans to continue its pursuit of alliances from early-stage to late-stage product opportunities including joint ventures and targeted acquisitions. Judy C. Lewent, Merck's executive vice president and chief financial officer, said, "Merck has redefined its structure to enable us to evaluate a broad spectrum of possible collaborations and to respond quickly to opportunities in the marketplace. Our activity in this area has increased significantly over the past two years and we see this strategy of increasing importance in the future." In presenting the company's financial overview, Ms. Lewent noted that the company has a strong focus on driving shareholder value through investments in research, marketing and external alliances, supplemented by operational excellence initiatives across the business to ensure that the company's cost structure is as efficient as possible. "Merck has demonstrated its commitment to shareholder value by returning 100 percent of its net income to shareholders through a combination of dividends and treasury stock over the past five years, while retaining the highest-quality capital structure," said Ms. Lewent. For the first nine months of 2002, Merck total sales were up 8 percent. Merck's earnings per share were $2.31 for the first nine months of 2002. The company stated on Dec. 5, 2002, that it continues to expect full-year 2002 earnings per share (EPS), on an as-reported basis, to be at the same level as 2001 results. The 2002 as-reported EPS will be affected by the benefit from the implementation of FAS 142 regarding goodwill amortization, most of which relates to Merck's 1993 acquisition of Medco Health. Merck also reaffirmed that the 2002 guidance for all of the income statement items forecasted on Oct. 18, 2002, is still appropriate. Details on the income statement items forecasted on Oct. 18, 2002, can be found in the company's third quarter sales and earnings release, which was filed with the Securities and Exchange Commission as an exhibit to a Form 8-K on the same day. For 2003, Merck expects full-year 2003 consolidated EPS of $3.40 to $3.47. The full-year guidance reflects the company's continued expectation for double digit EPS growth in the core pharmaceuticals business and includes a full year of net income from Medco Health Solutions, Inc. However, the company's intention to separate the Medco Health business in mid-2003, subject to market conditions, remains unchanged. After the separation has occurred, Medco Health's historical results up through the separation date will be presented in the company's consolidated financial statements as Discontinued Operations, and Merck will adjust its 2003 consolidated earnings expectations to reflect the separation, as appropriate. Elements of 2003 guidance initially provided by the Company on Dec. 5 are set forth in an attachment. 7 ABOUT MERCK Merck & Co., Inc. is a leading research-driven pharmaceutical products and services company. Merck discovers, develops, manufactures and markets a broad range of innovative products to improve human and animal health, directly and through its joint ventures. ABOUT MEDCO HEALTH SOLUTIONS, INC. Medco Health Solutions, Inc. (www.medcohealth.com) is the nation's leading provider of prescription healthcare services, based on the $29 billion in drug spend the company managed for its clients in 2001. Formerly known as Merck-Medco, Medco Health is a wholly owned and independently managed subsidiary of Merck & Co., Inc., and assists its clients to moderate the cost and enhance the quality of prescription drug benefits provided to 65 million Americans nationwide. This press release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements in this document should be evaluated together with the many uncertainties that affect our businesses, particularly those mentioned in the cautionary statements in Item 1 of our Form 10-K for the year ended Dec. 31, 2001, and in our periodic reports on Form 10-Q and Form 8-K (if any) which we incorporate by reference. # # # 8 MERCK FINANCIAL GUIDANCE FOR 2003 Worldwide (WW) net sales will be driven by the company's major inline products, including the impact of new studies and indications. Sales forecasts for those products for 2003 are as follows:
WORLDWIDE PRODUCT THERAPEUTIC CATEGORY 2003 NET SALES ------- -------------------- ------------------ ZOCOR Cholesterol modifying $5.6 to $5.9 billion Coxibs Arthritis and Pain $2.6 to $2.8 billion (VIOXX and ARCOXIA) FOSAMAX Osteoporosis $2.6 to $2.8 billion COZAAR/HYZAAR Hypertension $2.4 to $2.6 billion SINGULAIR Asthma and (anticipated) Allergic $2.0 to $2.3 billion Rhinitis*
*An sNDA (supplemental New Drug Application) for an allergic rhinitis indication for SINGULAIR was filed in 1Q02. This guidance assumes approval of the sNDA and sales of SINGULAIR for allergic rhinitis. - - Under an agreement with AstraZeneca (AZN), Merck receives supply payments at predetermined rates on the U.S. sales of certain products by AZN, most notably PRILOSEC and NEXIUM. Merck anticipates that the total supply payments that the company receives from AZN will decline in 2003 at a mid-single digit percentage rate. - - The income contribution related to the Merck and Schering-Plough collaboration will be negative in 2003. This reflects that sales of ezetimibe will be more than offset by launch expenses for the product and ongoing joint venture R&D spending. The results of the Merck and Schering-Plough collaboration are combined with the results of Merck's other joint venture relationships and reported, in the aggregate, as Equity Income from Affiliates. THE COMPANY ALSO ANNOUNCED 2003 GUIDANCE FOR THE FOLLOWING ITEMS: - - Merck continues to expect that manufacturing productivity will offset inflation on product cost in the core pharmaceuticals business. - - Research and Development expense (which excludes joint ventures) is estimated to grow 10 percent to 12 percent over the full-year 2002 expense. - - Consolidated Marketing and Administrative expense for 2003 is estimated to grow at a mid-single digit percentage rate over the full-year 2002 expense. - - The consolidated 2003 tax rate is estimated to be approximately 29.5 percent to 30.5 percent. - - Merck plans to continue its stock buyback program during 2003. As of Sept. 30, 2002, $11.8 billion remains under the current buyback authorizations approved by Merck's Board of Directors. - - Medco Health net income on a stand-alone basis is estimated to grow 20 percent to 25 percent for full-year 2003. Given these guidance elements, Merck & Co., Inc. anticipates full-year 2003 consolidated earnings per share (EPS) of $3.40 to $3.47. The full-year guidance reflects the company's continued expectation for double digit EPS growth in the core pharmaceuticals business and includes a full year of net income from Medco Health Solutions, Inc. However, the company's intention to separate the Medco Health business in mid-2003, subject to market conditions, remains unchanged. For the period prior to the separation, Merck will continue its practice, begun in 2002, of providing additional disclosure detailing the results of both its core pharmaceuticals business and its Medco Health business on a stand-alone basis. After the separation has occurred, Medco Health's historical results up through the separation date will be presented in the company's consolidated financial statements as Discontinued Operations, and Merck will adjust its 2003 consolidated earnings expectations to reflect the separation, as appropriate. -----END PRIVACY-ENHANCED MESSAGE-----