Leerink Swann's analyst, Seamus Fernandez (should own Irish-Mexican bar), didn't mince words. He says Merck's Roger Perlmutter, R&D Chief at Merck, needs to slash its budget by at least $1B now. He said that would bring it in line with other competitors like, Pfizer, at 14% of sales.
Perlmutter, new to the job after coming from Amgen, had proposed a much more modest $144 M in cuts. Certainly, not enough to assauge Fernandez's chopping mentality. He says the R&D group is clearly underperforming with recent failures -- odanacatib, suvorexant, Bridion, and Tredaptive to point to as evidence. He further stated that for every $1B excised from R&D, Merck would see a $0.25 per share gain. And we must protect those shareholders, mustn't we?
Merck is quickly becoming a poster child for underperforming R&D groups that seem to be plaguing the industry generally and certainly are a bane in big pharma right now. Fortunately, Merck still has groups like Lilly and AZ that appear capable of racing it to the bottom for R&D productivity. See Fierce Biotech.
Posted by Bruce Lehr Aug 20th 2013.