Merck & Company, Inc. · NYSE:MRK
Merck & — Investor Day (December 2007)
132 slides from Merck &'s investor day presentation, Dec 11, 2007
Slide 1: Annual Business Briefing December 11, 2007
Annual Business Briefing December 11, 2007
Slide 2: Welcome & Logistics
Graeme Bell Head of Investor Relations Welcome & Logistics
Slide 3: Forward-Looking Statement
Forward-Looking Statement This presentation contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and involve risks and uncertainties, which may cause results to differ ma
Slide 4: No Duty to Update
No Duty to Update The information contained in the presentation set forth below was current as of December 11, 2007. While this presentation remains on the company's website the company assumes no duty to update the information to reflect subsequent developments. Consequently, the company will not u
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Slide 6: Realizing the Benefits
Richard T. Clark Chairman, President and Chief Executive Officer Realizing the Benefits
Slide 7: Delivering on Our Long-Term Commitments
Delivering on Our Long-Term Commitments Commitments Double-Digit EPS CAGR from 2005 to 2010 Sales + 50% of JV Revenue Achieve 4-6% CAGR by 2010 PGM Returns to Pre-ZOCOR Levels (77-78%) beyond 2008 Marketing and Admin Expense Returns to 2006 Level by 2010 R&D Growth of Mid Single-Digit CAGR from 2005
Slide 8: Realizing the Benefits: Through Successful Product Launches
Realizing the Benefits: Through Successful Product Launches Through Successful Product Launches Through Successful Product Launches
Slide 9: New and In-Line Products Continue to Drive Revenue Growth
New and In-Line Pharmaceutical Products and Vaccines Continue to Drive Revenue Growth Despite Patent Expirations New Products In-Line Products and 50% JV Sales Patent Expiry Products 2005* 2010 4 to 6% CAGR* 2005 to 2010 *2005 total of $24.8 billion includes Merck sales of $22.0 billion plus $2.8 bi
Slide 10: Returning PGM to Pre-ZOCOR Levels One Year Ahead of Schedule
Returning PGM to Pre-ZOCOR Levels One Year ahead of Schedule Worldwide Manufacturing Results (Indexed on 2003 Base Year) - -40% - -30% - -20% - -10% 10% 20% 2003 2004 2005 2006 2007 2008 Operating Spending Production Volume Mfg. Headcount Base-line
Slide 11: Changing the Way We Go to Market
Returning Marketing & Admin to 2006 Levels Changing the Way We Go to Market Making fundamental changes in: How we interact with our customers How we support these interactions globally Approach: Customer centric model using multiple channels Consolidated global shared activities in marketing and med
Slide 12: Changing the Way We Support our Business
Making fundamental changes in: How the business receives services How our support functions operate A three-step process: Consolidate support functions under a single, global point of accountability Integrate into the business - execute globally, cross-divisionally Optimize the quality, cost and spe
Slide 13: Building a Sustainable R&D Advantage
Fully Funding Research & Development Building a Sustainable R&D Advantage Redefining R&D success by looking to customers and scientific leaders early and often in product lifecycle Leveraging technologies to: Facilitate drug discovery & development Increase pipeline productivity Continuing our focus
Slide 14: Cycle Time Performance vs. Peers
1CMR International, 2002-2006 Major Company Median Comparison, June 2007. Merck's Ranking vs. Peers Merck's Ranking vs. Peers Cycle Time Interval When MRL Transformation Began Recent Performance1 Overall Study Duration 13 of 15 #1 Big Pharma (n=11) # 5 of all companies (n=31) Study Initiation 10 of
Slide 15: Significant Opportunities Still Exist
While We Have Started to Realize the Benefits, Significant Opportunities Still Exist Commitments Double-Digit EPS CAGR from 2005 to 2010 Sales + 50% of JV Revenue Achieve 4-6% CAGR by 2010 GM Returns to Pre-ZOCOR Levels (77-78%) beyond 2008 Marketing and Admin Expense Returns to 2006 Level by 2010 R
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Slide 17: Research Overview
Dr. Peter S. Kim President, Merck Research Laboratories Research Overview
Slide 18: Building Merck's Scientific Strength
Enhancing Discovery and Development: From Basic Research to Life-Cycle Management Building Merck's Scientific Strength Industrializing Research Technologies Increasing the Probability of Success and Increasing Productivity Enhancing a Partnership Focus Leveraging Targeted Acquisitions
Slide 19: Outline
Outline MRL Overview Key Highlights Approved Products New Indications Late Stage Pipeline Review Pipeline Overview
Slide 20: Continued Progress in Merck's Portfolio and Pipeline
Continued Progress in Merck's Portfolio and Pipeline 2007 FDA Approvals JANUMET(tm) ISENTRESS(tm) Two filings currently under FDA review Anticipate two new NDA filings in 2008 Anticipate filing new indications for GARDASIL(r) and ISENTRESS in 2008 Seven programs currently in Phase III
Slide 21: Merck's Late-Stage Development Pipeline
Merck's Late-Stage Development Pipeline December 11, 2007 JANUMET Diabetes ISENTRESS (MK-0518) HIV 2007 US Approvals CORDAPTIVE(tm)* (MK-0524A) Atherosclerosis IV EMEND(r) (MK-0517) CINV (Approvable) 2007 Under Review MK-0974 Migraine MK-7418 (KW-3902) Heart Failure MK-0822 Osteoporosis MK-8669 (AP2
Slide 22: GARDASIL: Expanding Indications and Planned Submissions
GARDASIL: Expanding Indications and Planned Submissions 2007 FDA submissions Prevention of vulvar and vaginal cancer Current indication for prevention of HPV 16/18-related high- grade vulvar and vaginal dysplasia (VIN 2/3 and VaIN 2/3) Cross-protection against other HPV strains Planned FDA submissio
Slide 23: JANUMET for Type 2 Diabetes
JANUMET for Type 2 Diabetes JANUMET approved by the FDA April 2007 Fixed dose combination of sitagliptin and metformin Addresses the three key defects of Type 2 diabetes Diminished insulin release Uncontrolled production of glucose Insulin resistance
Slide 24: JANUMET Clinical Study Results
JANUMET Clinical Study Results Phase III clinical study results 66% of patients on high-dose JANUMET reached the ADA goal of HbA1C < 7% compared with 38% on metformin alone1 No increased risk of hypoglycemia, edema, or GI disturbances beyond metformin alone Weight loss comparable to metformin alone
Slide 25: Initial Combination with Sitagliptin and Metformin by Baseline HbA1C
sita = sitagliptin; met = metformin. <8.0 HbA1C (mean 7.6%) n = 172 8 - <9 HbA1C (mean 8.4%) n= 244 9 - <10 HbA1C (mean 9.4%) n = 163 ^10 HbA1C (mean 10.4%) n = 78 Sita 50 mg BID + met 1000 mg BID Sita 50 mg BID + met 500 mg BID Met 1000 mg BID Met 500 mg BID Sita 100 mg QD LSM Change From Baseline,
Slide 26: JANUVIA: Large, Pooled Analysis for Safety
JANUVIA: Large, Pooled Analysis for Safety 5,141 patients with type 2 diabetes from Phase II and III studies of up to 2 years in duration 2,786 patients were treated with JANUVIA 100 mg per day and 2,355 patients were treated with placebo or other therapies Mean duration of therapy was 31 weeks Resu
Slide 27: JANUVIA: Life-Cycle Management
JANUVIA: Life-Cycle Management Updated labeling approved by FDA in October 2007 as an adjunct to diet and exercise: Initial therapy in combination with metformin Add-on therapy to a sulfonylurea when the single agent alone does not provide adequate glycemic control Add-on therapy to the combination
Slide 28: HIV Integrase Enzyme: A Novel Target for Therapy
Adapted from clinicaloptions.com/HIV.aspx HIV Integrase Enzyme: A Novel Target for Therapy Background - Antiretroviral therapies belonged to 4 classes: Nucleoside reverse transcriptase inhibitors Non-nucleoside reverse transcriptase inhibitors Protease inhibitors Entry inhibitors HIV integrase enzym
Slide 29: ISENTRESS: A Novel, First-in-Class Treatment for HIV-1
ISENTRESS: A Novel, First-in-Class Treatment for HIV-1 Infection ISENTRESS approved by FDA October 2007 In combination with other antiretroviral agents for the treatment of HIV-1 infection In treatment-experienced adult patients who have evidence of viral replication and HIV-1 strains resistant to m
Slide 30: ISENTRESS: Phase III Results in Treatment-Experienced Patients
ISENTRESS: Phase III Results in Treatment- Experienced Patients Demonstrated Efficacy OBT = Optimized background therapy (including two investigational HIV therapies, darunavir and tipranavir) For HIV RNA <400 copies/mL and <50 copies/mL: Non-completer = failure approach. For CD4 cell count: Baselin
Slide 31: ISENTRESS Phase III Program Ongoing
ISENTRESS Phase III Program Ongoing Phase III program in treatment-naive patients underway Potent antiretroviral activity demonstrated No significant changes in serum lipids at week 48 Generally well tolerated Anticipate filing for treatment-naive indication in 2008
Slide 32: Phase II 48-Week Results in Treatment-Naive Patients
Phase II 48-Week Results for ISENTRESS in Treatment-Naive Patients ISENTRESS 400 mg b.i.d. (n=41) Efavirenz 600 mg q.d. (n=38) 0 2 4 8 12 16 24 32 40 48 Week 0 20 40 60 80 100 Percent of Patients with HIV RNA <50 copies/mL All patients treated in combination with Tenofovir and Lamivudine Markowitz,
Slide 33: Serum Lipids not Increased by ISENTRESS
Phase II 48-Week Results in Treatment-Naive Patients: Serum Lipids not Increased by ISENTRESS *All doses combined: 100 mg b.i.d. (n=39), 200 mg b.i.d. (n=40), 400 mg b.i.d. (n=41), 600 mg b.i.d. (n=40) All patients treated in combination with Tenofovir and Lamivudine - -20 - -10 0 10 20 30 40 50 60
Slide 34: New Model: Global Pharmaceutical Manufacturing Commercialization
New Model: Global Pharmaceutical Manufacturing Commercialization Manufacturing (tons) Research (g to 10s of kg) Pre- clinical I IIA IIB III Launch Long-term Supply D R U G D E V E L O P M E N T P R O C E S S Proof of Concept Technology Transfer Drug Discovery Process Traditional Model Global Pharmac
Slide 35: Outline
Outline MRL Overview Late Stage Pipeline Review Submitted Products Phase III Products MK-0859 update Pipeline Overview
Slide 36: Merck's Late-Stage Development Pipeline
Merck's Late-Stage Development Pipeline December 11, 2007 JANUMET Diabetes ISENTRESS (MK-0518) HIV 2007 US Approvals CORDAPTIVE* (MK-0524A) Atherosclerosis IV EMEND (MK-0517) CINV (Approvable) 2007 Under Review MK-0974 Migraine MK-7418 (KW-3902) Heart Failure MK-0822 Osteoporosis MK-8669 (AP23573) C
Slide 37: Lipid Management Beyond LDL-C
Lipid Management Beyond LDL-C There is a significant unmet medical need for reducing the risk of cardiovascular events NCEP, ISA and ESC1 guidelines identify patients with low HDL-C at increased coronary heart disease risk Approximately 55 million Americans have low HDL-C (25% of adults) Triglycerid
Slide 38: Niacin-Induced Flushing is a Major Barrier to Widespread Use
Niacin-Induced Flushing is a Major Barrier to Widespread Use1 Despite favorable lipid effects and cardiovascular benefits of niacin, poor tolerability limits the use of niacin 90% of patients experience flushing with niacin Worst at first dose Chronic, intermittent and unpredictable A significant po
Slide 39: MK-0524A & MK-0524B: A Novel Approach to Lipid Management
MK-0524A & MK-0524B Programs: A Novel Approach to Lipid Management CORDAPTIVE (MK-0524A) Merck's extended-release niacin combined with laropiprant, a novel flushing pathway inhibitor CORDAPTIVE may provide an opportunity to change the paradigm of niacin dosing and increase the therapeutic potential
Slide 40: Nicotinic Acid-Induced Flushing Pathway
Vasodilation and Flushing Overview: Nicotinic Acid-Induced Flushing Pathway1-4 Nicotinic Acid Nicotinic Acid Receptor (+) Phospholipids PGF2^ PGI2 PGE2 TXA2 PLA2 Cyclooxygenase 1 PGD Synthase Lipoxygenase Arachidonic Acid Pathway Epidermal Langerhans Cells Dermal Blood Vessel PGD2 DP1 Receptor Prost
Slide 41: CORDAPTIVE Phase III Efficacy Results
Placebo (n=257) Merck's ER niacin 2 g (n=434) CORDAPTIVE (n=696) (ER niacin 2 g / laropiprant 40 mg) * p<0.001 vs. placebo % Change from Baseline HDL-C * * * * * - -25 - -20 - -15 - -10 - -5 0 5 10 15 20 25 LDL-C Triglycerides CORDAPTIVE Phase III Efficacy Results 24 Weeks Maccubbin, D. et al., Symp
Slide 42: Global Flushing Severity Score (GFSS)
Global Flushing Severity Score (GFSS) Key Questions Asked How many times did you flush? How would you rate your flush? How long did you flush? How bothersome was your flush? Did flushing symptoms cause you to have difficulty sleeping last night? OVERALL during the past 24 hours, how would you rate y
Slide 43: CORDAPTIVE Maintenance Phase: Lower Incidence of Flushing
CORDAPTIVE Maintenance Phase: Lower Incidence of Flushing versus ER Niacin Average Number of Days per Week with Moderate or Greater Flushing Symptoms (GFSS ^4) Across Weeks 1-24 Weeks on Treatment 0 2 4 6 8 10 12 14 16 18 20 22 24 Number of Days per Week 0 1 2 ER niacin dose advancement (1 g to 2 g)
Slide 44: Laropiprant: Studies to Evaluate Effect on Platelet Function
Laropiprant (MK-0524): Studies to Evaluate Effect on Platelet Function Laropiprant is a selective and potent antagonist of the prostaglandin D2 receptor 1(DP1) Laropiprant also has affinity for the TxA2 receptor (TP) Thomboxane (TxA2) stimulates platelet activation and increases platelet aggregation
Slide 45: MK-0524 Human Exposure in Phase I-III Studies
MK-0524 Human Exposure in Phase I-III Clinical Studies* *Does not include ongoing ACHIEVE OR HPS2-THRIVE STUDIES Phase I: >1,200 volunteers Phase II: >1,800 patients Phase III: >3,200 patients Treatment # Patients Dose Duration MK-0524 monotherapy > 90 300 mg 3 weeks MK-0524 co-administration with E
Slide 46: Cardiovascular Surrogate Endpoint Study & Outcomes Study
Study Partner n Duration Objective Study Start Patients Exposed to MK-0524A* ACHIEVE Carotid IMT study MedPace/ ImagePace 900 2 years Assess the effect of MK-524A + any statin on carotid intima media thickness 3Q06 737 HPS2-THRIVE Clinical Outcome Study Oxford Clinical Trial Study Unit 20,000 4 year
Slide 47: MK-0524A Summary
MK-0524A Summary Favorable lipid benefits of niacin were preserved with CORDAPTIVE CORDAPTIVE provided substantial reduction in ER niacin-induced flushing, both acutely and chronically Generally well tolerated Ongoing cardiovascular outcomes studies to demonstrate the benefit of CORDAPTIVE when adde
Slide 48: Merck's Late-Stage Development Pipeline
Merck's Late-Stage Development Pipeline December 11, 2007 JANUMET Diabetes ISENTRESS (MK-0518) HIV 2007 US Approvals CORDAPTIVE* (MK-0524A) Atherosclerosis IV EMEND (MK-0517) CINV (Approvable) 2007 Under Review MK-0974 Migraine MK-7418 (KW-3902) Heart Failure MK-0822 Osteoporosis MK-8669 (AP23573) C
Slide 49: Heart Failure is a Common and Disabling Medical Condition
Heart Failure is a Common and Disabling Medical Condition Heart failure is the leading cause of hospitalization in patients over 65 years of age 5,000,000 patients suffer from heart failure in the US1, many of them from acute heart failure Current practice guidelines include treatment with diuretics
Slide 50: MK-7418: Selective Renal Arterial Vasodilator
MK-7418: Selective Renal Arterial Vasodilator for the Treatment of Acute Heart Failure Inhibits sodium reabsorption in the proximal tubule ? Enhances diuresis Blocks adenosine-mediated vasoconstriction of afferent arteriole ? Increases renal blood flow ? Increases glomerular filtration rate Furosemi
Slide 51: MK-7418 Early Clinical Study Results
MK-7418 Early Clinical Study Results: Increased Glomerular Filtration Rate & Increased Renal Plasma Flow Patients with congestive heart failure and reduced kidney function Randomized, two-way crossover study (n=23) Background treatment with furosemide % Change in Renal Plasma Flow from Baseline p<0.
Slide 52: MK-7418: Phase III Pilot Study Results
MK-7418: Phase III Pilot Study Results1 305 patients with acute heart failure and renal dysfunction Randomized to placebo, 10 mg, 20 mg or 30 mg of MK-7418 (4 hour infusion, once daily for 3 days) Patients at high risk for seizures were excluded, patients at intermediate risk were treated prophylact
Slide 53: Obesity is a Major Health Problem Worldwide
Obesity is a Major Health Problem Worldwide Obesity is a global epidemic with long-term medical consequences1 1.6 billion adults worldwide and 130 million in US are overweight or obese Increases risk of cardiovascular disease, type 2 diabetes, and some cancers Diminishes life expectancy Current trea
Slide 54: Taranabant (MK-0364): CB-1 Receptor Inverse Agonist
Taranabant (MK-0364): A Highly Selective Cannabinoid-1 (CB-1) Receptor Inverse Agonist for the Treatment of Obesity Phase II clinical study Enrolled generally healthy patients (n=533) Excluded patients with a history of depression, symptomatic depression, or on antidepressants Significant dose-relat
Slide 55: Taranabant Phase II Results: Mean Change in Body Weight
- -2 0 2 4 6 8 10 12 LS Means (84% CI) - -1.6 kg* Taranabant (MK-0364) Phase II Study Results: Mean Change in Body Weight - -2.4 kg* - -2.9 kg* - -4.0 kg* Placebo, n=105 Taranabant 0.5 mg, n=106 Taranabant 2 mg, n=109 Taranabant 4 mg, n=105 Taranabant 6 mg, n=108 2-wk run-in 12-wk treatment Change v
Slide 56: Taranabant Phase II: Reduction in Waist Circumference
Taranabant (MK-0364) Phase II Study Results: Mean Reduction in Waist Circumference at 12 weeks - -6.0 - -5.5 - -5.0 - -4.5 - -4.0 - -3.5 - -3.0 - -2.5 - -2.0 - -1.5 - -1.0 - -0.5 0.0 Taranabant Treatment Group 0.5 mg n=106 2 mg n=109 4 mg n=105 6 mg n=108 - -4.2 - -4.2 - -4.8 - -5.0 - -2.4 Placebo n
Slide 57: Taranabant Phase III Studies Ongoing
Taranabant (MK-0364) Phase III Studies Ongoing Taranabant Phase III program evaluating multiple doses up to and including 2 mg Entry criteria include patients controlled on one anti-depressant Patients with symptomatic depression and patients on multiple anti-depressants excluded Additional safety a
Slide 58: Migraine is a Debilitating Disease
Migraine is a Debilitating Disease Over 29 million Americans suffer from migraine The US Headache Consortium goals include treating attacks rapidly and consistently, and preventing recurrence Triptans are a first-line treatment for migraines Side-effects (e.g. chest pain, paresthesias) Not recommend
Slide 59: Proposed Role of CGRP Receptor Antagonists in Migraine
Proposed Role of Calcitonin Gene-Related Peptide (CGRP) Receptor Antagonists in Migraine CGRP is a potent neuropeptide expressed in the trigeminal system Increased during migraine and cluster headache CGRP receptor antagonists: May act at multiple sites to block the actions of CGRP Are not vasoconst
Slide 60: MK-0974: Potent Oral Antagonist of the CGRP Receptor
MK-0974: Potent Oral Antagonist of the CGRP Receptor Phase II clinical study demonstrated efficacy in migraine patients Significant relief of migraine pain two hours after dosing Relief of migraine-associated symptoms Generally well tolerated Phase III clinical trials ongoing Anticipated filing NDA
Slide 61: MK-0974 Pain Relief Results in Phase II Study
MK-0974 Pain Relief Results in Phase II Study 2 hours 24 hours 46.3 68.1 48.2 67.5 69.5 0 10 20 30 40 50 60 70 80 Placebo n=115 MK-0974 300mg n=38 400mg n=45 600mg n=40 Rizatriptan 10mg n=34 Proportion of patients, % 23.5 52.6 37.8 52.5 35.3 0 10 20 30 40 50 60 70 80 Proportion of patients, % Placeb
Slide 62: Osteoporosis Affects Millions in Europe, Japan and USA
Osteoporosis Affects an Estimated 75 million People in Europe, Japan and USA 1 in 3 women over 50 years of age will experience osteoporotic fractures, as will 1 in 5 men 24 percent of hip fracture patients aged 50 and over die in the year following their fracture At six months after a hip fracture,
Slide 63: Odanacatib (MK-0822): Cathepsin K Inhibition
Odanacatib (MK-0822): Cathepsin K Inhibition for the Treatment of Osteoporosis Cathepsin K is a cysteine protease responsible for bone matrix degradation Inhibition of Cathepsin K decreases bone resorption MK-0822 is a selective and reversible inhibitor of Cathepsin K CO2 H2CO3 H2 CO2 HCO-3 HCO-3 Cl
Slide 64: MK-0822: A New Mechanism for Osteoporosis
MK-0822: A New Mechanism for the Treatment of Osteoporosis Results of clinical studies to date Dose-dependent increase in bone mineral density at key fracture sites At doses of 10, 25 or 50 mg once weekly MK-0822 was generally well tolerated Weekly dosing of MK-0822 with or without food No unique do
Slide 65: MK-0822 Increases in Bone Mineral Density in Phase IIB
- -2 - -1 0 1 2 3 4 5 LS Mean Percentage Change from Baseline * p ? 0.001, **p ? 0.050 Lumbar Spine Total Hip Femoral Neck Hip Trochanter * * * * * * ** * * * * * Placebo, n = 81 3 mg, n = 82 10 mg, n = 77 25 mg, n = 78 50 mg, n = 77 MK-0822 Showed Increases in Bone Mineral Density at Key Fracture S
Slide 66: Deforolimus (MK-8669): Novel mTOR Inhibitor for Cancer
Deforolimus (MK-8669; AP23573): Novel mTOR Inhibitor for Cancer Global collaboration established with ARIAD (July 2007) ARIAD's Phase I studies demonstrated favorable activity with sarcoma mTOR is a cellular master switch that plays a central role in: Cell growth Cell division (proliferation) Metabo
Slide 67: MK-8669: Novel mTOR Inhibitor for Cancer
MK-8669: Novel mTOR Inhibitor for Cancer Initial Phase II study demonstrated encouraging activity as a single agent in metastatic endometrial cancer Patients with cancer that failed prior chemotherapy 27% (12/45) had clinical benefit response (objective response, or stable disease for at least 4 mon
Slide 68: HEPLISAV (V-270): Novel Hepatitis B Vaccine
HEPLISAV (V-270): Novel Hepatitis B Vaccine Licensed from Dynavax in November 2007 Contains HBsAg and immunostimulatory sequences Target toll-like receptor 9 on dendritic cells Enhance specific immune response Phase II clinical study results demonstrate robust response after two doses1 Phase III tri
Slide 69: HEPLISAV Phase II Study: Faster Response with Fewer Doses
HEPLISAV (V270) Phase II Study: Faster Response and Antibody Persistence with Fewer Doses Response in 18-28-year-olds 0 4 8 9 12 24 25 28 60 Week % anti-HBsAg ?10 mIU/mL 0 20 40 60 80 100 12% 4% 18% 64% 57% 93% 98% 90% 100% 75% 79% HEPLISAV (0, 8 wks); Menjugate(r) (24 wks) Engerix-B(r) (0, 8, 24 wk
Slide 70: Merck's Late-Stage Development Pipeline
Merck's Late-Stage Development Pipeline December 11, 2007 JANUMET Diabetes ISENTRESS (MK-0518) HIV 2007 US Approvals CORDAPTIVE* (MK-0524A) Atherosclerosis IV EMEND (MK-0517) CINV (Approvable) 2007 Under Review MK-0974 Migraine MK-7418 (KW-3902) Heart Failure MK-0822 Osteoporosis MK-8669 (AP23573) C
Slide 71: CETP: Potential Role in Atherosclerosis
Cholesteryl Ester Transfer Protein (CETP): Potential Role in Atherosclerosis CETP facilitates the transfer of cholesteryl esters from HDL to other lipoproteins Elevated plasma HDL-C levels are inversely correlated with cardiovascular risk Inhibition of CETP raises HDL-C levels and decreases LDL-C le
Slide 72: ILLUMINATE: Cardiovascular Outcomes Study of Torcetrapib
ILLUMINATE: Cardiovascular Outcomes Study of Torceptrapib (>15,000 patients)1 ILLUMINATE tested the proposition that the investigational CETP inhibitor, torcetrapib, would decrease the risk of clinical cardiovascular events Trial terminated prematurely due to increased risk of death and cardiac even
Slide 73: Preclinical Studies of Torcetrapib Blood Pressure Effects
Merck's Preclinical Studies to Investigate Off- Target Blood Pressure Effects of Torcetrapib Preclinical studies to evaluate the acute hemodynamic effects of the CETP inhibitors, torcetrapib and anacetrapib (MK-0859) Results Effects of torcetrapib Acute increase in blood pressure Appears to be media
Slide 74: Anacetrapib Ambulatory Blood Pressure Profile
Anacetrapib (MK-0859) Clinical Cross-Over Study (n=22): Ambulatory Blood Pressure Profile Comparable to Placebo R Krishna, European Society of Cardiology Congress, Sep 2007 Day 10 (hour) Mean Systolic Blood Pressure (SE) (mmHg) 2 4 6 8 10 12 14 16 18 20 22 24 100 110 120 130 Day 10 (hour) Mean Diast
Slide 75: Anacetrapib (MK-0859): A Novel CETP Inhibitor
Anacetrapib (MK-0859): A Novel CETP Inhibitor Results from Phase IIb dose-ranging study in patients with dyslipidemia 8-week treatment period: Placebo, Atorvastatin alone, Anacetrapib (4 doses), Anacetrapib (4 doses) + Atorvastatin Anacetrapib significantly decreased LDL-C Decreases in Apo B and Lp(
Slide 76: Anacetrapib: Effects on LDL-C
Anacetrapib (MK-0859): A Novel CETP Inhibitor Effects on LDL-C Anacetrapib Monotherapy % Change from Baseline in LDL-C Weeks 0 2 4 8 - -80 - -60 - -40 - -20 0 20 Anacetrapib + Atorvastatin Weeks 0 2 4 8 - -80 - -60 - -40 - -20 0 20 % Change from Baseline in LDL-C D. Bloomfield, Intl Symposium on Dru
Slide 77: Anacetrapib: Effects on HDL-C
- -20 0 20 40 60 80 100 120 140 160 0 2 4 8 - -20 0 20 40 60 80 100 120 140 160 0 2 4 8 % Change from Baseline in HDL-C % Change from Baseline in HDL-C D. Bloomfield, Intl Symposium on Drugs Affecting Lipid Metabolism, Oct 2007 Anacetrapib (MK-0859): A Novel CETP Inhibitor Effects on HDL-C Placebo A
Slide 78: Anacetrapib: Summary of Clinical Study Results
Anacetrapib (MK-0859): Summary of Clinical Study Results Favorable lipid changes, including significant decreases in LDL-C and increases in HDL-C versus baseline, as monotherapy and in combination with atorvastatin The safety and tolerability profile of anacetrapib was comparable to placebo in clini
Slide 79: Anacetrapib: Sequenced Phase III Program Planned for 2008
Anacetrapib (MK-0859): Sequenced Phase III Program Planned to Start in 2008 Intend to initiate sequenced Phase III program in 2008 Obtain additional clinical experience in patients before initiating outcomes study Evaluate effects on key safety parameters (blood pressure, electrolytes, aldosterone)
Slide 80: Outline
Outline MRL Overview Late Stage Pipeline Review Pipeline Overview
Slide 81: R&D Pipeline Discussion
R&D Pipeline Discussion Phase III Specific candidates Phase I and II The most advanced candidate for a specific mechanism within a given therapeutic area Not included: Back-up candidates, regardless of their phase of development Additional indications in the same therapeutic area Additional claims f
Slide 82: Merck Pipeline: December 11, 2007
Merck Pipeline: December 11, 2007 * Proof-of-Concept Molecule (1) Clinical Program conducted by Allergan, Inc. Progressed since December, 2006 Athero., MK-0524B Under FDA Review Obesity, MK-0364 (taranabant) Stroke, MK-0724 Cancer, MK-4721 Cancer, MK-0646 Cancer, MK-0457 Overactive Bladder MK-0634 R
Slide 83: Summary
Summary Two product approvals in 2007 and a robust late-stage pipeline Two filings under FDA review Anticipate two new filings in 2008 Seven programs currently in Phase III Building on the successes of GARDASIL and JANUVIA Strong overall pipeline to support long-term growth
Slide 84: Questions and Answers
Questions) and) ANISWETS)
Slide 85: Global Human Health and Commercialization
Kenneth C. Frazier Executive Vice President and President, Global Human Health Global Human Health and Commercialization
Slide 86: Agenda
Agenda Global Human Health Strategy Realizing the Benefits of our Plan to Win Maximizing the Success of Recent Launches Driving In-Line Product Growth Preparing for Upcoming Launches Evolving to New Commercial Model Driving Growth in Emerging Markets Summary
Slide 87: Merck's Commercial Strategy: Plan to Win
Outcomes Merck's Commercial Strategy Merck's Plan to Win Designed to Succeed in a Changing Environment Market Environment Maximize new product launches Capitalize on lifecycle management Focus on customer value and efficiency through New Commercial Models Standardized, scaleable global processes to
Slide 88: Therapeutic and Region/Country Leadership
Global Human Health Achieving Benefits of Therapeutic and Region/Country Leadership United States Asia Pacific Latin America Japan Europe, Middle East, Africa, Canada Diabetes & Obesity Atherosclerosis & Cardiovascular Respiratory, Bone, Arthritis & Analgesia Oncology Neuroscience & Ophthalmology Ad
Slide 89: Realizing the Benefits
Realizing the Benefits Successfully launched 7 new products in the last 2 years Grew global revenue 8% 3Q YTD, despite US patent expiries of ZOCOR and PROSCAR Achieved nearly four-fold increase in global vaccine sales since 2005 Starting to gain significant savings in Marketing & Administrative expe
Slide 90: Achieving Our Plan to Win Through Successful Product Launches
Achieving Our Plan to Win Through Successful Product Launches
Slide 91: GARDASIL Unprecedented Execution
GARDASIL Unprecedented Execution Public sector funding available, e.g., Australia, Germany, US & Canada; recommendation issued in UK (2008 tender) Comprehensive US private sector coverage: 99% of managed care lives* Strong opinion leader support Unprecedented uptake across specialties Vaccination be
Slide 92: GARDASIL Strong Performance Driven by US and Australia
GARDASIL Strong Performance Driven by US and Australia Cumulative sales of $1.4 billion since launch with over 5 million receiving first dose Rapid funding, physician and consumer adoption support global success Strongest uptake in US, Australia; SP-MSD success driven by early adopter countries, inc
Slide 93: GARDASIL Profile
GARDASIL Profile Only HPV vaccine proven to protect against: Four types of HPV (quadrivalent) Genital warts (>1 MM US cases/year) HPV 18 related cervical pre-cancers as a separate clinical endpoint AIS, immediate cervical cancer precursor More cancers - vaginal cancer (13K WW cases/year) and vulvar
Slide 94: GARDASIL Short- and Long-Term Health Economic Benefits
GARDASIL Short- and Long-Term Health Economic Benefits HPV 6/11 protection provides great early return on investment Longer term cost effectiveness driven by prevention of HPV 16/18 Short-Term Economic Estimates Long-Term Economic Estimates Analysis conducted for the UK based on economic model * Exc
Slide 95: GARDASIL Driving Continued Growth Through Life Cycle Management
GARDASIL Driving Continued Growth Through Life Cycle Management Cumulative Market Penetration Time Stage Four 9-26 Year Old Males Stage One - Core Phase III Program in 9-26 Year Old Females Cervical Cancer Genital Warts CIN 1-III, VIN/VAIN II, III Stage Two Vaginal Cancer, Vulvar Cancer Immune Memor
Slide 96: GARDASIL Summary
GARDASIL Summary: Growth Driven By Penetration of Current and New Cohorts; Strong Competitive Position Increase uptake in current cohorts: Enhance penetration among 19-26 year olds Continue to drive consumer awareness/origination Support ex-US policy recommendations/funding Enhance compliance Launch
Slide 97: ZOSTAVAX, ROTATEQ and VARIVAX Strong Market Acceptance
ZOSTAVAX, ROTATEQ and VARIVAX Strong Market Acceptance and Initial Success Approved in 73 countries Launched in US, 41 other markets Recommended by ACIP and reimbursed by plans covering ~96% managed care lives* Penetration in US over 60% of birth cohort Well positioned to maintain US market leadersh
Slide 98: JANUVIA/JANUMET Unprecedented Execution
JANUVIA/JANUMET Unprecedented Execution Highly Differentiated Products Rapid and Strong Market Uptake Discovery and development in 3.8 years vs. industry average of 7.1 years First DPP-4 Inhibitor on the market Approved in 64 countries; reimbursed in 14 countries, many in record time JANUMET launche
Slide 99: JANUVIA Rapid and Strong Market Uptake
JANUVIA/JANUMET JANUVIA - Rapid and Strong Market Uptake Source: IMS Health, NPA Weekly NGPS Diabetes Oral and GLP-1 Market JANUVIA 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 10/20/06 11/3/06 11/17/06 12/1/06 12/15/06 12/29/06 1/12/07 1/26/07 2/9/07 2/23/07 3/9/07 3/23/07 4/6/07 4/20/07 5/4/0
Slide 100: JANUMET Additive Impact
JANUVIA/JANUMET Additive JANUMET Impact Source: IMS Health, NPA Weekly NGPS Diabetes Oral and GLP-1 Market JANUMET Sitagliptin FAMILY 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% TRx Share 10/20/06 11/3/06 11/17/06 12/1/06 12/15/06 12/29/06 1/12/07 1/26/07 2/9/07 2/23/07 3/9/07 3/23/07 4/6/07 4
Slide 101: JANUVIA/JANUMET Growth Through Life Cycle Management
JANUVIA/JANUMET Growth Through Life Cycle Management Cumulative Market Penetration Time Stage Four Stage One - Core Phase III Program Monotherapy (2 studies) Combination Therapy (Met, PPAR) Dosing for renal impairment Stage Two Add on to MF (vs. SFU) therapy EU 2nd line study Stage Three SFU/Met add
Slide 102: ISENTRESS Meets Critical Unmet Need for HIV Therapy
ISENTRESS Meets Critical Unmet Need for HIV Therapy In 2007, ~33.2 MM HIV positive people worldwide ~2.5 MM new infections and ~2.1 MM AIDS deaths per year ~2.6 MM patients treated worldwide People living with HIV In the US ~1.2 MM (500K treatment experienced) In the EU ~2.3 MM (415K treatment exper
Slide 103: ISENTRESS Early Success Driven by Unprecedented Execution
ISENTRESS Early Success Driven by Unprecedented Execution Strong Scientific Leader support across the world In the US, ISENTRESS surpassed Prezista in comparable retail pharmacy data by week two In Canada, the Ontario government has made the decision to reimburse ISENTRESS within a few days of recei
Slide 104: ISENTRESS Rapid and Strong Market Uptake
ISENTRESS Early Success - Rapid and Strong Market Uptake Comparison of ISENTRESS Weekly NRx Trends vs. Major HIV Drug Launches 0 500 1000 1500 2000 2500 3000 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 NRx ISENTRESS Kaletra Reyataz Prezista Aptivus Selzentry Viracept Lexiva Source: IMS Health, NPA Plu
Slide 105: ISENTRESS Growth Through Lifecycle Management
ISENTRESS Driving Continued Growth Through Lifecycle Management Cumulative Market Penetration Time Stage Four Pediatrics (including neonates) Stage One Core Phase III Program in treatment experienced patients with triple class resistance Treatment-experienced patients with virological suppression an
Slide 106: Late Stage Product Candidates: Next Wave
Late Stage Product Candidates Next Wave to Address Significant Unmet Needs Lipid Management - MK-0524A (CORDAPTIVE*) MK-0524B (ER niacin/laropiprant/simvastatin) Large patient population with abnormal lipids Unmet need for proven treatment to increase HDL, with improved tolerability Proven outcomes
Slide 107: Dyslipidemia in the United States
*Percent of US Adult Population Low HDL-C (26%*) High TG (13%*) High LDL-C (26%*) CORDAPTIVE Dyslipidemia in the United States Source: NHANES IV Data, U.S. Population projected to 2007 Nearly 100 million Americans have at least one "abnormal" lipid parameter ~55 million have high LDL-C ~55 million h
Slide 108: Executing to Maximize Global In-Line Product Performance
Executing to Maximize Global In-Line Product Performance Sales: 3Q YTD $3.1 billion, +19% #1 product in US respiratory market #1 asthma controller brand for children worldwide Sales: 3Q YTD $2.5 billion, +7% #2 branded AIIA in the US and Europe Sales: 3Q YTD $3.7 billion, +34% VYTORIN continues to o
Slide 109: Evolving to New Commercial Models
Evolving to New Commercial Models
Slide 110: Continuous Improvements to Current Model
Speed of Decisions Accountability Customer focus Strong Execution Global Franchises Today Future Optimized Current Model New Commercial Models Continuous Improvements to Current Model
Slide 111: Optimized Current Model Helping to Drive Performance
Optimized Current Model Helping to Drive Performance TRx Share 13.9% 14.1% 12.2% 12.5% 18.7% 17.6% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 SINGULAIR Zyrtec Advair Source: IMS NPAO
Slide 112: Multi-Channel Marketing/Technology
Build-a-Patient Multi-Media e-detail aid Exam Room Education Waiting Room TV Multi-Channel Peer to Peer Education Customized Patient Kit TV / Print Website Banner ads Campaign Customized email Multi-Channel Marketing/Technology MCO Asthma Improvement Program 53
Slide 113: Journey for Control Program Advancing Diabetes Education
Journey for Control Program Advancing Diabetes Education "Bringing key partners together" A wide variety of offerings to improve learning and behavior modification Innovative teaching tools and special training to use them New educational options to offer their patients More educational options for
Slide 114: Solutions to Address Customer Needs
Solutions to Address Customer Needs Unbranded resource to address healthcare disparities Customers indicated need to increase training on cultural competence Resource developed in coordination by those "closest to the customer" Resource also focuses on Merck Priority Disease Areas
Slide 115: Embrace New Ways of Engaging Physicians
Critical to Embrace New Ways of Engaging Physicians on Their Terms and Execute with Greater Productivity On average, a call lasts 4.6 minutes Current Industry Model Source: ImpactRx SNL 2006 100 Sales Reps 83 make it past reception 56 see the physician (27 drop samples and leave) < 24 have quality,
Slide 116: Changing Our Commercial Model
Brand Differentiation Merck Differentiation Customer Value Score Trust & Value Metrics Partner with customers to improve patient outcomes (via products and solutions) New Commercial Models Model Key Metrics Changing Our Commercial Model Deliver consistent, compelling brand messages to explain value
Slide 117: Piloting New Commercial Models
Field Team determines region boundaries Execute Determines # of personnel/resources Alignment based on customers Field Team determines # customers and workload Field-driven "bottom-up" alignment process Piloting New Commercial Models a "Laboratory" with 700 Customer-Facing Employees HQ determines #
Slide 118: Path to New Commercial Models
Pilots are Generating: Continuous Improvements to Current Model and Path to New Commercial Models Speed of Decisions Accountability Customer focus Strong Execution Global Franchises Today Customer Account Managers Asymmetrical deployment Customer-centric solutions and culture Future Optimized Curren
Slide 119: Path to New Commercial Models
Speed of Decisions Accountability Customer focus Strong Execution Global Franchises Today Customer Account Managers Asymmetrical deployment Customer-centric solutions and culture Future New Commercial Model Optimized Current Model Pilot Current Transition Phase Future State Pilots are Generating: Co
Slide 120: New Commercial Models
Value-based partnership vs. message frequency transactions Longer-term customer loyalty and advocacy vs. short-term product utilization Increased focus on healthcare system - physician groups, integrated health systems, payers and consumers Strategic channel management to decrease dependency on pers
Slide 121: Emerging Markets On Track to Double Sales to $2 Billion
Emerging Markets On Track to Double Sales to $2 Billion by 2010 Merck well positioned to capitalize on key growth opportunity High growth rates & rapidly evolving health care systems Speed to market & market access are key levers Product portfolio well aligned to meet healthcare needs Increasing bur
Slide 122: Summary
Summary Realizing our Plan to Win Maximizing Product Launches - 7 in 2 years Driving In-Line Product Growth Preparing for Next Wave of Launches Moving Forward on New Commercial Models Increasing efficiency and effectiveness Growing in Emerging Markets On track to double sales to $2 billion in emergi
Slide 123: Questions and Answers
Questions and Answers
Slide 124: Financial Overview
Peter N. Kellogg Executive Vice President and Chief Financial Officer Financial Overview
Slide 125: Focused on Shareholder Returns
Focused on Shareholder Returns New business model structured to drive top line and double-digit bottom line growth by 2010, excluding certain items Savings from cost management are reinvested to accelerate expanded pipeline productivity and new launches, and to contribute to Earnings Per Share growt
Slide 126: 2007 Key Highlights
2007 Key Highlights - Realizing the Benefits Top Line: Strong sales growth, despite patent expiries of ZOCOR and PROSCAR Vaccine sales growth led by GARDASIL and VARIVAX Continued double-digit growth of SINGULAIR Successful launches of JANUVIA and JANUMET Alliances: Continued growth from ZETIA and V
Slide 127: Anticipated 2008 Performance
Anticipated 2008 Performance Driving Toward Long-Term Objectives Top Line: Newly launched products and optimization of in-line products offset another year of patent expiries JANUVIA, JANUMET, ISENTRESS, GARDASIL, ZOSTAVAX, VARIVAX and SINGULAIR Alliances: ZETIA and VYTORIN drive equity income growt
Slide 128: AZLP 2008 Payments and Pre-tax Gain
AZLP 2008 Payments and Pre-tax Gain Contractually, AZLP is required to buy out a portion of Merck's Partnership interest in AZLP Additionally, deferred income set up in 1999 will be recognized in 2008 Merck's investment balance for equity stake in AZLP Estimated pretax gain Merck repays a $1.4 billi
Slide 129: 2007 and 2008 Performance
2007 and 2008 Performance 2007 Results Expected to be In-Line with Guidance Merck anticipates 2007 non-GAAP EPS of $3.08 to $3.14* Merck anticipates 2007 GAAP EPS of $1.45 to $1.51 2008 Guidance Merck anticipates 2008 non-GAAP EPS of $3.28 to $3.38** Merck anticipates 2008 GAAP EPS of $3.96 to $4.06
Slide 130: Growth from New and In-Line Products Offset Patent Expiries
Growth from New and In-Line Products Offset Significant Patent Expiries * For illustrative purposes only ** Anticipated growth off Sales Ex-Expiries 2005 2006 2007 2008 Revenue* Total Sales Expiries Sales Ex-Expiries New Launches In-Line $22B - -$2B $23B ~ -$2B ~$24B ~ +10% to +12%** ~ -9% to -11%
Slide 131: Anticipate Double-Digit EPS CAGR
Anticipate Double-Digit EPS CAGR (2010/2005 Base*) Our guidance anticipates: Revenue incl. 50% of JV's: 4 to 6% CAGR (2005 - 2010) Cumulative savings: $4.5 to $5.0 billion through 2010 2010/2005* Earnings Growth: Double-digit EPS CAGR Supported by: Gross margins of 77 to 78% Compound annual R&D expe
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