Massive pharma merger on the horizon

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Massive pharma merger on the horizonPharmaceutical company Merck has just announced that it will merge with a major competitor Schering-Plough creating a multinational pharmaceutical giant.

The boards of directors of both companies have unanimously approved the agreement under which they will combine in a stock and cash transaction under the name Merck.

The value of the merger is estimated at $41.1 billion.

"The combined company will benefit from a formidable research and development pipeline, a significantly broader portfolio of medicines and an expanded presence in key international markets, particularly in high-growth emerging markets," says Richard T. Clark, Merck chairman, president and CEO.

He adds, "The efficiencies we gain will allow us to invest in strategic opportunities, while creating meaningful value for shareholders."

According to the Fortune 500 2008 ranking, Merck is the world’s fourth largest pharmaceutical company with total revenue of $ 24.2 billion, while Schering-Plough is ranked ninth at $ 12.6 billion.

The announcement comes on the heels of recent complaints by natural products industry groups about the FDA practice of classifying dietary supplements as drugs if they are an ingredient of newly approved medications.

As such, they can no longer be sold without a prescription, boosting profit opportunities of pharmaceutical companies.

The critics believe that the FDA’s approach favors big pharma interest at the expense of natural supplements producers.
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