Merck Dives Into Biotech

Updated from 10:41 a.m. EST WHITEHOUSE STATION, N.J. -- Drugmaker Merck (MRK) tried to reassure investors Tuesday that its latest restructuring strategy will put the company back on a growth track as it moves into new markets and opens units aimed at taking advantage of biotechnology.

During its annual business briefing, Merck said it is on track to reach its goal of $2 billion in sales from emerging markets including China and India. Meanwhile, it is creating Merck BioVentures, a unit aimed at developing biotechnology-based treatments and products. That unit would also focus on generic biotechnology drugs, which could become a key issue during the next session of Congress.

"We're building a sustainable model for success," said Chairman, President and Chief Executive Richard T. Clark in a statement. "We remain focused on achieving our short-term objectives, while investing appropriately for our future success."

Merck's stock, which closed at $27 Monday, was trading down 41 cents, or 1.5%, at $26.59 Tuesday afternoon.

The reassurance follows a slashed outlook from management earlier this month as slower product sales, generic competition and a weak economy eat into Merck's bottom line. Safety concerns have been a lingering issue for the company's cholesterol drugs.

In its latest restructuring move, announced in October, the company expects to cut 7,200 jobs by 2011 and save $4 billion by 2013. But the move will cost about $1.4 billion in 2008 alone.

Merck reaffirmed its outlook for 2008 profit of between $3.28 and $3.32 per share and for 2009 profit of between $3.15 and $3.30 per share, excluding charges. Analysts polled by Thomson Reuters expect 2008 profit of $3.29 per share and 2009 profit of $3.28 per share.