lost its cherished triple-A credit rating at Moody's Tuesday, adding to its woes one day after disclosing it is the subject of two federal probes.
The downgrade "reflects loss of revenue and cash flow associated with the Vioxx withdrawal; increasing concerns regarding Merck's Vioxx litigation exposure; erosion of Merck's competitive position based on its product portfolio post-Vioxx; greater reliance on a relatively thin late-stage pipeline," and other factors, the agency said.
Moody's dropped its long-term credit rating of Merck by two notches to Aa2, leaving the drugmaker's status under review for possible further downgrades.
Standard & Poor's currently has its triple-A rating for Merck under review. Merck currently has about $4.4 billion in long-term debt and $2.2 billion in short-term debt outstanding. Moody's left the short-term rating at Prime-1.
Moody's warned Merck could see another one-notch downgrade if its Vioxx liability grows above $10 billion over the next three years.