NEW YORK ( TheStreet) -- Shares of pharmaceutical giant Merck ( MRK) are down by more than 6% on Thursday morning after it announced that an experimental blood clot prevention drug that held the promise of billions in sales had suffered serious setbacks in two trials.

Trading in Merck shares was heavy on Thursday morning, with more than twice its average daily volume of 22 million shares reached an hour after the market open.

The race is on for big pharma companies like Merck and Pfizer ( PFE) to find the next blockbuster drug. While Pfizer has the most notable patent expiration of 2011 with Lipitor set to go generic in November, the pipeline of both Merck and Pfizer are keys for these stocks breaking out of the narrow trading range in which their stable cash flow and dividend-friendly profile keep them hemmed in.

Merck said that one trial for vorapaxar would be discontinued immediately, while a second trial would be discontinued for patients who had previously suffered a stroke.

Les Funtleyder, health care analyst at Miller Tabak, noted in an email to TheStreet, "There will always be days like this in health care. The 'but' is when a big drug does go down, it puts more pressure on the rest of the pipeline to be successful."

The blood clot drug has been among the most promising in the Merck pipeline as a revenue replacement for the company. Two key blood clot pills with sales in the billions went generic in 2010.

Merck shares fell from above $37 to below $35 on Thursday morning. The stock's 52-week high above $41 dates back to January 2010.

Merck is much more richly valued by the market than Pfizer in terms of price to earnings, though all the drug stocks trade at multiples that are considered relatively low compared to other sectors in the equities market.

Vorapaxar was acquired by Merck in its acquisition of Schering-Plough.

Both Merck and Pfizer start 2011 with new CEOs. Merck's new CEO Kenneth Frazier took over on January 1, with a vow of not throwing drug exploration money around loosely but rather, focusing on innovative drugs.

Merck's statement about the vorpaxar trials was not a "waving of the white flag" completely, but the market seemed to be reading it as such.

Peter S. Kim, Ph.D., president of Merck Research Laboratories, said in the company's statement, "We remain committed to conducting large clinical trials such as TRACER and TRA-2P that are so critical to understanding new cardiovascular medicines and to advancing the standard of care for patients with heart disease. We thank the investigators and the patients involved in these two studies for their continued efforts to understand the potential role of vorapaxar in the treatment of cardiovascular disease."

Merck said it plans to update its projections for regulatory filings for vorapaxar once the company has received data from the aborted drug trial and can determine an updated completion date for the ongoing study.

Miller Tabak's Funtleyder added, "You never know with trials, but I would say the drug's guilty until proven innocent."

The drug stock sector was down on Thursday morning in line with the market sell off, but no stock other than Merck among the big pharma companies was down by more than 1%.

The outlook for big pharma stocks at the outset of 2011 has been largely positive, given the low P/E ratios in the sector, and an improving economy serving as a boost to drug sales.

-- Written by Eric Rosenbaum from New York.

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