“We try never to forget that medicine is for the people. It is not for profits. The profits follow, and if we have remembered that, they never fail to appear.” – George Merck II
In 1995 CEO Ray Gilmartin described the principle driver for Merck as growth. Not profitability, not cutting edge scientific breakthroughs, nor medicinal innovation or R&D… no, but growth. That intent continued into 2000 when the chairman’s letter to shareholders stated, “As a company, Merck is totally focused on growth.” At the time Merck had good reason to believe it could, in fact, accomplish this goal. They were on the cusp of releasing the FDA-approved and PTO-patented drug Vioxx. By 2002 Vioxx sales worldwide approached 2.5 billion, which weighed against a 25 billion company represented significant growth indeed. But in the same time period studies were finding an alarming relationship between Vioxx and an increase in ‘cardiovascular thrombotic events’ – heart attacks and strokes.
In 2008 the New York Times published an article revealing that research papers on Vioxx were often ghostwritten by Merck writers and then published under the byline of prestigious doctors and scientists. All in efforts to substantiate the value and public perception of Merck and Vioxx. By early 2005 the FDA had officially attributed up to 139,000 deaths to Vioxx and unofficial estimates ranged upwards of 250,000 globally, although statistics are difficult to gather in developing nations.
And while Gilmartin laudably ordered Marck to voluntarily remove Vioxx from the market in the fall of 2004, sending Merck’s stock from $45 to $33, one must wonder if Merck’s goal in the product Vioxx served the vision of George Merck II. Jim Collins reminds in How the Mighty Fall that the pursuit of profit over value, of growth over service can destroy even the mightiest of companies. Motorola, HP, IBM, even NASA have all suffered from hubris, conceit, denial of risk, and yet returned from the brink of disaster. Merck’s lesson is: remember the core vision and values, money will follow.