Merck & Co., Inc. is one of the leading biopharmaceutical companies in the world. The company is involved in the research, development, production, and sale of medicines, vaccines, biological therapies, and animal health products. Merck operates via two business segments: Pharmaceuticals and Animal Health. The company has its headquarters in Kenilworth, New Jersey, US, and was founded in 1891 by George Merck and Theodore Weicker.
Merck & Co. (the US company) traces its roots to the Merck Group (German company), which was founded way back in 1668. Merck & Co. was initially a subsidiary of Merck Group, but it was nationalized in the aftermath of World War I due to its German links. It was then later privatized, and to date, it has no direct links with its previous parent company. As a company, Merck has distinguished itself as one of the most innovative in the healthcare industry, always in the frontline in researching and developing medicines and vaccines that help prevent and treat diseases that threaten the lives of both humans and animals. As a testimony of its success, Merck has at least a dozen products that have consistently achieved annual revenues of over $1 billion. Some of its most successful products include Keytruda, Januvia, Zetia, Remicade, Gardasil, Mexsana, Isentress, Invanz, and Molnupiravir.
Merck has also been an active player in the M&A market, making multiple strategic acquisitions as well as spinning off a few non-core businesses. Additionally, Merck has also pursued important partnerships with major pharmaceutical companies, such as AstraZeneca and Quartet Medicine, to develop focused care medicines or therapies.
Merck & Co., Inc. is listed on the New York Stock Exchange, where it trades under the ticker symbol MRK. The stock is categorised in the Healthcare sector under the Drug Manufacturers-General industry.
Merck Stock History
The MRK stock had a blockbuster period between 1985 and 2000, rising from a split-adjusted price of circa $2 to highs of above $85. But the turn of the millennium proved challenging for the Merck stock, as the stock tumbled to lows of circa $25 by the end of 2004.
The dip was consistent with the broader market tech-inspired bubble burst, but Merck had its own fundamental challenges. The company had seen the expiry of the patent exclusivity of some of its best-performing products, while other drugs were withdrawn from the market due to new damning research on their long-term effects.
The stock, however, started to recover in late 2005, and it managed to edger higher to a peak of just above $55 in December 2007. The effects of the 2008 Great Recession then pressured the stock to below $25 by March 2009. Since then, however, the MRK stock has sustained an upward trend that saw it break above $80 in mid-2019. A brief dip happened during the 2020 COVID-19-inspired plunge, but the stock has been pushing towards $80 since then, as of September 2021.
Merck is one of the most solid and generous dividend payers on Wall Street. The company has sustained a more than respectable dividend yield of 3.5%, making the MRK stock one of the most attractive for investors.
How to Trade Merck Stock
Here are some of the factors to consider when trading MRK stock:
- Regulatory And Legislative Issues
The pharmaceutical industry is characterised by close regulatory scrutiny. As a major player in the industry, Merck must deal with regulatory and legislative issues such as approvals, patents, and rights protection, as well as environmental impacts. In recent history, Merck has particularly had to deal with the issue of patent expiration, with patents of notable drugs, such as Humira, also set to expire in coming years. This can encourage the development of generic alternatives that will dent Merck’s bottom line significantly.
- New Product Rollout
Merck has at least half a dozen products that individually generate at least $1 billion in annual sales. This means that the rollout of a new product can be very impactful on the company’s revenues. However, the process of releasing a new product in the market is very long and drawn out and requires heavy research and development, thorough testing, verification, and approval. A new product must really be a hit for it to recoup its investment and generate profits for the company. If a product is a miss, the costs can be extremely high for the company, and its stock can be pressured lower.
The pharmaceutical industry is fiercely competitive, with competition coming from global research-based pharmaceutical companies, smaller research-based companies focused on limited care therapies and generic drug manufacturers. Competition is primarily influenced by factors such as research and technological advances, regulatory and legislative issues, as well as the quality and prices of products.
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