Merck Annual Report 2001
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Poised for a New Generation of Breakthroughs Poised for a New Generation of Breakthroughs
< Unlocking the secrets of the brain  
Sara Rao, research associate, and her colleagues in our San Diego research laboratories (formerly SIBIA Neurosciences) are part of our six-site network focusing on the human brain and nervous system. Our hope is that this critical mass of scientific expertise will allow us to make great strides in discovering novel medicines for diseases where little or no treatment exists, such as Alzheimer’s disease, schizophrenia, bipolar disorders, stroke and obesity.

6 Introduction
6 Leading the way in genomics
6 Supporting our products with additional trials
7 Merck’s research strategy
7 Forging external alliances
8 Marketing: Identifying our customers’ needs
9 Getting medicines to the people
9 Strong today, stronger tomorrow
10 Merck-Medco to Become Separate, Publicly Traded Company
11 Our workforce provides Merck with a powerful competitive advantage
In the next few years, we expect to introduce new medicines that will advance the treatments of diabetes, arthritis, anxiety, HIV/AIDS, heart and lung diseases, cancer and depression.

By 2006, we plan to have introduced or filed for 11 new medicines – each of which employs a unique mechanism of action. Each may have the potential to become an important medical advance because it will offer a novel approach to disease treatment and address significant unmet medical needs.

These new medicines will build on the strong record of productivity our research laboratories have shown since 1995. Between that year and 2001, we introduced 17 new medicines and vaccines. Also in 2001, Invanz, an injectable once-daily antibiotic for hospital use, was approved by the U.S. Food and Drug Administration (FDA). In 2002, we expect that the FDA will complete its reviews of two more: Zetia* (for cholesterol) and Singulair (for allergic rhinitis).

Leading the way in genomics
Looking beyond our near-term and intermediate pipeline of potential medicines and vaccines, we are making important advances in basic research, notably in the burgeoning field of genomics and its natural extension, proteomics. To speed those developments, Peter S. Kim, Ph.D., a renowned molecular biologist, joined Merck in 2001 as executive vice president of research and development. Also in 2001, we acquired Rosetta Inpharmatics, a Washington-based company that brings us cutting-edge genomic technology and research capabilities.

Genomics permits Merck to select drug targets more accurately, to better understand how medicines act and then work in treating diseases, and to identify more readily and quickly the safety issues involved in potential drug candidates. These developments should help make the drug development process more efficient. They should also lead to more precise “tailoring” of medicines to patients and potentially higher patient compliance. “Genomics will have a major impact in the clinic and in the way medicine is practiced in the future,” says Dr. Kim.

Peter S. Kim, Ph.D.
Building on the promise of genomics
“A major initial goal of mine at Merck,” says Peter S. Kim, Ph.D., Merck Research Laboratories executive vice president, research and development, “is to rapidly position the Company to capitalize on the genomics revolution. We are investing heavily now because we are convinced that it will revolutionize health care.

“While genomics will help Merck make great strides in basic discovery, another application that I’m excited about is the development of genomic analyses in preclinical studies (drug testing before human trials) to evaluate the safety and effectiveness of compounds. Right now, that takes a long time and a lot of different studies. We’re aiming to develop genomics methods to predict which molecules will have bad characteristics (such as undesirable side effects) so that we can remove them early in the process and focus on improving success for the ones that are taken forward. The use of genetic differences among individual patients may improve the accuracy of diagnoses, improve the likelihood of response to a drug and decrease the likelihood of adverse reactions. In the future, new technologies may allow us to do better and faster clinical trials because we can identify genetic markers that are predictive of an outcome in the clinic.”
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Shahnaz Shahinfar, M.D.
< Merck excels at developing medicines to help the broadest patient populations <

Shahnaz Shahinfar, M.D., senior director, clinical research, led a study that demonstrated reduced progression of renal disease in patients with Type 2 diabetes and kidney disease who used our antihypertensive Cozaar. Merck continues to support the research into and growth of Cozaar with ongoing investments in two additional outcomes studies: a hypertension survival study and a post-heart attack survival study. The excellent tolerability and effectiveness of Cozaar and Hyzaar have helped propel the two to the No. 2 sales rank for global branded antihypertensive medicines. Those characteristics will help Cozaar and Hyzaar maintain growth in their class of medicines. Sales for the two were $1.9 billion in 2001, an increase of 11 percent over 2000.
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Supporting our products with additional trials
Building for tomorrow does not mean short-changing today. Merck Research Laboratories (MRL) designs and conducts myriad ongoing trials that help expand the reach of our products already on the market. Cozaar, our leader in the class of AIIA drugs for hypertension and the No. 2 branded antihypertensive agent worldwide, provides just one example. This year, we completed a study that demonstrated that Cozaar significantly delayed the progression to end-stage renal disease in patients with kidney disease and Type 2 diabetes. About 146 million people worldwide have Type 2 diabetes and, of these, about 20 to 30 percent develop kidney disease. We have asked regulatory authorities worldwide to add an indication for this use in the label for Cozaar.

In addition, we are well along with two large trials, each with thousands of hypertensive patients, to see if Cozaar can offer benefits to patients suffering from end organ damage associated with long-standing high blood pressure.

Similar studies are either completed or well advanced for several other major products, most notably Zocor, Vioxx, Fosamax and Singulair, which, along with Cozaar/Hyzaar, accounted for 68 percent of Merck’s worldwide human health sales for 2001. We expect these studies to greatly expand the market potential for these five key drivers of our growth, especially in the areas of arthritis and pain (Vioxx), allergic rhinitis (Singulair) and heart disease (Zocor).

Additional studies with Fosamax showed that a once-weekly dose of 70 mg Fosamax (osteoporosis) was as well tolerated and effective as a 10 mg daily dose. Another study found that patients considered the once-weekly dose of Fosamax to be more convenient to take than the daily dose. The sales for the once-weekly formulation of Fosamax accelerated in 2001 in the United States.

Outcomes trials for our key products continue to provide our marketing and sales forces with the scientific data required to demonstrate the value of these medicines to our millions of customers – whether they be physicians, patients, or payers such as managed care and insurance companies. That value will ensure these five key medicines, supported by our portfolio of other products that meet important medical needs, will continue to fuel Merck’s success for years to come.


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continued >

*Ezetimibe is under development around the globe (except in Japan)
through a joint venture between Merck and Schering-Plough Corporation

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Merck Annual Report 2001
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