Case Number: 5-207-253, Year Published: 2007
HBS Number: KEL289
Drug development, Drug development risk, Risk in pharmaceutical industry, Investment in drug development, Withdrawal of drugs from the market
This case follows Merck’s pharmaceutical product Vioxx from initial development to launch and subsequent withdrawal, and considers the decisions made at each stage by the Merck executives involved. The case concludes by examining the financial impact of the Vioxx withdrawal on the company and on the Merck stock value. LEARNING OBJECTIVE: Once a decision has turned out so poorly—such as Merck’s decision to launch and support Vioxx—it is easy to criticize. However, are these bad outcomes the result of a good decision which turned out unlucky, or are they decisions where the bad outcome could have been predicted? This case allows the students to examine the various steps of Vioxx’s development and launch. By doing so, they can consider whether the decision making process broke down and why. By connecting the Vioxx launch and withdrawal to changes in Merck’s cash flow and stock market value, the students can document the impact of such decisions on the value of the firm.
Return to Search Results