Merck (MRK) - Time (For You) to Run?

Merck has run up all year -- actually, for more than a year -- in part due to real success and in part due to increased efforts to explain its pipeline of products yet to be approved. The question for investors -- is it real or is it activity to support the price of the stock in the face of the Zocor patent rxpiration and another big one next year. I vote for the latter. Why?

Merck is facing a huge patent expiraiton next year -- Fosamax for bone density in February, less than tow months away --a $3 billion plus drug. Don;t be surprised if the company loses 80% of its market share by yearend, probabyl sooner. That is a lot of easy revenue to replace. And the drugs in the pipeline are not that close to approval. Are they worth investing in?

The first drug is a new and improved anti-cholesterol drug that would be better than generic statins. The problem is this drug is very similar to torcetrapib, a drug Pfizer (PFE) pulled from trials because of very serious side affects.

The second drug is an obesity drug that works the old fashioned way -- it suppresses the appetite and cravings rather than involve itelf with the metablism of hunger and saiety. Simply put, old technology that is very similar to the drug Sanofi-Aventis (SNY) Acomplia that the FDA has put in the deep freeze and will probably, in my opinion, not get to market in the US.

The consensus says the comapny will have flat revenue in 2008 -- yeah, right -- and they will earn $3.40. That they might do with cost cutting. So they are selling at a slight premium to the market -- about 18 times next year's earnings. With zero growth prospects.

One other thing to consider -- there is a reasonable probability price controls of many Merck products come into play in 2009 when the Dems or a weak Republican take the White House -- even some Repubicans back giving Medicare the right to negotiate prices -- so watch out. The run is over.