The Recall of Vioxx

Two hundred years later, in 1887, Merck started its operations in the US when chemist Theodore Weicker came from Germany to establish a branch. In 1891, George Merck (great-grandson of Jacob Merck) formed a partnership with Weicker. Initially, the company imported and sold drugs and chemicals from Germany. In 1903, Merck opened a plant at Rahway, New Jersey to manufacture alkaloids. Over the decades, Merck has emerged as the leading drug company in the US. Headquartered in Whitehouse Station, New Jersey, Merck's researchers had enjoyed phenomenal success over the years discovering new medicines to treat hypertension, osteoporosis, asthma, HIV and baldness.

In its first year, the drug generated $280 mn in revenues and by 2003 it was a $2.7 bn brand. In 1996, Merck launched Crixivan for HIV. In the next year, Merck developed Singulair for asthma and Propecia for baldness. The launch of these successful drugs boosted Merck's stock price which appreciated 188% between 1995 and mid-1999. In 1996, FDA threatened to revoke its approval for osteoporosis drug Fosamax since it was causing worse-than-expected gastrointestinal side effects. Later, the FDA agreed to continue it in the market, requiring Merck to include a warning label that instructed patients to sit upright for an hour after taking the medicine. In November 1998, Merck submitted an application to the FDA seeking approval for Vioxx.