With an 11-5 record so far in trials over liability from its Vioxx drug, you might think that
Merck would be encouraged to continue -- as it vowed in the past -- fighting every case individually. But an
announcement today from the company signaled that they are laying down their arms and settling the suits still outstanding for an estimated $4.85 billion.
Sticker shock at the size of the settlement may lead some to believe that this is a poor turn of events for Merck. The market, however, was encouraged by the turn of events and boosted Merck's stock over 2% on a day when everything else headed south.
Why would investors be happy? First and foremost, the market hates uncertainty. Though the nominal amount of the settlement is large, it puts a definite figure to the issue and allows investors to now make value judgments with that in mind. Additionally, it will allow the company to move on and get back to fully focusing on developing and marketing new drugs.
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