• MarketWatch, Monday, March 9, 2009 11 AM

Merck is buying rival Schering-Plough for $41.1 billion in cash and shares to expand its presence in emerging markets and to bolster its pipeline of potential new medicines, Aude Lagorce reports.

Merck CEO Richard Clark, who will lead the combined company, says that Schering-Plough's "considerable biologics expertise" will complement Merck's novel proprietary biologics presence to create the best pipeline in the industry. The tie-up will double the number of potential drugs Merck has in Phase III development to 18.

"It's a constructive deal because Merck recognizes that the level of access to Schering-Plough's pipeline is good," says Stephen Pope, chief global market strategist at Cantor Fitzgerald Europe. "Schering-Plough wasn't necessarily in the best position to develop some of these drugs."

The two companies already are partners on the cholesterol drugs Zetia and Vytorin. But sales of the drugs fell more than 20% in the fourth quarter on concerns about their effectiveness.

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