• by Christine Bittar , December 19, 2006

Winding down a year that saw the launch of five new drugs and vaccines, Merck has several more drugs due for approval in 2007. But don't look for the drug giant to increase marketing spending. Instead, Merck says it's looking to reduce promotional spending by 15% to 20% for primary care brands in the U.S. by 2010, according to J.P. Morgan analyst Chris Shibutani.

Part of the cutback will come from finding more efficient and effective ways to reach customers, CEO Dick Clark said last week. Most notably, Merck is experimenting with the use of video detailing to doctors--a sales tactic that, if successful, will probably be mimicked by other pharmaceutical competitors.

The use of video detailing to supplement--or in some cases, replace--in-person visits from sales reps, has the potential to save millions.

"Although the ability to save costs using video technology is clear, maintaining the same promotional impact requires careful and focused targeting of efforts to the right doctors so that promotional messages will not be lost or blunted," Shibutani wrote in an analyst's note. Shibutani's comment refers in part to different positioning given to specialists and general practitioners for the same drug.

Beyond the video experiment, Clark said spending per primary brand will decrease by 9% in 2007 versus last year in order to keep costs down. After cutting sales reps in 2005, Merck has managed to increase reps' productivity, with a pilot program resulting in a 9% increase in the number of calls made in 2005, a 20% increase in 2006, plus a 17% increase in the number of days reps spend in their territories, Shibutani wrote.

Among the new launches this year is Gardasil, a vaccine to ward off cervical cancer. Gardasil's rollout so far has exceeded expectations--with awareness of cervical cancer and its connection to HPV up tenfold, according to Steve Scala of Cowen & Company, who says 50% of pediatricians are stocking Gardasil.

Gardasil, which is recommended for females ages 9 to 26, is being looked at for use in older women in the 26- to-35-year-old age range. Merck expects to file a New Drug Application (NDA) with the Food & Drug Administration for that demographic in the fourth quarter of 2007.

Peter Kim, president of Merck Research Laboratories, said the company expects the FDA to decide on the potential approval of the painkiller Arcoxia this year. It is a potential follow-up to Vioxx, Merck's arthritis drug which was pulled off the market in 2004. Like Vioxx, Arcoxia is a COX-2 inhibitor that can help osteoarthritis pain.

In addition, Merck's pending $1.1 billion deal to buy Sirna Therapeutics could close by the end of this month after clearing an antitrust hurdle, the company said last week. An acquisition of the biotech company would give Merck an opportunity to be involved in RNA interference, which is a potential way to develop drugs based on shutting off genetic cells in the body that trigger disease.