In the world of pharmaceutical companies, there are two or three types. There are those that are focused on becoming the market “owner;” meaning, they let other companies engage in risky R&D, then acquire patents and technologies that they bring to market. Then, there are those focused on buying or partnering with other technology or resource-driven companies to share the load. Finally, there are those focused on the actual research and development needed to bring prospective products to market.

“Merck & Co., Inc. (“Merck” or the “Company”) is a global research-driven pharmaceutical company that discovers, develops, manufactures and markets a broad range of innovative products to improve human and animal health. The Company’s operations are principally managed on a products basis and are comprised of two reportable segments: the Pharmaceutical segment and the Vaccines and Infectious Diseases segment”

In short, Merck is a company engaged in research and development and other supporting operations that create new drug therapies and products. Research and development expenses (which included restructuring costs) were $5.8 billion in 2009, $4.8 billion in 2008 and $4.9 billion in 2007. Hovering around the 30% R&D costs mark, Merck is definitely a company that makes pharmaceutical products.

In 2009 Merck Pharmaceuticals acquired Schering-Plough. The results of Schering-Plough’s business have been included in New Merck’s financial statements only for periods subsequent to the completion of the Merger. Therefore, New Merck’s financial results for 2009 do not reflect a full year of legacy Schering-Plough operations. Year end financials show $27,428 billion in sales, that reflect a 15% 1-year sales growth largely attributable to Schering-Plough’s product contributions, and other products maturing.

This merger creates a myriad of issues at Merck, not the least of which is realignment of both people and facilities, while attending to ongoing product concerns.

Merck is a company in a state of transition.

Several of Merck’s top profit-producing products, are set for patent expirations. Cozaar and Hyzaar expire in April 2010. In addition, the patent for Cozaar will expire in a number of major European markets in March 2010. Hyzaar lost patent protection in major European markets in February 2010. The Company expects that sales of these products will decline rapidly after expiration of these patents, particularly in the United States since there are expected to be multiple sources of generic products at the time of patent expiry. In addition, the patent that provides U.S. market exclusivity for Singulair expires in August 2012. The Company expects that within the two years following patent expiration, it will lose substantially all U.S. sales of Singulair, with most of those declines coming in the first full year following patent expiration. Also, the patent for Singulair will expire in a number of major European markets in August 2012 and the Company expects sales of Singulair in those markets will decline significantly thereafter. The company experienced significant changes in 2008 with the patent expiration of it’s blockbuster osteoporosis treatment, Fosamax.