Merck - 10 Largest U.S. Patent Losses

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Drug: Singulair
Company: Merck
2010 U.S. sales: $3.224 billion/$4.987 billion global
Impact: 15.96% of U.S. sales
Exclusivity expires: August 2012

Singulair is another drug topping its maker's sales list. And Merck is aware of the danger. In fact, it anticipates "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," the company says in its annual filing with the SEC.

The company bought Schering-Plough to help cushion the blow, gaining full rights to cholesterol drugs Vytorin and Zetia, as well as its current No. 2 seller, Remicade. Merck is shedding costs, too, aiming to align its spending with a post-Singulair environment. The company recently announced it would cut another 13,000 jobs, or 14% of its current workforce, in addition to the 17,000 cuts already planned. When the cost-cutting push is finished, Merck aims to have an annual cost base that's almost $5 billion less; its workforce will be about 30% smaller.

CEO Kenneth Frazier (photo), who took over for the retiring Richard Clark (photo) in January, has tried to spare R&D as much as possible. Even when the latest round of cost cuts was announced, word was the administrative, sales and other headquarters layoffs would help keep Merck's R&D in the money.

In announcing early this year his company would toss its earnings guidance for 2013, Frazier said he wanted the company to focus on developing new drugs that will pay off, earnings-wise, down the line. Sticking to shorter-term EPS targets would require the kind of cost-cutting that Merck would regret later, he said at the time. And 2013, of course, will be the company's first full year without Singulair.