Where Merck loses, Abbott gains

Wed, 30 Apr 2008 06:59:58 -0400

What's bad for Merck is good for Abbott Labs. When the FDA said "no" to Merck's niacin-based cholesterol treatment Cordaptive, it raised the prospects for Abbott's extended-release form of niacin, Niaspan, and its regular niacin drug Simcor. As long as Merck can't enter that market, Abbott has much more room to grow and solidify its market share.

Already Abbott's niacin meds had gotten a boost from problems at Merck: After the Enhance study results were presented at the American College of Cardiology meeting, the New England Journal of Medicine put niacin drugs higher on the cholesterol-treatment ladder than the Zocor-and-Zetia combo Vytorin.

Investors punished Merck, sinking its stock by 10 percent yesterday, and rewarded Abbott with a 3.6 percent boost to $53.48. Analysts scrambled to boost their sales outlooks for Niaspan and Simcor; some estimated that Cordaptive might now be delayed for two to three years. Given that sales estimates for the med were as high as $2 billion annually, that's a big blow. Analysts cut their stock-price targets accordingly--but reaffirmed their "buy" ratings, saying, just as Merck officials are, that the company is strong enough to weather the setback. But some said they're only recommending Merck to long-term investors.

- read the Houston Chronicle story
- see the item in the Wall Street Journal Health Blog
- check out the Associated Press coverage
- find an FAQ on the Cordaptive rejection at In the Pipeline