Mulling a Zilmax relaunch, Merck faces reports of hoofless cattle and skeptical customers

Merck reportedly is testing the waters on Zilmax, the livestock growth stimulant it pulled from the market last year. The company would like to reintroduce the $160 million drug, so it's looking for some support from veterinary experts. But the project could be tough, with key customers still wary--and new revelations like those surfacing in an extensive Reuters investigation.

The news service dug into an FDA stash of side-effect reports submitted by Merck ($MRK) and others, interviewed cattle raisers and feedlot officials, and talked to beef processors--including Tyson and Cargill--that now refuse to accept cattle fed with Zilmax. And according to Reuters, a Tyson plant first barred Zilmax-fed cattle after 17 animals hobbled into the slaughterhouse. They had lost their hooves and couldn't walk. All 17 were euthanized.

In its review of FDA data, Reuters found 285 cases of unexpected death or euthanization in Zilmax-fed cattle, including 75 that lost their hooves and 94 that developed pneumonia. There's no proof that Zilmax caused these deaths; like adverse-event reports filed on human drugs, these aren't evidence enough to prove a causal link.

Merck told Reuters it brought in third-party experts to investigate the hoof-loss issue and determined that Zilmax didn't cause the problem. The company says Zilmax is safe, and that it's planning to gather and analyze more data on the drug's use in the field, with outside experts overseeing the study. Some veterinary experts told Reuters they aren't convinced that Zilmax is a safety problem.

Indeed, Merck hopes it can win over some prominent veterinarians and animal health leaders to help turn around public opinion, so it can reintroduce Zilmax successfully. As Reuters notes, Merck is trying to win over the vets and cattle raisers who have since turned to a competitor feed additive from Eli Lilly ($LLY). One key obstacle remains: Tyson and Cargill tell Reuters that they won't start accepting cattle fed with Zilmax until Merck can prove it's safe.

Meanwhile, China and other countries say they won't accept meat from cattle fed with Zilmax. And that complicates these global beef producers' supply chain. Allowing Zilmax-fed cattle back into their slaughterhouses raises the risk that their meat will end up in the export business accidentally--and Tyson and Cargill could lose customers that way.

Merck's animal health unit has its own problems, however. In November, CEO Kenneth Frazier said he's looking at his company's animal health and consumer health units to see whether they'd be more valuable as independent businesses. At a time when Pfizer ($PFE) has already spun off its animal health business, Zoetis ($ZTS), and Novartis ($NVS) appears close to making a similar move, trouble at Merck's unit could be Frazier's tipping point. Zilmax's $160 million in sales may not be much compared with Merck's blockbuster pharma products, but it's a decent share of the animal health unit's $3.3 billion.

- read the Reuters investigation

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