Merck is aiming to revive Zilmax sales, but it's not that easy after safety scare

Courtesy of Merck

Merck wants to get its cattle feed additive Zilmax back to multimillion-dollar sales. But with lingering reservations from beef producers and sellers, that may be easier said than done--and competition is ramping up in the meantime.

The drugmaker ($MRK) is looking to ease safety fears by testing Zilmax in some 250,000 cattle in a randomized, controlled study. The problem? Meatpackers are concerned about animal welfare--as well as their ability to market the $500 million worth of beef produced during the research, sources tell The Wall Street Journal.

Thus, Merck has run into delays with the evaluation, which it had hoped to launch this summer; the pharma giant in May trained the first group of livestock-industry employees and animal-science researchers to evaluate Zilmax--said to cause lameness--among cattle.

"This has become more time-intensive than we anticipated," David Yates, a Merck manager who helped design the study, told the WSJ. "We continue to work on the process to make sure we have alignment with all parties."

Merck's decision to temporarily pull the drug--which brought in $159 million in U.S. sales--came last summer, when Tyson, the United States' largest meat processor by sales, told cattle suppliers it would be stopping purchases of Zilmax-fed animals. And that stance hasn't changed, a spokesman told the newspaper.

Customers have also expressed reservations about buying the beef produced during Merck's evaluation, and the potential for public scrutiny may have some restaurant chains worried, too.

"We don't want to fiddle with it as long as there's a known animal-welfare issue. Costco is not going to agree to take the meat until we've got the right assurances in place," Costco VP Craig Wilson told the Journal. A spokeswoman for Burger King said the chain would carefully evaluate Zilmax before making a decision on future use.

Meanwhile, rival pharma giants are capitalizing on Zilmax's absence, the WSJ notes. Feedlot operators have switched over to competitor Optaflexx from Eli Lilly's ($LLY) Elanco unit, with a spokeswoman saying the company has seen "strong interest" in the product as of late. And Zoetis ($ZTS), Pfizer's ($PFE) animal-health spinoff, plans to roll out its own growth-promotion drug later this year.

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