Shares in Vioxx maker ease by 2%

SHARES in the embattled pharmaceutical company Merck eased back by just over 2% yesterday, the first day of trading since a US court awarded the family of a man who died from taking its flagship drug Vioxx, €207 million in damages.

Shares in Merck have fallen by more than a third, wiping some €25 billion from its value, since the drug - which was one of the best-selling painkillers - was withdrawn from the market late last year.

Last Friday a court in Texas awarded the massive damaged to the Carol Ernst, whose 59-year-old husband Robert died suddenly after using Vioxx for eight months.

The family alleged the drug company, which employs 500 people in Ireland, knew that Vioxx could be dangerous, but downplayed concerns and aggressively marketed the product.

Merck now faces at least 4,200 similar lawsuits around the world, including individuals in Ireland.

Merck had set aside €532m for liabilities and legal fees. Based on the Texas court award it would be facing €8bn in damages if it lost all the cases, which would put pressure on the company’s finances as it has its profits fall for eight consecutive quarters.

“If I were advising the company, I would tell them to settle this fast,” said Robert Zito, a partner at New York-based law firm Schiff Hardin.

Merck said it will appeal the Texas case and stick to its strategy of defending each case. “The result in the Ernst trial does not provide a basis for the re-evaluation of reserves established for legal defence costs,” the company said.

Analysts say the size of the award to the Ernst family will be reduced to a tenth of the €207m under Texan law which limits damages to €21m and they also believed the company would look to make a settlement with some claimants.

Some analysts expressed concern the lawsuit will overtake the time of management, who should be looking at rebuilding the business and develop a pipeline of new treatments.