Merck & Co’s share price took yet another knocking on Friday after news that a US court had ruled that the patent on the firm’s top-selling osteoporosis drug, Fosamax (alendronate), would expire ten years earlier than previously expected, was further compounded by the US Securities and Exchange Commission’s decision to launch a formal investigation into the company’s withdrawal of its Vioxx (rofecoxib) pain-killer last year [[01/10/04a]]. The firm’s share price closed down more than 10% on the New York Stock Exchange.

The US court of appeals has ruled that a patent covering the $3.2 billion-dollar-a-year drug is invalid, overturning an August 2003 decision in Merck’s favour [[01/09/03e]]. However, the ruling is a victory for generics manufacturer, Teva Pharmaceutical Industries, which had appealed the 2003 ruling and says its copycat version of the drug will be eligible for US approval once the remaining patent expires in February 2008. Merck says it disagrees with the latest ruling and is considering its options, including possibly asking the court of appeals to reconsider its decision.

The Fosamax patent ruling will likely be a massive blow to Merck, coming just four months after the company took the dramatic step of taking the $2.5 billion-a-year Vioxx off the market after it was linked to an increased risk of heart attack and stroke [[01/10/04a]]. There is further gloom on the horizon, with the patent on the firm’s biggest-selling drug, the cholesterol-lowering Zocor (simvastatin) set to expire in the US in the middle of 2006 [[17/06/03d]]. With the loss of these thee big earners on the horizon, and what is seen as a relatively thin product pipeline, it remains to be seen whether Merck will be able to drag itself out of the financial doldrums as soon as it had hoped.

- Meanwhile, Merck has confirmed that the SEC has issued a “formal notice of investigation” into the company’s handling of the Vioxx withdrawal. The company had previously revealed that the SEC was conducting an informal inquiry [[09/11/04a]], and says that the latest action was not unexpected. It says that it will continue to cooperate with the investigation.

- In other news, Merck says that a judicial panel on multidistrict litigation has heard motions by various parties, including the company, which is aiming to combine all the pending product liability and shareholder actions into coordinated proceedings. The company expects the panel to make decisions regarding these motions in the next several weeks.