When Congress passed the Sarbanes Oxley Act, it was expecting that board members would make sure that the corporations complied with all the legal/tax/accounting requirements. But directors of companies should not forget the spirit of SOX - better governance, and eventually, protection of the interests of the shareholders.
So what does Merck's board do in the wake of the Vioxx recall scandal? It approves a severance package that has been a public relations disaster for the firm and has sent a totally wrong message to Merck employees. As iProceed's analysis has shown, Merck is doing everything that it can to destroy shareholder value. In our opinion, Merck's Vioxx recall strategy is flawed and it will do nothing more than expedite its end (be it in form of an acquisition or liquidation).
So what are Merck's options?
So what does Merck's board do in the wake of the Vioxx recall scandal? It approves a severance package that has been a public relations disaster for the firm and has sent a totally wrong message to Merck employees. As iProceed's analysis has shown, Merck is doing everything that it can to destroy shareholder value. In our opinion, Merck's Vioxx recall strategy is flawed and it will do nothing more than expedite its end (be it in form of an acquisition or liquidation).
So what are Merck's options?
We are convinced that Merck was a great company with an excellent portfolio of products and a very rich pipeline. It also has tremendous intellectual and human capital. In other words, at this time, Merck is undervalued due to cloud looming over its due to its Vioxx liabilities which are expected to be as high as $38 billion.
- Are there other firms that would be interested in buying Merck's drugs? Absolutely.
- Is this the best time to sell those drug businesses? Of course.
- Can Merck survive as a company that it used to be? No.
- Will waiting help? No.
The summary of our research is that Merck may be better off selling its business in parts and let the corporation focus on dealing with legal complications which are likely to drag for years, if not decades. A drug firm should be working on drugs, not fighting lawsuits of such massive proportions.
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