October 1, 2004

NO THERE THERE:

Vioxx withdrawal hurts Dow as quarter ends (MICHAEL J. MARTINEZ, 10/01/04, Chicago Sun-Times)

Merck said the withdrawal of Vioxx from the market will mean a major loss of revenue, as the drug accounted for $2.5 billion in worldwide sales. Merck plummeted 27 percent, or $12.07, to $33, stripping the company of more than $25 billion in market capitalization.

Everyone gets the tech bubble by now, companies whose worth was based on nothing, but the Merck story yesterday was truly remarkable. The $25 billion that the pulling of Vioxx, a specific drug that apparently no one needs but many are prescribed instead of cheaper ones, shaved off the company would purchase GM, the nation's largest car maker. Our economy isn't about things, but about ideas.

Posted by Orrin Judd at October 1, 2004 1:04 PM
Comments

My wife & I both used to work for Pharmacia (now a part of Pfizer), which markets a competitor to Vioxx named Celebrex. Pfizer saw a large jump in stock price yesterday, as you'd expect.

The market may be pricing in lawsuits, OJ. The data a few years ago was suggestive of cardiovascular effects from Vioxx, and was in fact used as a selling point by the competition (Pharmacia with Celebrex).

Posted by: Bruce Cleaver at October 1, 2004 2:12 PM

*groans* I should have said the data were suggestive...

At any rate, it's a miracle that illegal (patent-breaking) knockoffs to any popular drug aren't more prevalent given the huge sums of money at stake.

Posted by: Bruce Cleaver at October 1, 2004 2:20 PM

oj-

Roughly 27% of revenues questionable,approx.26% of market cap. lossed. Not that hard to figure.

Posted by: at October 1, 2004 3:50 PM

Anonymous:

No, the numbers are easy. What's interesting is that it's a needless drug worth more than an auto giant, yet people are worried about manufacturing.

Posted by: oj at October 1, 2004 5:43 PM

When was a last time you rode an idea to work? (I mean, the last time you actually worked).

Posted by: Robert Duquette at October 1, 2004 6:23 PM

Robert:

That's very much the point. It's an economy where you write books instead of assembling cars.

Posted by: oj at October 1, 2004 6:33 PM

Also, the market value of GM ought to be about zero.

Their return on capital is pathetic, and their pension liabilities hair-raising.

Whatever they used to be, GM is now a very large jobs programme, which is good for America but bad for GM investors.

Posted by: Michael Herdegen at October 1, 2004 7:50 PM

Well, he could have picked many other firms besides GM.

Wise investors would have paid attention when the cardiac problems were first made public over a year ago.

Posted by: jim hamlen at October 1, 2004 10:48 PM

Part of that -$25 billion is the costs of all the forthcoming lawsuits.

Posted by: carter at October 2, 2004 12:35 AM

Bruce,

> *groans* I should have said the data were suggestive...

Why--did you think you were writing in Latin or something?

Posted by: Kirk Parker at October 2, 2004 4:13 AM

Kirk is right. Contemporary usage allows the word "data" to function as a mass noun, even by many of the pickiest grammarians. Use the singular. "The data are" not only doesn't sound right anymore, it's rarely even accurate. (Define a single "datum," for instance.) Like "blood" or "money," the word "data" is a mass noun and should not take a plural verb.

Posted by: Tomas at October 2, 2004 10:15 AM

OJ, we still need cars. We need steel, concrete, furniture, wire, bricks, airplanes, lightbulbs, generators, etc. Your fantasy that we can generate the world's ideas and let the rest of the world build our stuff for us is beyond ridiculous. If America was a small supercolony of elite geniuses, maybe. We are a nation of 300 million. Very few of us are geniuses, or even capable of competing as world class knowledge workers. Manufacturing jobs are good jobs for our average workers, they are superior to the majority of service jobs that they would otherwise qualify for. There is no reason that we shouldn't be fighting tooth and nail to keep a vital manufacturing base in this country.

Posted by: Robert Duquette at October 3, 2004 12:36 PM

We don't need to make them--that's what poor nations are for.

Posted by: oj at October 3, 2004 1:26 PM
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