Merck to merge with Schering-Plough

US drug maker Merck is to buy Schering-Plough in the second huge takeover in the sector in weeks following Pfizer’s recent purchase of Wyeth.

Merck will pay 41 billion dollars (32.5 billion euros); that represents a premium of just over a third from last Friday’s closing price for Schering-Plough shares.

Combined Merck and Schering-Plough will be the world’s fourth largest drugmaker in terms of revenues with 33.5 billion euros last year. In top position is the merged Pfizer and Wyeth.

Pharmaceutical firms worldwide are looking to
become more efficient with cost savings as well as for ways to take capacity out of an over-supplied industry

That is because they are faced with the problems of slowing sales, patents expiring so that other companies can make cheaper versions of their drugs and sliding prices.

In addition, the industry is being pressured by politicians through moves to cut government health service costs.

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tags: pharmaceutical companies