It isn’t every day that a company loses $25 billion (yes BILLION) dollars of stock value in a single day… or a company has the courage to do the right thing even knowing they’re going to get hammered for doing so. But that’s what Merck did.
Merck & Co. on Thursday recalled its arthritis drug Vioxx after an ongoing trial confirmed the medication increases the risk of heart attack and strokes. The news sent stock down nearly 27 percent and erased $25 billion from its market value.
Merck’s pulling of their blockbuster drug Vioxx off the market was an act of courage and integrity that is almost unheard of in an age of Enrons and Tycos . But instead of focusing on that, everyone seems to be wondering who to blame. Well that’s the wrong question and the wrong line of thought.
I would be asking, “who’s going to be the hero at Merck that seizes on this challenge and uses it as an opportunity to create a breakthrough for the company?” This event has created a disruption at Merck—there’s white space in the shadow of this disaster that will allow them to make just about any changes they want to make—and this sort of opportunity is very hard to come by.
Normally, companies are so hide-bound by their locked-in behaviors and organizational structure that they can’t break out of the status quo to make the important strategic shifts that would position them for a brighter future. SO, as bad as this situation is for Merck, it is also a golden opportunity. The big question is what will Merck do with it?
What could they do? Well they could leverage the integrity of their action to create trust with a customer base that has grown wary and cynical about drug companies—what would that be worth? They could re-examine their assumptions about the viability of the drug company model that puts them in feast-or-famine mode depending on the next great blockbuster drug to emerge from the R&D labyrinth. What changes could they make that would diverge from the industry norms and give them a real advantage?
What ideas do you have?
