Merck Well-Positioned to Achieve Long-Term Future Growth, Chairman Tells Stockholders

Merck & Co., Inc.'s commitment to patients, its relentless pursuit of scientific excellence and adherence to high standards of ethics and integrity, have shaped the way the Company has addressed past challenges and will position it for future success and long-term growth, said Chairman, President and Chief Executive Officer Raymond V. Gilmartin at Merck's Annual Meeting of Stockholders today.

"We have found that putting the best interests of patients first is also consistent with the long-term best interests of stockholders. These interests are not in conflict, they are closely linked. Putting patients first will drive the future growth and success of our Company, just as it drove our decision to voluntarily withdraw VIOXX," Mr. Gilmartin told approximately 900 stockholders at the Company's annual meeting at Raritan Valley Community College in North Branch, N.J.

Mr. Gilmartin reviewed for shareholders the impact of the Company's decision on VIOXX, and outlined key initiatives, products and programs that are expected to drive Merck's future growth.

Earnings Affirm Underlying Strength

On April 21, Merck announced first quarter earnings per share results of $0.62, which reflect the ongoing success of the Company's efforts to lower costs, the strength of its commitment to research and development, and the continued strong growth of its newer franchises.

Mr. Gilmartin said that Merck is committed to maintaining annual cash dividends in excess of $3 billion and to continuing share repurchases from operating cash flow.

The decision to withdraw VIOXX affected the Company's earnings per share last year, Mr. Gilmartin told shareholders. Merck's 2004 earnings per share of $2.61 reflected foregone sales and other costs related to the VIOXX withdrawal and reserves for future legal defense costs.

"The situation we face today is not business as usual," Mr. Gilmartin said. "Nevertheless, the environment in which Merck - and the rest of the industry - will be operating in the years ahead remains as we have identified it: patients, physicians and payers will continue to demand ever greater value from the drugs we offer."

As a result, Merck is substantially changing the way it approaches every aspect of its business, from the drug discovery process to the way in which it brings new medicines and vaccines to market and then educates people about the products' benefits.

Changing Every Aspect of Merck's Business

Through advances in its drug discovery and development process, Merck is working to increase the probability of success in its labs and accelerating both early- and late-stage development efforts, Mr. Gilmartin said. Investment in Merck's own internal research and development has also grown substantially. And Merck continues to pursue promising external alliances and licensing deals. During 2004, the Company completed 50 transactions, which included research collaborations, pre-clinical and clinical compounds, and technology transactions - a five-fold increase from 1999 when the Company completed just 10 licensing deals.

Spending on R&D almost doubled to more than $4 billion last year from just more than $2 billion in 1999.

"We have not and will not sacrifice our commitment to the science that drives our success," said Mr. Gilmartin. "All of these actions will allow us to discover and develop the novel drugs the market demands, which, in turn, will drive earnings and cash flow and thus the value of shareholder investments."

During the meeting, Mr. Gilmartin also highlighted Merck's progress in permanently reducing its cost structure companywide, noting that Merck's efforts are well underway. By the end of 2004, the Company had eliminated 5,100 positions, exceeding its target of 4,400 positions, which will result in approximately $300 million in savings in 2005. The Company expects additional cost savings of $300 million by 2006 from inventory reduction efforts, while capital initiatives are on track to generate savings of more than $600 million by 2008. Changes made to Merck's procurement activities are expected to generate another $1.2 billion in savings through 2008, while shared services programs should deliver additional significant savings.

Merck also has implemented a market-driven redesign of its approach to marketing and selling, as well as to the needs of its managed care customers, to deliver greater value to providers and payers. In addition, Merck is customizing its disease information, patient education and formulary information to better meet the needs of the physician practice and managed care environment. Merck representatives will call on fewer physicians and handle fewer products to help them become more specialized in their knowledge of both their products and their doctor customers.

"These initiatives are enabling us to give providers and payers the value they demand from their interactions with Merck, while allowing us to support both our in-line products and our new products more efficiently and effectively," Mr. Gilmartin said.

Growth and Movement in Merck's Pipeline

During the meeting, Peter S. Kim, Ph.D., president of Merck Research Laboratories, provided an update on the progress of Merck's pipeline and highlighted recent accomplishments.

"To put it very simply, Merck's pipeline is both growing and moving," said Dr. Kim. "When we compare where our pipeline was 13 months ago, in March of 2004, with where it stood two months ago, on Feb. 15 of this year, the progress is obvious."

In March 2004, Merck's Phase I pipeline contained 14 new drug mechanisms under study. By Feb. 15 of this year, Phase I included 20 mechanisms. In March 2004, the Company's Phase II pipeline included just seven drug mechanisms. As of Feb. 15 of this year, it contained 18. Thirteen months ago, the Phase III pipeline contained six compounds. Today, Merck has submitted or expects to submit by this time next year applications for four of those six.

According to Dr. Kim, Merck is continuing to successfully move products through its pipeline. During the past year:

The U.S. Food and Drug Administration (FDA) approved VYTORIN for use in the United States. Developed and marketed by Merck and Schering-Plough Corporation, VYTORIN is the only single tablet to provide powerful LDL ("bad") cholesterol reduction through dual inhibition of the two sources of cholesterol by inhibiting the production of cholesterol in the liver and blocking absorption of cholesterol in the intestine, including cholesterol from food.
Merck received FDA approval for FOSAMAX PLUS D, a product which builds on the proven power of FOSAMAX to reduce the risk of both hip and spine osteoporotic fractures with the benefit of a weekly dose of vitamin D.
The Company submitted an application which is under review by the FDA for its PROQUAD vaccine, which adds chickenpox vaccine to the existing measles, mumps and rubella vaccine.
An application was submitted to the FDA for muraglitazar, which is expected to be the first in a new class of drugs that is thought to control blood sugar. In clinical trials, muraglitazar has reduced blood glucose levels, decreased triglyceride levels and increased HDL ("good") cholesterol levels in patients with type 2 diabetes, and has been generally well tolerated. Muraglitazar is the product of a joint collaboration with Bristol-Myers Squibb Company.
The Company successfully completed Phase III studies on ROTATEQ, its vaccine for the prevention of rotavirus infection, and submitted an application to the FDA.
Dr. Kim highlighted the promise of GARDASIL, a vaccine to prevent human papillomavirus (HPV) infection and the associated development of cervical cancer and genital warts. Merck expects to submit an application for GARDASIL to the FDA during the second half of 2005.

Later this quarter, the Company expects to file an application for ZOSTAVAX, which is expected to protect tens of millions of older adults from shingles and the often severe and persistent pain which accompanies it.

In 2006, Merck expects to submit MK-431, which is designed to lower blood sugar in type 2 diabetes, to the FDA. And in late 2006/early 2007, the Company expects to submit an application for gaboxadol, its treatment for sleep disorders.

With the exception of the delay in the approval of ARCOXIA, the Company is on or ahead of schedule with its planned regulatory submissions and Phase III development programs.

Dr. Kim attributed the growth and movement in Merck's pipeline to the efforts the Company has been making to accelerate the speed of development and to the licensing, alliances, and acquisitions into which it has entered.

"This is indeed an extraordinary time to be in this business," Dr. Kim concluded. "I am truly excited to be a part of what we are doing at Merck - which is changing the course of medical history."

Ensuring Access to Medicines

During the meeting, Mr. Gilmartin also stressed Merck's long-standing commitment to ensuring that those who need Merck medicines have access to them. Last week, Merck announced a new comprehensive prescription drug discount program designed to benefit the more than 45 million uninsured in the United States. The Merck Prescription Discount Program will provide all uninsured Americans, regardless of age or income, with easy and immediate access to discounts of 15 to 40 percent off many Merck medicines. There are no fees to enroll or participate, and patients will be able to get their drugs at the pharmacy of their choice.

"Millions of people who otherwise would not have been able to access Merck's medicines have had their health and lives improved because we put patients first," Mr. Gilmartin said.

Mr. Gilmartin concluded his remarks by reporting that the Board of Directors is moving forward with an orderly, thoughtful and well-planned process to find his successor. Mr. Gilmartin is scheduled to retire early next year.

"Whoever succeeds me in this job will take the helm of a company that I believe is prepared for the challenges of the years ahead," Mr. Gilmartin said. "This past year has presented Merck with an extraordinary challenge. But we have met this challenge in a manner consistent with our commitments to patient safety, the highest standards of ethics, and scientific excellence. As a result, we are well-positioned to achieve the long-term future growth to which we are all committed."

About Merck

Merck & Co., Inc. is a global research-driven pharmaceutical company dedicated to putting patients first. Established in 1891, Merck discovers, develops, manufactures and markets vaccines and medicines in more than 20 therapeutic categories. The company devotes extensive efforts to increase access to medicines through far-reaching programs that not only donate Merck medicines but help deliver them to the people who need them. Merck also publishes unbiased health information as a not-for-profit service. For more information, visit www.merck.com.

Forward-Looking Statement

This press release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding product development, product potential or financial performance. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements in this press release should be evaluated together with the many uncertainties that affect Merck's business, particularly those mentioned in the cautionary statements in Item 1 of Merck's Form 10-K for the year ended Dec. 31, 2004, and in its periodic reports on Form 10-Q and Form 8-K, which the company incorporates by reference.



--------------------------------------------------------------------------------
Contact:
Merck & Co., Inc.
Media Contacts:
Janet Skidmore, 908-423-3046
Chris Loder, 908-423-3786
or
Investor Contact:
Graeme Bell, 908-423-5185



--------------------------------------------------------------------------------
Source: Merck & Co., Inc.