Merck CEO defends taking research risks

Merck & Co. chief executive officer Kenneth C. Frazier is convinced that nearly everyone, from patients to long-term investors, wants the world's third-largest drugmaker to take big risks.

So Merck is plunging ahead in one of medicine's toughest challenges - looking for a drug to slow Alzheimer's disease - despite repeated failures that have led most drugmakers to halt or scale back research on the No. 6 killer in the United States.

"When people question me, 'Aren't you putting a lot of money at risk for something that's hard?', I say, 'Isn't that exactly what the world wants a company like Merck to do?"' Frazier, 58, said.

The company, based in Whitehouse Station, N.J., with large operations in Montgomery County, is taking risks even though it, like other major drugmakers, is being squeezed by the weak global economy, cuts in health-care spending by governments, rising research costs, and increased competition from cheap generic versions of drugs that once brought in billions of dollars.

Merck is pouring tens of millions into an experimental treatment for a new type of Alzheimer's drug meant to limit the main element in the brain-damaging plaques believed to cause the disease.

Roughly 100 Alzheimer's drugs have failed in the last couple of decades.

The Alzheimer's gamble is partly personal for Frazier, a Harvard-trained lawyer who became CEO in January 2011 after 19 years in various executive positions at Merck. His father, a janitor who raised him and his siblings in Philadelphia, died of Alzheimer's. Frazier and his wife cared for him during his final years.

"My father, to me, was 10 feet tall," said Frazier, whose mother died when he was young. "To see this disease take away his brain and to see him rendered like a child, it was devastating."

The company's research bets have not always paid off. A few promising drugs failed in tests recently.

Still, the company, which has annual revenue of about $50 billion, got five medicines approved in the United States in 2011 and 2012, including the breakthrough hepatitis C drug Victrelis. Merck also expects to apply for U.S. approval of five drugs in 2013.