Nathan MendesRonnie NgScott PerkinsZvi RhineZack Weaver

Symbol: MRK

Exchange: NYSE

12/4/2000

Profile

Merck & Co., Inc. is a global, research-driven pharmaceutical company that discovers, develops, manufactures and markets a broad range of human and animal health products, directly and through its joint ventures and provides pharmaceutical benefit services through Merck-Medco Managed Care.

Major Drugs

Zocor & Mevacor: Cholesterol Drugs Vasotec, Cozaar & Hyzaar: Hypertension and Heart

Failure Fosamax: Osteoporosis Pepcid: Anti-ulcerant M-M-R II & Varivax- Live Vaccines Singulair: Asthma Crixivan & Strocrin: HIV Symptom Treatment Aggrastat: Prevents Blood Clots Vioxx: Arthritis

Expiring Patents

2000– Pepcid– Vasotec

2001– Mevacor– Prinvil

Combined 1999 Domestic Sales of $3 Billion– Mevacor and Vasotec already being phased out

Growth Opportunities

Vioxx Relief of osteoarthritis and acute pain Inhibits Cox-2 enzyme while protecting Cox-1

– Relieves pain while easy on the stomach More than 5 milion prescriptions in the first seven

months on the U.S. market Once daily dosage- ease of use Competitive boost in efficient launch of Vioxx

– Patients were able to start taking the drug within days of its approval

Growth Opportunities

Zocor Lowers bad cholesterol levels and triglycerides while

raising levels of good cholesterol (HDL) Money back guarantees if patients cannot reach their

cholesterol goals Number 1 cholesterol lowering drug in the European

market U.S. Market has room to grow

– Only 4 out of 10 heart disease patients with dangerous cholesterol levels use a cholesterol lowering drug

Growth Opportunities

Singulair Asthma medication Number of children with asthma has increased 160%

since 1980Fosamax Osteoporosis Only drug consistently proven to increase bone

density Shows results within 12-18 months of first dose

– significantly shorter than most drugs

One Year Performance

• Up 23.4% from date purchased

Industry

S&P Pharmaceuticals are up 22.5% (Year to October 6)

S&P 1500 is -2.7% (Year to October 6) Concerns over pricing restraints over new Medicare

prescription plans Income and Price Inelasticity of Drugs is favorable FDA is streamlining and making more efficient new

drug approval processes Kick-ass margins

– Upwards of 20%

Competitors

Peer Group Symbol Price P/E ROE % Pre-Tax Margin %Merck MRK 91.9375 32.25 20.1 27Glaxo GLX 57.3125 31.93 62 30.3

Lilly (Eli) LLY 90.4375 32.17 53.9 32.4Pfizer PFE 44.1875 70.16 36.2 27.5

Schering-Plough SGP 55.1875 33.73 46 30.5SmithKline SBH 65.25 30.24 51.7 19.3

Recommendation

HOLD