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Making Her Mark At Merck


For Merck's Margaret G. McGlynn, developing drugs is a deeply personal pursuit. As a child growing up in Buffalo, she learned early about the ravages of disease after three of her seven brothers and sisters died in childhood—one of measles before McGlynn was born and two of a rare genetic disorder. She was four years old when the measles vaccine was introduced, and as her mother drove her to a mass-immunization clinic, she reminded her of the child they'd lost. "I was a real believer that vaccines have a critically important role," says McGlynn.

Today vaccines have a critical role in Merck & Co.'s (MRK) turnaround effort, and McGlynn is right in the thick of it. The drug giant has launched four new vaccines since McGlynn took over as president of Merck Vaccines in September, 2005. Among them is Gardasil, hailed as a breakthrough because it prevents some forms of human papilloma virus (HPV), a leading cause of cervical cancer. Merck rolled out Gardasil in June for females aged 9 to 26, with marketing focused on educating patients about the link between HPV and cancer. The product brought in $80 million in three months—a debut that CEO Richard T. Clark says beat expectations. When asked if McGlynn, 47, could be a CEO candidate one day, Clark says: "Absolutely. She's definitely CEO material."

McGlynn, a pharmacist who started at Merck as an intern in 1981, is helping restore some luster to the company's tarnished record. After its $2.5 billion-a-year arthritis medication Vioxx was yanked from the market in late 2004 because of cardiovascular side effects, Merck set out to slash costs and improve the way it develops and markets drugs. Merck expects to report 2006 earnings of at least $5.4 billion before special charges—slightly exceeding the estimate Clark gave at the beginning of the year—on sales of $22 billion. Investors pushed Merck's stock up 36% in 2006, to 43. Analysts are counting on McGlynn to drive much of Merck's growth: Some predict revenues from her division will triple by 2010, to $6 billion.

Early on, McGlynn proved that she could churn out hits. As a product manager in the late 1980s, she turned Merck's treatment for high blood pressure, Vasotec, into the company's first $1 billion product. Her strategy stressed that the drug was also approved to treat congestive heart failure—an advantage competitors couldn't yet match. When McGlynn spotted rivals working on next-generation blood pressure remedies, she spearheaded an effort to license one from DuPont (DD), because she knew this would be a faster way into the market than starting from scratch. That drug, Cozaar, and a follow-up are still among Merck's biggest successes, bringing in $3 billion a year.

An ability to argue her case in a "relentlessly logical and wonderfully intense way," as ex-boss David Anstice puts it, helped McGlynn rise rapidly. She worked in consumer marketing, managed care, and business development. She held top posts in U.S. marketing during the time Merck came under fire and then withdrew Vioxx. But most of the juries that have heard cases against the company have ruled in favor of Merck, and Mc-Glynn has emerged unscathed.

McGlynn's powers of persuasion have also helped her achieve results on Capitol Hill. Last summer, after Merck won approval to market a vaccine for shingles—a painful disease that strikes the elderly—she started knocking on doors all over Capitol Hill. Turned out that the new Medicare Part D drug plan prevented doctors from getting fully paid to administer vaccines. "I explained to [policymakers] that shingles is a debilitating illness that causes a major impact on quality of life," she says. They seem to have listened: On Dec. 9, Congress passed a bill that fixes the Medicare payment shortfall, which the President signed on Dec. 20.

Leading Merck's charge into the world of vaccines with the likes of Gardasil presents McGlynn with a new set of challenges. She has spent most of her career working on traditional pharmaceuticals, where success hinged almost entirely on the strength of Merck's marketing muscle. Vaccines, on the other hand, are heavily influenced by a range of powerful organizations, including the Centers for Disease Control and the American Academy of Pediatrics, which issue guidelines for physicians.

In Gardasil's case, Merck has been lobbying state legislators to mandate the vaccine for all young girls. The idea at first generated resistance from some conservative groups, who feared it would sanction promiscuous behavior, since HPV is sexually transmitted. McGlynn sent members of her team out to talk to the groups: "We meet with anyone, whether they share our viewpoint or not."

A PEOPLE PERSON

In the end, McGlynn's skill at navigating political mazes could make the difference between a success and a multi-billion-dollar blockbuster. Kris Jenner, a health-care portfolio manager at T. Rowe Price Group Inc. (TROW), estimates Gardasil sales will peak at $2 billion a year, but could go as high as $4 billion if the states require it. Four states are weighing laws to mandate Gardasil.

A talent for marketing and connecting with customers was apparent back in McGlynn's teenage years, when she clerked at her father's community pharmacy. "She got to know all the personalities," says her brother Ed Hempling. "It was like Mayberry." Her admiration for her father's role as neighborhood medical expert led her to follow in his footsteps. Hempling describes her as "one of those kids with a 10-year plan."

A likely item in McGlynn's plan: fending off GlaxoSmithKline (GSK), which could launch an HPV vaccine in 2007. Glaxo's record of fierce price competition has some analysts worried that Merck might have to slash Gardasil's $360 price tag. To expand the potential market, Merck is testing it in older women and in men, who can be carriers. Taking a page from her Vasotec playbook, McGlynn plans to promote Gardasil's prime advantage: It protects against four HPV strains, whereas Glaxo's drug guards against only two. "That's a fair price for offering the broadest possible public health benefit," she says. Spoken like a real believer.

By Arlene Weintraub


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