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Merck and the pharmaceutical industry are headline news today. Contro-
versies over public safety, prices, and the ability of the industry to develop
the new drugs and vaccines that society needs have swirled over the United
States, Europe, and the developing nations. Roy Vagelos, who was head of
research and then CEO at Merck from the mid-1970s through the early
1990s, addresses each of these issues in The Moral Corporation – Merck
Experiences.
Vagelos highlights his efforts to turn around the Merck laboratories and
introduce an entirely novel approach to new drug development. Success
with targeted research started Merck on a path that would lead to a series
of blockbuster therapies that carried the firm to the top of the global industry
in the 1980s and 1990s and Vagelos into the top position at the company.
Trained as a physician and scientist, he had to learn how to run a successful
business while holding the organization and all of its employees to the
highest principles of ethical behavior. He was not always successful. He
and his co-author explain where and why he failed to achieve his goals and
analyze those initiatives that succeeded.
i
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ii
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P. Roy Vagelos
Louis Galambos
iii
cambridge university press
Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo
isbn-13 978-0-521-68383-8
isbn-10 0-521-68383-1
Cambridge University Press has no responsibility for the persistence or accuracy of urls
for external or third-party internet websites referred to in this publication, and does not
guarantee that any content on such websites is, or will remain, accurate or appropriate.
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Contents
3 Turn Around 25
5 Corporate Grooming 75
9 Afterwards 173
Index 181
v
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vi
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Preface
“Man that is born of woman,” the Book of Job tells us, “is of few
days and full of trouble.” Our experiences in business, in science, in
government service, and in academic life give us plenty of reasons
to affirm Job’s insight. The evening news, the morning newspaper,
and the Internet provide fresh evidence every day of a troubled
world. But we also find cause for hope in the everyday events that
don’t make it into the media, events that inspire the kind of hope
that runs through the New Testament and our study of the moral
corporation.
Here is a story of life and leadership in an American multi-
national, one of the world’s leading pharmaceutical companies,
Merck & Co., Inc. Merck and the entire pharmaceutical industry
are headline news today – mostly bad news. Controversies over
public safety, prices, and the ability of the industry to develop the
new drugs and vaccines that society needs are swirling through the
United States, Europe, and the developing nations.
vii
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Preface
viii
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Preface
Roy Vagelos
Louis Galambos
November 2005
ix
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x
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chapter one
The Puzzle
1
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others. In the victim’s skin, the parasites develop into adult worms
that can reach two feet in length. They produce millions of microfi-
lariae that crawl through the skin and produce intolerable itching.
Even worse, when they enter the eyes, they cause inflammation
and then scarring that leaves the victim blind. As Mohammed and
Bill explained, there was a good chance that ivermectin might be
the first effective treatment for this terrible disease. The drug, they
said, was working against a related parasite that attacks horses.
But there was a catch. At that time, it was estimated that 18 mil-
lion people were infected in Sub-Saharan Africa alone, and in some
West African villages 60 percent of the population over fifty-five
years old was already blind. According to WHO’s estimates, there
were over 100 million people living in areas of Africa and Latin
America where they were threatened by the disease.1 If ivermectin
worked, there was bound to be a tremendous demand for it. But
there was no way either the people at risk or their governments
could pay for the treatment.
That was the first part of the puzzle, and I found it relatively
easy to solve by saying “Yes.” There was a potential downside for
me personally. I hadn’t been on the job very long and I was still
learning how to promote new drug development in a corporate
setting. While we had some big innovations in our pipeline, I was
still an unproven rookie in the business world. I would be spend-
ing a considerable amount of company money in a field, tropical
medicine, that few of us other than Mohammed Aziz knew very
well.
Still, I had good reason to be confident of what we could
accomplish with ivermectin. Merck & Co., Inc., had an impressive
1
The scientific name of the parasite is Onchocerca volvulus, and thus
the disease is onchocerciasis (pronounced onco-sir-KI-isis).
2
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THE PUZZLE
3
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chapter two
4
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of the class, where it was hard to hear. I got used to not paying
attention to the lessons, although I pretended to work when the
teacher was watching.
The year 1936, when I was in first grade, was an especially dif-
ficult one for my family. My father and his oldest brother owned
the Westfield Sweet Shoppe in the center of an affluent bedroom
community about an hour’s drive from New York City. Like many
other Greek immigrants, they had gravitated to the candy and
small restaurant business because startup costs were small and they
were largely uneducated. They could thrive with minimal English,
making up with hard work and warm personalities what they
lacked in education and capital.
But the hard times of the 1930s didn’t spare Westfield or our
family business. When the market collapsed, we lost our house.
We moved into an apartment above a drugstore about two miles
from Westfield, and I thought my life was coming unhinged. My
sister and I changed schools. I lost my room and had to sleep on a
sofa in the living room.
I remember it like it was yesterday. My parents, Herodotus and
Marianthi, never discussed their financial problems in front of
me. But I absorbed every sign of urgency in our family. My father
and his older brother tried to keep the Sweet Shoppe going by
cutting expenses and working longer hours. My mother, who had
stayed home before I entered school, took a job ironing clothes
in a laundry. After a full day there, she came home and made
elaborate evening dresses for the few women in that part of New
Jersey who could still afford them. As soon as we could work, we
all helped with the family business. I washed windows and swept
out the store. I think I learned more about life from these early
experiences in my family than I did in school, where I continued
to lag.
5
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***
I had never even seen the Penn campus before my parents drove me
and my single suitcase down to Philadelphia in September 1947
and dropped me at the gate on 37th Street and Woodland Avenue.
Beyond the gate were dormitories built around large quadrangles
7
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8
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