Ten-Year History on Merck (MRK) and Eli Lily (LLY) - Essay Example

Eli Lily and Company emerged in 1876 and currently has over $20 billion in annual revenue. This report constitutes a broad ranging analysis on these companies over the last ten years and provides a recommendation of which company would be a more desirable acquisition. Qualitative, Cultural, Social There are a number of notable incidents that have occurred in the last ten years of these companies’ histories. While the 2008 economic recession is a prominent consideration that had a detrimental impact on both organizations, there are other problems that have been encountered.

For Merck perhaps the most prominent such issue is the 2007 price fixing settlement the company reached, as the company had to pay over $20 million dollar out-of-court settlement with the Department of Health over oligopolistic price fixing in terms of its pharmaceutical drugs (Bowers 2005). Eli Lilly found similar legal troubles as they had to pay a reported $1.42 billion in fines levied by the United States Justice Department for improper marketing techniques in relation to the company’s anti-psychotic drug Zyprexa. . From this period the equity valuation went on a steady decline until its November 16th, 2004 trading price of $26.41. While the stock is dividend driven, it’s clear that during this three years period there was a substantial market correction.

From the November 16th, 2004 trading price made a steady climb and three years later on November 16th, 2007 the equity had largely regained its equity valuation and was trading at $58.38 ("Financial statement," 2011). The subsequent economic recession and the company price crashed to a ten year low of $25.43 by December 28th, 2009. Since then the stock has slowly climbed and is not trading at $35.67 ("Financial statement," 2011). The clear implication is that the company has demonstrated a past top over $60.

00 and that there is strong historical precedent for the current $35 trading price to continue to grow. The Merck equity financials can be compared to those of Eli Lily in an attempt to determine both companies’ financial strengths in relation to each other as market as macro-concerns within the health care sector. In this context of understanding it’s demonstrated that both companies share slightly similar trends in terms of equity valuation. In November 16th, 2001 Eli Lilly was trading at $79.02. The company witnessed a steady decline in this market price that was topped off by the 2008 recession.

By November 16th 2009 the company was trading at $35.36, greatly similar to its current market price of $37.65 ("Financial statement," 2011). While both companies are dividend driven and currently share a similar market valuation, one of the prominent concerns is that while Merck experienced significant ups and downs in valuation, Eli Lilly has demonstrated a steady