                                   MERCK

                                  3/23/94

                      Stock    Latest      52 week     YTD Pr    Div  Gross
                      Rating    Price   --- Range ---    Chg     Rate Yield
Merck & Co.             MP      30.50       40-28       -11      1.12  3.7

                                 Est.        - Interim EPS -    -EBITDA 94-
          FY/IP       EPS93     EPS94 PE94   --Next- -YrAgo-    per/sh  p/e
MRK       12/01Q      2.39R      2.40 12.7      0.55    0.54      n/a   n/a

Merck & Co., Inc. (MRK), 1993 $2.39, 1994 $2.40, Market Performer


Analysts continue to maintain 1994 earnings of $2.40 versus $2.39 in
1993; the estimate includes cuts in discretionary spending and head
count related to the merger and the changing distribution
characteristics of the industry.  Analysts continue to rate Merck stock
a market performer at current levels.

The weakness in Merck and Bristol Myers Squibb shares related to the
Sandoz announcement of a 50% discount on their cholesterol drug (which
is in the same class as Merck's Mevacor and BMY's Pravachol) confirms
that the gross margins of the pharmaceutical industry are declining from
their current 75% average level towards 50%-60% range as price wars
(rebates, discounts, and undercutting on capitation contracts) continue.

1.  The threat of price wars, therapeutic substitution and generic
substitution was precisely the reason that led Merck to purchase Medco.
The decline in gross margins will only be fueled more by undercutting on
capitation contracts to secure head count.  He who controls head count
will control the marketplace.

2.  Gross margins will continue to decline towards the 50%-60% level.
Analysts believe that investors must focus on operating margin expansion
and operating income growth to value the growth prospects of the
pharmaceutical industry.  Analysts continue to expect large cuts in
discretionary spending and head count that will follow the impending
horizontal and vertical integration within the health care industry to
drive the operating income growth.

Thus, until the business and the P&L of the pharmaceutical industry are
rewritten, the stocks should continue to languish during the transition
period, supported primarily by dividend payout and yield.

3.  Analysts expect that before Merck cuts the price of Mevacor, it will
try to leverage Mevacor in bundling strategies by combining it with a
package of cheaper drugs and offer the customer/client a cheaper overall
package of drugs.

Merck will also attempt to distinguish Mevacor's better efficacy
strategy and LDL or bad cholesterol lowering ability versus Sandoz's
drug, in the marketplace.

Nonetheless, all the price shifting strategies and distinguishing
characteristics may only slow the inevitable decline in Mevacor's price
and profit contribution, and the gross margin.  Until the steep cuts in
discretionary spending and head count related to the merger are
forthcoming, Merck's earnings growth may continue to remain under
pressure.

