Merck & Co. completes Medco purchase

November 19, 1993|By New York Times News Service

Merck & Co. the world's largest drug maker, said yesterday that it had completed the $6 billion purchase of Medco Containment Services Inc., one of the largest mail-order pharmacy and managed-care drug companies.

The deal was closed after Medco shareholders overwhelmingly approved the sale, which was announced on July 28.

Demonstrating the new company's marketing strength, Medco announced that it had signed new contracts with General Motors Corp. and a dozen other large companies since July. Martin J. Wygod, Medco's founder, said the new contracts would increase Medco's managed-care business by 45 percent next year, generating total gross sales that could exceed $4 billion.

Mr. Wygod is joining Merck's board and will continue to head the Medco unit.

Future Medco contracts will include incentives to purchase Merck drugs as well as those made by other companies. Analysts said Merck would have a significant advantage that would increase its market share with large buyers.

Merck shares rose 62.5 cents, to $34.625, on the New York Stock Exchange yesterday.

Mr. Wygod said that under the new contract with GM and the United Automobile Workers, Medco's mail-order service and retail pharmacy network will be offered to 900,000 GM employees, retirees and their dependents, who spend $400 million a year for drugs.

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