Merck Soldiers On

Finding good news about Merck (NYSE: MRK) hasn't been easy lately. Anyone who has even cursorily followed the drug manufacturer's recent travails knows the reasons for the dark clouds hanging over the firm. But while the looming patent expiration for Zocor and the withdrawal of Vioxx have commanded widespread attention, investors should not overlook the company's positive developments. One such indicator popped up recently, and it's worth examining in greater detail.

Even with all of its problems, Merck research and development efforts have continued. As Fool contributor Brant David McLaughlin recently noted, the company continues to have a few aces up its sleeve. In the near term, it seems likely that one of these aces, Gardasil, an experimental vaccine in phase 3 development, will soon pay off. The drug is being tested a means of preventing infection by human papillomavirus (HPV).

Merck announced in a press release yesterday that the medical journal The Lancet Oncology published a phase 2 study showing that Gardasil reduced by 90% the incidence of various types of HPV infection as well as related diseases. HPV is a very common infection in both men and women, although it often clears up on its own. However, HPV has also been linked to more serious conditions. One of these ailments is genital warts, a disease that Merck indicates affects 500,000 to 1 million people in the United States.

Perhaps more significantly, HPV is also linked to cervical cancer, which causes an estimated 288,000 deaths worldwide. In the U.S., the mortality rate is relatively low, thanks to regular medical care. Nevertheless, it's easy to imagine Gardasil becoming a standard preventative measure among millions of women worldwide.

Admittedly, Merck may not have a monopoly on this market. As is often the case, Gardasil has a potential competitor in an experimental medicine being tested by GlaxoSmithKline (NYSE: GSK). Still, Merck is believed to have the lead in development, so it could grab a large portion of the market if it acts fast. In the final analysis, Gardasil won't erase Merck's troubles, but the potential for the vaccine shows that the drugmaker is far from dead.

For related news, see "Merck's Road to Recovery."

Merck, with its 4.61% dividend yield, is a Motley Fool Income Investor recommendation. You can take a free, no-obligation trial to learn about more income-generating companies.

Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.