It takes an above-average level of commitment to diligently follow pharmaceutical companies. In addition to the normal cycle of earnings, you have all manner of clinical presentations and Food and Drug Administration decisions to keep an eye on.

And over the past year, Motley Fool Income Investor recommendation Merck's (NYSE:MRK) travails have certainly made matters even more interesting.

Matters reached something of a head a short time ago when former CEO Raymond Gilmartin stepped down a year ahead of schedule. For investors hoping for a breath of fresh air and a new direction, the board's decision to go with Richard Clark, the company's head of manufacturing operations, might be seen as a disappointment.

Though Clark is a competent and qualified manager, resuscitating Merck will require more than just incremental improvements to the status quo. And therein lies the problem. The selection of an insider -- when the perception is that Merck's culture dictates a reluctance to engage in mergers and acquisitions -- doesn't suggest change. What's more, the new CEO does not appear to be a research and development wonk, and Merck could desperately use some fresh ideas on that front.

Of course, Vioxx continues to be the story that just won't go away. Lawyers smell blood and over 2,000 lawsuits have been filed, with perhaps as many as 100,000 more on the way. While nobody has any idea what Merck's total potential liability could be, some estimates have reached $18 billion or more. That's a tough blow for almost any company to absorb without batting an eyelash.

But there's a glimmer of hope. Merck's pipeline isn't deep, but there are some near-term candidates that continue to look promising. New data suggests that the company's anti-HPV vaccine Gardasil could be effective in adolescents, and the company is on track with the compound.

Merck also continues to accumulate good news on muraglitizar -- its new drug for type 2 diabetes that is partnered with Bristol-Myers Squibb (NYSE:BMY). Recent phase 3 studies reconfirmed that the drug is effective in lowering HbA1C levels (an important measure of blood glucose control) as well as triglycerides. With over a year's head start on the competition and perhaps more than $2 billion in potential sales, this is obviously a critical compound for Merck.

So where does Merck sit going into the summer? Many investors continue to wait for a major announcement, such as a merger with Schering-Plough (NYSE:SGP) or a buyout of a promising late-stage biotech company. While I'd caution my fellow Fools not to make such a dramatic move a centerpiece of their investment thesis, Merck has its charms. Its dividend is solid and appears sound, and an overall improvement in the drug sector should pull it along for the ride.

Merck is a Motley Fool Income Investor recommendation. Want to hear what chief analyst Mathew Emmert thinks of the stock now? Take a 30-day free trial and find out.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).