Under Pressure: Can Merck Show Cubist Is Worth $9.5 Billion Without Cubicin?

Hours after Merck revealed a merger agreement with Cubist, a court ruled that generic versions of Cubist’s big seller Cubicin can launch in 2016, two years earlier than expected, putting the pressure on Merck to justify the pricey acquisition.

Merck & Co. Inc. has put a long-term strategy in play – building a specialty in acute care – with the acquisition of Cubist Pharmaceuticals Inc. Investors, however, may need some more convincing before they agree that the deal, valued at $9.5 billion, is worth the cost, especially if the remaining patent life for Cubist’s top seller, Cubicin (daptomycin), is short-lived.

The timing of the merger announcement couldn’t have been worse for Merck. Just hours after Merck revealed plans to buy Cubist Dec. 8 [See Deal], a Delaware district...

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