MERCK has stunned investors by announcing that it has received 300 lawsuits in less than two weeks. It also admitted that it might not have enough insurance cover to pay claims and revealed that profits were down 28 per cent.

The company, one of the world’s biggest drugs groups, yesterday told Wall Street that a mounting number of lawsuits since its withdrawal of its painkiller Vioxx two weeks ago may damage future earnings.

Merck said: “A series of highly unfavourable outcomes could have a material adverse effect on the company’s financial position, liquidity and results of operations.”

The company said that as of October 15 it was aware of 300 lawsuits, which included 900 plaintiff groups alleging personal injury as a result of using the arthritis painkiller and antiinflammatory drug.

Merck announced that it was withdrawing Vioxx on the final day of its third-quarter period.

Nonetheless, profits for the period were still hit by $552.6 million (£302 million) in charges as it paid for returns of the medicine, and costs of withdrawing it from the market.

Some of the lawsuits included allegations that the drug had caused stomach bleeding and kidney damage, as well as cardiovascular problems.

Merck expects at least one of the lawsuits to go to trial in the first half of next year. It warned investors that it expected more legal claims. “Based on media reports and other sources, the company anticipates that additional Vioxx lawsuits will be filed against it and/or certain of its current and former officers and directors in the future,” it said.

Two million patients have used Vioxx. Merck voluntarily pulled it from the market on September 30 after a study that was intended to prove that the drug was useful in treating colon polyps revealed that it doubled the risk of stroke, blood clots and heart attacks.

“The company is unable at this time to determine whether the company’s insurance coverage with respect to (the Vioxx lawsuits) will be adequate to cover its defence costs and losses, if any,” Merck said.

Merck believes it has insurance to cover $630 million of personal injury claims, but said: “Certain of the company’s insurers have reserved their rights to take a contrary position with respect to certain coverage and there could be disputes with insurers about coverage matters.

“The company believes that it has meritorious defences to the Vioxx lawsuits and will vigorously defend (itself).”

Profits fell by 28 per cent to $1.33 billion, or 60 cents a share, with the Vioxx withdrawal producing a 25 cent a share reduction.

Merck earned $1.86 billion, or 82 cents a share, for the same period a year earlier.

The company expects full-year earnings to be cut by 50 to 55 cents a share, to between $2.69 and $2.64 a share. Vioxx had $2.6 billion sales last year.

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