ISSUE FOR DEBATE One of the most difficult decisions firms in dynamic industries need to make is whether to invest primarily in one line of research and development or to spread its investments in multiple lines of research. Merck, a major pharmaceutical firm, faced this very choice recently. Up until recent years, Merck was a company that liked to spread its bets across a range of research directions and products. As Bernard Munos, a pharmaceutical R&D consultant stated, "Merck's R&D strategy was to bring as many drugs to market as they could." Recently, the firm's focus shifted. Rather than developing a range of drugs, Merck has focused largely on one drug, Keytruda, a new type of cancer drug that leverages the patient's own immune system to fight cancer tumors. The drug is already marketed to treat skin, blad- der, and other cancers, but the firm is looking for even more uses for it. Merck has expanded its oncology team, doctors who study and treat cancer, from 20 to 100 specialists. The firm has over 700 clinical trials examining how Keytruda could treat more than 30 types of can- cer. Over half of Merck's budget for clinical trials is aimed at Keytruda. Merck's R&D head, Roger Perlmutter, put it bluntly to his staff when he said, "Whatever other projects you're working on, you can stop now, because we're doing this, and we're going to put a lot of muscle behind this." Not all clinical trials have produced positive outcomes. The drug did not appear to extend the survival of gastric cancer patients. Still, the general news has been positive. Trials for kidney, brain, lung, and esophageal cancers have shown positive results. The sales of the drug have been growing rapidly, making up 9 percent of Merck's sales in 2017 and is pro- jected to make up nearly 20 percent of the firm's sales in 2019. $8 billion in sales for the one drug alone. Even with its success, some wonder if Merck is investing too heavily in this one patented drug. Discussion Questions 1. Why is Merck investing so heavily in this one drug? What are the risks and opportunities? 2. What are the long-term implications for Merck's culture, its human resources, and its knowledge base? 3. Is this a good "bet the company" decision? How do you think Merck should move forward from here