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Merck (MRK - Analyst Report) recently announced that it has received US Food and Drug Administration (FDA) approval for its transdermal patch, Oxytrol for Women (oxybutynin transdermal system). The drug has been approved for treating women suffering from overactive bladder (OAB). The company expects the drug to be available from fall of 2013.

The FDA approval of Oxytrol for Women marks the first approval of an over-the-counter (OTC) treatment for overactive bladder in women. Oxytrol for Women has a proven safety profile with oxybutynin, the active ingredient of the drug, being used for treating OAB for more than 30 years. 

The company licensed the exclusive commercialization rights regarding Oxytrol for Women from Watson Pharmaceuticals, Inc., which is currently known as Actavis, Inc. (ACT - Analyst Report).

The drug offers significant commercial potential. Merck stated in its press release that although OAB, which affects more than 20 million women in the US, can be treated, more than 80% of women with OAB remain untreated.

We note that Merck has entered into a challenging period with erstwhile blockbuster drug, Singulair, losing exclusivity in the US in early Aug 2012. Other headwinds remain in the form of EU pricing pressure, US health care reform, unfavorable currency movement, the Remicade/Simponi transition and pipeline setbacks.

We believe the company will continue resorting to cost-cutting initiatives to drive the bottom line. Meanwhile, some of the company’s recent launches are expected to start contributing significantly to the top line in the coming quarters.

Merck carries a Zacks Rank #3 (Hold). Large-cap pharma companies that currently look better-positioned include Eli Lilly (LLY - Analyst Report) and Novo Nordisk (NVO - Analyst Report). Both are Zacks Rank #2 (Buy) stocks.

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