[Tester32]

Tue Oct 19, 2004 04:46 AM ET

FRANKFURT, Oct 19 (Reuters) - U.S. drugmaker Merck & Co (MRK.N: Quote, Profile, Research) still sees no value in large mergers but will continue its strategy of drug alliances, its chief executive was quoted as saying in a German paper on Tuesday.
"We have always said that large mergers do nothing in terms of broadening research," Raymond Gilmartin told Die Welt in an interview.

"They also do nothing for our long-term growth. That is incidentally the prevailing view in the pharmaceutical industry," he said.

The company's stock has lost about a third of its value since last month's surprise withdrawal of arthritis drug Vioxx from the market, and analysts have said pressure could build for it to do a deal.

Earlier this month the Wall Street Journal reported that Merck had begun vetting executive search firms to screen external candidates to succeed Gilmartin, a move analysts said may pave the way for a merger.

An external hunt could lead to the faster-than-expected replacement of Gilmartin, who is required to retire at age 65 in March 2006.

Gilmartin told the paper Merck would continue its strategy of working with other companies.

"We will stick with our strategy even after the Vioxx recall and continue to extend our partnerships," he said. He said the number of Merck's alliances had risen to 47 last year from 10 in 1999, and was at 41 this year so far.

He said the Vioxx recall was unlikely to change much in the way Merck developed its drugs as it had always been extremely cautious, and he did not expect regulators to tighten specifications for drug approvals.