Question: Merck is one of the largest pharmaceutical firms in the
Merck is one of the largest pharmaceutical firms in the world, and over an extended period of time in the recent past, it consistently earned higher ROEs than the pharmaceutical industry as a whole. As a pharmaceutical analyst, what factors would you consider to be important in making projections of future ROEs for Merck? In particular, what factors would lead you to expect Merck to continue to be a superior performer in its industry, and what factors would lead you to expect Merck’s future performance to revert to that of the industry as a whole?
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