n the 1980s, Merck & Co. (MRK) faced a quandary.

The drug giant was trying to decide whether to pursue a cure for river blindness.

The disease, which was the scourge of Third World countries, was gruesome. It was caused by a parasitic worm that, left untreated, would burrow into its victims' eyes, causing them to go blind.

Though millions of people needed a cure, many were too poor to afford whatever drug would be developed.

Rather than forgo the pursuit of a cure in favor of a more profitable drug, Merck stayed true to the ideals of its founder and went forward with it.

But once the drug, called Mectizan, was developed, no government or aid organization stepped up to purchase it.

So Merck in 1987 announced two moves: It would give the drug away and create a foundation to get it to the people who needed it.

The firm knew that in return it would receive long-term good will.

At the time, CEO Roy Vagelos said that if Merck hadn't delivered the drug, it would have demoralized the scientists working on the project.

That was unacceptable at a company that considered itself "in the business of preserving and improving human life," Vagelos said.

That corporate vision echoed the spirit of George W. Merck (1894-1957), whose family founded the company and who guided its growth from a midsize family company into an industry powerhouse.

The drug giant had a humble start. It traced its roots to 1668, when Friedrich Jacob Merck bought a pharmacy in Darmstadt, Germany.

In 1890, George Merck's father came to the U.S. to start a branch of the family business. That division became the Merck & Co. we know today. He passed it to his son 35 years later.

"If George Merck the elder officially created the American Merck & Co., George the younger created the conglomerate it would become," Fran Hawthorne wrote in her book "The Merck Druggernaut."

Merck took the business he inherited into the big leagues.

"In 1925, when he took over, Merck was a largely family-owned firm that made fine chemicals, recording $6 million in sales," Hawthorne wrote. "By the time he died in 1957, it was a $188 million company, traded on the New York Stock exchange, that had discovered Nobel Prize-winning medicines."

When George Merck stepped to the helm, drug manufacturers didn't do research. They served as sales agents who sold medicines discovered by scientists at universities.

Merck changed all that when he established his own research lab in Rahway, N.J., to give his scientists the freedom to chase scientific leads rather than profit.

"George W. Merck's most revolutionary decision was to branch beyond manufacturing and into research in the 1930s," Hawthorne wrote. "For a drug company like Merck to say it was going to do its own research, back in those days, would be like a hot dog stand today announcing that it would be hiring the finest French chefs."

Merck was so successful in expanding the company he inherited that his methods have been studied by management experts in the decades since his death.

Among these were James Collins, author of the best-seller "Good to Great," who teamed with Jerry Porras to write "Built to Last" in 1994.

"Built to Last," based on six years of research at Stanford University, looked at exceptional firms such as Merck and 3M. "Merck in fact epitomizes the ideological nature — the pragmatic idealism — of highly visionary companies," Collins and Porras wrote. "Our research showed that a fundamental element in the 'ticking clock' of a visionary company is a core ideology — core values and sense of purpose beyond just making money — that guides and inspires people throughout the organization and remains relatively fixed for long periods of time."

George Merck made sure that ideology permeated his firm.He "envisioned Merck as a world class company that benefits humanity through innovative contributions to medicine — a company that makes superb profits not as the primary goal, but as a residual result of succeeding at that task," they wrote.

One of the first things George Merck did to change his firm for the better was to make his New Jersey laboratory the equal of labs at universities and research institutes.

Merck designed the lab to have an academic atmosphere — to look so much like a college that it became known as the Merck Campus.

"Furthermore, instead of keeping its pure research behind locked doors, Merck encouraged its research scientists to publish in scientific journals — a key move that attracted many top scientists," Collins and Porras wrote.

Merck encouraged his scientists to collaborate with peers at universities and other laboratories, which helped improve the quality of the research they published. "Merck even went so far as to list the scientific publications of its researchers in recruiting materials, much as an academic institution lists the publications of its faculty," Collins and Porras wrote. "As one scientist summed it up, 'Merck is like MIT or Harvard or any other academic institution with an outstanding reputation for research. You have to want to do your science intensely.' "

His moves paid off. Merck researchers and other scientists supported by the company made great advances in the development of chemotherapy in the 1930s and '40s. Merck scientists also developed, alone and with their peers, a variety of synthesized vitamins and began to produce them on a large scale.

In one of the giant steps of George Merck's tenure, the company developed the first penicillin used to treat an infection in the U.S.

Merck was simply in his scientists' corner, letting them pursue promising leads and experiment, even when it was not directly related to a drug they were developing.

He assumed that such commitment to doing the right thing would pay off for the company.

"We try to remember that medicine is for the patient," Merck said in a speech in 1950. "We try never to forget that medicine is for the people. It is not for profits."

He added: "The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been."
BY CHRISTINA WISE