The outgoing Merck cfo, who retires shortly, spends a few minutes chatting about her career highlights with The Star-Ledger of New Jersey. Judy doesn’t discuss the big tax settlement with the IRS and any aspirations she may have held to be Merck’s ceo. But she does make this revealing statement about big pharma: “The perception is we’re too profitable when, in fact, it’s literally earning its economic return to support the R&D effort and no more.” No more. Really? Hmm…

Q: Your career provides you with a great vantage point from which to assess the pharmaceutical industry. What do you think about the state of the industry?

Judy: The industry today is in a position of paradox. There’s never been a greater opportunity for research and development. There’s never been more excitement in terms of valid pathways and approaches to discovering therapies in areas like cancer, Alzheimer’s and anti-virals.

The paradox is the industry has never been under more pressure and has, unfortunately, a very bad public image. So the ability to see that research opportunity through is more a challenge than ever before. I think the over-arching pressure is understandable. It’s the major question of how a society wants to allocate its resources.

These are classic macroeconomic issues. Now, as a society develops and grows, health is certainly one of the top priorities. That’s understandable. Everyone wants to live a healthier and longer life. When it comes to pharmaceuticals, we have found ourselves in a place of great misunderstanding. The outside world, I think, does not understand we actually do the research and development of these therapies.

So, because they don’t understand that, people look at what they pay for a prescription and don’t understand the total value proposition. They come to the conclusion that the industry doesn’t deserve the pricing it gets. The perception is we’re too profitable when, in fact, it’s literally earning its economic return to support the R&D effort and no more.

Q: A huge part of your legacy at Merck will be the strategic alliances you’ve helped to forge — AstraZeneca, Medco, Schering- Plough among them. Which one stands out as the defining deal?

Judy: Astra stands above all the others because it added tremen dous value to Merck. From 1982 — we’ll be together until at least through 2010. I’ll tell you conservatively, conservatively, it’s generated over $20 billion for Merck.

We realized the vision they had in 1982 of building a world-class, stand-alone pharmaceutical company, and now, they’re a key competitor and a key player in the market. It is cer tainly one of my proudest accomplishments on the business side.

Astra right now is AstraZeneca, but in 1980-1981, they were stand- alone Astra. They decided their development portfolio was so promising that this might be an opportunity to think about creative structures with another pharmaceutical company that might give them a better presence in the U.S. We were not the only company to whom they were speaking. But we won.

Q: How was the deal structured?

Judy: We basically agreed to in-license (or buy) 12 products. We would develop them and whatever products came to market we would market them. We had until Dec. 31, 1993 for the fruits of that effort to realize sales of a specific number.

If we realized those sales, we would set up a joint venture. Astra would have the option to buy into it as a 50-50 partner. The important part of the agreement gave Merck evergreen rights to Astra’s pipeline. We hit the sales level around the end of August — not too many months to spare. We established the joint venture on Nov. 1, 1994. It’s really a prototype of what goes on in this business. Of those 12 products, the first four that we thought were going to lead us to success all failed.

Most of the products in earlier stage development failed except for one which turned out to be Prilosec. At its peak, Prilosec was the largest- selling product in the world. It was certainly something that was unanticipated when we closed the deal in 1982.

Q: You really seemed to relish the deal-making aspect of your work.

Judy: I loved it. I loved it because I like fashioning something out of nothing. It’s a creative process. You’re trying to think of ways to organize them so they add value, so they make sense, so it can work economically.

The other part I love about it is working with your partner to get a win- win. Each party has a vision of what they’re trying to achieve and has concerns and objectives of their own. That’s a dynamic of every transaction that I’ve always loved. You need to be comfortable in a consensus environment.

You need to listen, and you need to be sensitive to your partner’s needs as well as the joint ven ture’s needs. Not everyone can do that. I’ve done a lot of transactions here at Merck — a lot — and no one is the same. Every one is an opportunity, and every one is a puzzle.

Q: What was it like to be one of the only female executives in finance at a major U.S. business?

Judy: I never think about it. If I’m treated fairly and I’m enjoying what I’m doing, I don’t think about it. At Merck, I was valued for what I brought to the table. I just never got the sense there was a gender issue. In fact, when I was named CFO in 1990, public affairs was getting calls asking if I was the only woman CFO in the Fortune 500.

No one at Merck knew the answer because no one at Merck had thought about it. (The answer to the question was yes.) I wasn’t named CFO be cause I was a woman. I was named CFO because of what people thought of my capabilities.

Q: What advice would you give to young people who hope to achieve some of the things you have?

Judy: I’d tell them a couple of things. You need to be absolutely the best at your chosen profession. I think people who have a passion for what they do always have an edge. Don’t think about the next job. Do the job you have today to your best ability, and the rest takes care of itself. It’s the people who really focus on what they’re doing, who love what they’re doing and contribute who are recognized.

Q: What is Merck’s biggest business challenge going forward?

Judy: One of the biggest will be managing the complexity of a large, global organization. (Merck CEO) Dick Clark has led a process to reorganize how we go about that both on the research and the commercial side, going more to what we call a matrix organization. We have fully integrated organizations on the ground around the world.

They are the ones that are making things happen. They are the ones executing the business plan. That’s been the way Merck has been organized for a long time. Now, the matrix part is to get a global view of our strategy by franchise. When we launched Januvia, we took a worldwide view of what we wanted to do with it.

Q: So, what’s your next move? I want a new challenge. I want a second career. I’m speaking to lots of people about a whole spectrum of things. Honestly, I’m looking in all directions.

Judy: It’s exciting. I turned 55 in 2004, but 2004 brought some developments (Those developments included the withdrawal of the company’s top-selling pain medicine Vioxx.) I couldn’t leave Merck in that state. When Dick (Clark) was brought in as CEO, he was someone I respected and someone I wanted to provide support for.

When he asked me to develop a strategy for the company, that’s what I worked on in ‘05. We started to implement that strategy in ‘06. It’s one think to get the ideas, but to see it through, that’s really the test and that’s really the exciting part. I think Merck is in a very good place. I really felt it was a good time for me to leave while I still have, as Roy Vagelos has told me, at least a good 20 years left.