Merck & Co announces further restructuring measures
US-based Merck & Co. has outlined additional steps in its continuing restructuring programme to create a new business model that is more customer-centric, more agile and has a variable cost structure that enables investment in key growth areas.
US-based Merck & Co. has outlined additional steps in its continuing restructuring programme to create a new business model that is more customer-centric, more agile and has a variable cost structure that enables investment in key growth areas.
As part of the 2008 restructuring plan, Merck expects to eliminate approximately 7,200 positions, of which 6,800 will be active employees and 400 vacancies, across all areas of the company worldwide by the end of 2011. About 40% of the job losses will occur in the US.
The total number of senior and mid-level executives will be reduced by approximately 25%; this is in addition to the 10,400 positions eliminated as part of the 2005 restructuring programme, which was substantially complete at the end of September 2008.
The restructuring effort will involve all areas of the company. For example, Merck & Co. will accelerate the rollout of a new, more customer-centric selling model; make greater use of outside technology resources; centralise common sales and marketing activities; and consolidate and streamline its operations. The manufacturing division will further focus its capabilities on core products and outsource non-core manufacturing.
In addition, Merck says it is enhancing its research operations to expand access to worldwide external science and incorporate it as a key component of the company's pipeline, and ensure a more sustainable pipeline by translating basic research productivity into late-stage clinical success.
As a result, basic research operations will be organised to consolidate work in support of a given therapeutic area into one of four locations. This will provide a more efficient use of research facilities and result in the closure of three basic research sites: Tsukuba in Japan; Pomezia in Italy; and Seattle in the US by the end of 2009.
Merck expects the 2008 programme to yield cumulative pretax savings of $3.8-4.2bn (Euro 3.02-3.34bn) from 2008 to 2013. These are in addition to the cumulative pretax savings of $4.5-5.0bn (€3.58-€3.98bn) that the company remains on track to achieve at the end of the 2005-2010 period.