Merck & Co to make further job cuts
13,000 positions to go by 2015 in next phase of restructuring programme
Merck & Co (known as MSD outside the US and Canada) is to cut a further 13,000 jobs as the US pharmaceuticals manufacturer responds to generic competition and other challenges by expanding resources in emerging markets.
Merck, based in Whitehouse Station, New Jersey, says it remains on track to achieve its goal of US$3.5bn in annual cost savings by the end of 2012, but will ‘more aggressively reduce its cost structure’.
As part of the next phase of its restructuring programme, the company expects to reduce its workforce by an additional 12 to 13% by the end of 2015.
‘Merck is taking these difficult actions so that we can grow profitably and continue to deliver on our mission well into the future,’ said chief executive Kenneth Frazier.
By the end of 2015, Merck now expects annual ongoing savings of $4bn–$4.6bn from an original estimate of $2.7bn–$3.1bn.
The company posted a strong performance in the second quarter with worldwide sales of $12.2bn, an increase of 7% compared with the second quarter of 2010. Pre-tax profit rose 35% to $1.7bn.
The company cut its r&d expenditure by 11% to $1.9bn.
For the six months ending on 30 June, sales were $23.7bn, up 4%. Pre-tax profit increased 83% to $3.4bn.
Double-digit sales of diabetes and obesity drugs Januvia (sitagliptin) (+30%) and Janumet (sitagliptin/metformin hydrochloride) (+47%) boosted revenue in the second quarter, along with Remicade (infliximab) for inflammatory diseases (+26%) and antiretroviral Isentress (raltegravir) (+26%).
Sales of asthma treatment Singulair (montelukast sodium) increased by 8%, but Merck will lose patent protection for the drug next year, which will lead to sales erosion from generic competition.
Pharmaceutical sales in emerging markets accounted for 18% of total sales in the quarter.
In China, sales were $206m, growing 30% and driven by the infectious disease and respiratory franchises.
Merck recently announced a joint venture with Simcere Pharmaceuticals that will give the company a greater reach and broader portfolio in the fast-growing cardiovascular market in this region.
The company is also accelerating new launches in Japan following the approval of Gardasil, Zolinza (vorinostat) and Cubicin (daptomycin for injection).
Merck’s Victrelis (boceprevir), an oral hepatitis C protease inhibitor, was approved in the US by the FDA and in Europe by EMA, and the US launch is now underway.