Merck announces 13,000 employees to be let go by 2015
Even the industry giants are feeling the pinch of trying to find the funds for all of their business ventures as the economy continues to limp along, and Merck & Co. is no different.
WHITEHOUSE STATION, N.J.--Even the industry giants are feeling the pinch of trying tofind the funds for all of their business ventures as the economy continues to limp along, and Merck & Co. is nodifferent. Despite a 7 percent increase in sales for the second quarter of2011, the pharmaceutical company has announced that it will be cutting up to13,000 jobs by the end of 2015, and 40 percent of those reductions are expectedto be made in the United States.
These cuts come on top of another 17,000 staff members thathave been let go in other attempts to cut costs. According to Merck, thelayoffs will save the company $1.3 billion to $1.5 billion annually, inaddition to the $3.5 billion the company expects in annual cost synergies bythe end of next year. The budget trimming will free up funds to help Merckfight against competition from generic drugs and expand into emerging markets.The company has declined to comment on which facilities the cuts are expectedto take place.
"Merck is taking these difficult actions so that we can growprofitably and continue to deliver on our mission well into the future,"Kenneth C. Frazier, president and CEO of Merck, said in a statement. "Theenvironment we operate in is changing rapidly and dramatically, and these stepswill help us more efficiently serve customers and patients around the world."
The mass job cuts, which began December 31, 2009 after Merckacquired Schering-Plough, are expected to reduce Merck's total workforce fromthat date by 30 percent by the end of 2015. As of June 30, 2011, Merck'semployees were numbered at approximately 91,000. By the end of 2015, Merckexpects its Merger Restructuring Program to result in annual savings of $4billion to $4.6 billion, up from its original estimates of $2.7 billion to $3.1billion.
According to Merck, some new hires will serve to offset thereductions, though they will primarily take place in "growth areas," such asChina and other emerging markets around the globe.
Still, the company did see some good news for the quarter.In addition to posting sales of $12.2 billion, an increase of 7 percent,pharmaceutical sales from emerging markets made up 18 percent of sales in thequarter. Merck also reported non-GAAP earnings per share (EPS) growth for thequarter, up to $0.95 from $0.86 in the same quarter in 2010. GAAP net income roseto $2 billion. Sales of several of Merck's products grew for the quarter,inclugin Januvia/Janumet, Singulair, Remicade and Isentress, while others suchas Cozaar continued to decline as they lost marketing exclusivity in the UnitedStates and several major European markets.
"Double-digit growth from key products, and successful newproduct launches in markets worldwide led to Merck's strong second quarterresults," said Frazier in a press release. "We're delivering on our promise togrow both the top and bottom lines while continuing our efforts to streamlineand transform Merck.
"By improving the effectiveness and efficiency of ouroperations and focusing on scientific innovation, we are well-positioned forsustained and profitable growth in the future," he said.
SOURCE: Merck press release