Merck & Co to reduce workforce 15%

The New Jersey drug major, which bought fellow US pharmaceutical group Schering Plough for $41bn last year​, said it will reduce its 100,000-strong global workforce by 15 per cent by 2012 in a bid to save $3bn.

Merck said that that consolidation of facilities will mean that both its manufacturing and research divisions will be impacted by the cuts, but did not specify how many jobs and plants.

Mega cuts without mega merger?​

Merck’s move is in keeping with the workforce cuts and restructuring activities that fellow drug majors Pfizer and Roche announced after completing their respective mega-mergers last year.

However, while the need to reduce duplicate manufacturing and R&D capacity post merger is undoubtedly a motivation for Merck, its cutbacks are also in line with the general trend among Big Pharma to streamline operations.

For example, the US firm’s announcement follows hot on the heels of news of impending cut backs at UK rivals AstarZeneca and GlaxoSmithKline, neither of which have adopted the mega-merger strategy.

Schering-Plough sales boost​

Merck announced the jobs cuts during the presentation of an impressive set of Q4 results in which net income hit $6.5bn, which was more than three times the figure for the year earlier period.

Clearly the key driver for this massive income increase was the contribution from Schering, which also increased Merck’s revenue for the period by around 67 per cent to around $10bn.

Commenting on the results Leerink Swann & Co analyst Seamus Fernandez told Bloomberg that: “We believe Merck’s acquisition of Schering-Plough lowers Merck’s risk profile while expanding the pipeline and the diversity of its healthcare portfolio​.”