Merck to fire 8,500 as cuts continue
Effect on Memphis division unclear
NEW YORK — Merck & Co., the second-biggest U.S. drugmaker by sales, will fire 8,500 workers and revamp its research and development after U.S. regulators delayed new medicines.
The positions eliminated add to 7,500 cuts already announced, the Whitehouse Station, N.J.based company said Tuesday. That amounts to 20 percent of Merck’s total workforce. The company declined to break down where the dismissals will occur, saying only they will come from all areas of Merck, including R&D, sales and management.
It’s unclear how the global downsizing might affect a 400-employee workforce at the Merck Consumer Care unit in Memphis, the former ScheringPlough consumer products division on Jackson. The Memphis unit produces over-the-counter and consumer products such as Claritin, Coppertone and Dr. Scholl’s.
The moves, designed to save $1 billion next year, are part of a strategy set by CEO Ken Frazier and R&D chief Roger Perlmutter, who was hired in April to replace Peter Kim. Under Kim, experimental drugs in cardiovascular, surgery, and osteoporosis suffered setbacks while rival drugmakers were able to get new products to market.
“We will sharpen our focus on core therapeutic areas,” Frazier said on a conference call. That means more resources for vaccines, cancer, diabetes and hospital care. “In other therapeutic areas, we will significantly reduce our resources.”
The company also will trim its real estate holdings, particularly in New Jersey, and work to improve the efficiency of its manufacturing and supply network. Headquarters will move to Kenilworth, N.J., about 35 miles east and closer to New York City. The company previously had planned to move to Summit.
By 2015, savings from the cuts will rise to $2.5 billion a year, the company said. Half of the savings will be in R&D, and half in the company’s commercial arm, which includes its sales force and marketing.
The stock had gained 5. 3 percent in the last 12 months through Monday, compared with an 18 percent gain in the Standard & Poor’s 500 Pharmaceuticals Index of drugmakers.
The company will place more emphasis on developing drugs with the most sales potential, which means getting the business side to work more closely with researchers, Frazier said.