Embattled Drugmaker Merck Announces 7,000 Job Cuts
The cuts, announced by Merck Chief Executive Officer and President Richard T. Clark, would reduce the company’s global workforce 11 percent by 2008 and cost up to $2.2 billion, but would save the company an estimated $4 billion dollars over five years, Clark said.
The move precedes losses anticipated in 2006 when the patent expires on Merck’s cholesterol drug Zocor — the world’s No. 2 drug in revenues, according to the Associated Press — and competition intensifies from generic drug makers.
“The actions we are announcing today are an important first step in positioning Merck to meet the challenges the company faces now and in the future,” Clark said in a conference call with analysts early Monday, according to the AP.
Clark, who took over as CEO in May and is known as a cost cutter, said the restructuring, which includes plans to outsource part of its manufacturing operations, would reduce costs and enhance efficiency and competitiveness.
Worldwide Merck employs just under 63,000 people. About half the job cuts will affect the company’s U.S. operations.
Merck did not say which of its 31 drug manufacturing facilities would close. Willie A. Deese, head of manufacturing, said employees would be briefed over the next two days and the company would name the sites after that.
The company has struggled since it removed Vioxx from the shelves in 2004 after a clinical trial linked it to heart attacks and strokes. Thousands of lawsuits have been filed against Merck as a result and shares of the company have fallen more than 30 percent.
On Monday, Merck shares fell 2.4 percent to $30.25 on the New York Stock Exchange, the A.P. reported.