Not much in the way of good news at Merck this morning. The pharma giant announced that it is revising its financial guidelines through 2010, and eliminating 7,200 positions by 2011. The move is expected to save the company $3.8 billion to $4.2 billion through 2013.
The layoffs will be staggered throughout different parts of the company, with 40 percent of the reductions being US employees. About 25 percent of the cuts will be senior and middle management
Merck President and CEO Richard T. Clark (pictured above in happier times) cited manufacturing challenges of some vaccines as a key problem area, along with a 15 percent drop in sales of the cholesterol drugs Zetia and Vytorin, which have been plagued with troubles in the past year. The loss of patent exclusivity of Fosamax also set the company back more than $127 million over last year. Even Merckâ€™s HPV blockbuster Gardasil saw a decrease in sales of 4 percent, with earnings of $401 million in Q3 2008.
Finally, Clark announced that Tredaptive will be delayed because of manufacturing issues that the company is currently working through.
â€œStreamlining Merck to meet the demands of the ever-changing business environment includes the ever-painful reality of losing employees whose contributions have helped the company accomplish so much throughout the years,â€ Clark said to investors this morning. â€œBut no matter how difficult the decisions are today, we know our long-term strategy is right.â€
Merck is investing $1 billion for new plants in North Carolina and Ireland, and is instituting a customer-centric selling model. Research labs are also deploying new operating strategies.
Photo from wikipedia.org.