Tuesday, October 01, 2013

Merck cuts 8,500 extra jobs

US pharmaceutical giant Merck has announced it will cut 8,500 further jobs in an attempt to cut $2.5bn (£1.5bn) from its costs by 2015.

The company's shares rose 2.35% to $48.73 in New York trading after it announced the cuts.

The new losses, combined with 7,500 job cuts announced in 2011 and 2012, amount in total to 20% of its workforce.

Merck said it will be shifting its focus to areas it sees as high growth, such as cancer treatment.

'Difficult decisions'
It is also pulling products in late-stage trials it estimates will not be so successful, and licensing iother products to alternative companies.

The New Jersey-based company anticipates its cost swill be reduced by $1bn at the end of 2014, from cutting marketing, administrative, research and development operations.

Kenneth Frazier, chief executive at Merck, said: "While these actions are essential to ensure that Merck can continue to fulfil its mission into the future, they are nevertheless difficult decisions because they affect our dedicated and talented colleagues.

"We appreciate the contributions of all our employees, and we will support them during this time of transformation."

Merck will also be selling property in New Jersey to help save costs.

Alex Arfaei, analyst at BMO Capital Markets, said he was concerned Merck was putting too much faith in a handful of experimental drugs.

He said these include a new type of cancer drug that boosts the immune system, a treatment for Alzheimer's disease, improved versions of its cervical cancer vaccine and its treatment for hepatitis C.

"Overall, today's announcement makes us more cautious about the potential of Merck's pipeline" of experimental drugs, Mr Arfaei said.


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