Merck & Co Inc plans to cut another 12,000 to 13,000 jobs by late 2015 to wring out additional annual cost savings of up to $1.5 billion that can be plowed back into research and deal making.
The No 2 US drugmaker eliminated 12,465 positions last year, offset by almost 6,500 new hires, reducing its workforce to 91,000 employees as of June 30.
The company, which also reported quarterly earnings in line with forecasts, said on Friday it would cut its workforce by an additional 12 per cent to 13 per cent from the 100,000 employees it had at the end of 2009 after buying Schering-Plough Corp.
A company spokesman declined to peg the planned size of its workforce, saying the job cuts would be substantially offset by new hires in strategic growth areas, such as emerging markets.
"The new phase of restructuring will create an additional $1.3 billion to $1.5 billion in annual cost savings," company spokesman David Caouette said.
Job cuts will come largely from administrative positions, consolidation of offices and sale or closure of manufacturing sites.
Merck is streamlining operations following its $41 billion purchase of Schering-Plough.
"I think we're going to see other firms continue to expand their cost-reduction programmes," Morningstar analyst Damien Conover said, pointing to increasingly difficult reimbursement environments in Europe and the United States.
"We have to remember that 10 years ago these firms were extremely bloated and in an entirely different operating mold and it's really shifted to one where you don't need the gigantic sales forces that you once needed," Conover said.
Many other big drugmakers years have slashed their workforces in recent to ensure profit growth as they face patent expirations that will subject them to generic competition, the costs of healthcare reform and efforts by insurers to keep a lid on drug prices.
From/ Gulf News