Location of Upper Gwynedd Township in Montgomery County (Photo credit: Wikipedia)
Merck & Co, taking a cue from other drugmakers that have slashed research spending to bolster earnings, on Tuesday said it plans to slash 8,500 jobs and cut annual operating costs by $2.5 billion by the end of 2015.
The job cuts announced Tuesday, representing more than 10 percent of the company’s global workforce of 81,000 employees, would be in addition to previously announced cuts of 7,500 positions.
Merck has 11,700 employees at seven sites in Pennsylvania, including those working in West Point and Upper Gwynedd in Montgomery County. Spokeswoman Lainie Keller said the job cuts are companywide and could not say how many would affect the Pennsylvania sites.
By slimming down, Merck aims to narrow its focus to products with the best chance of winning regulatory approval and achieving substantial sales, while jettisoning research products with less likelihood of success.
Although Merck had a higher than anticipated second-quarter profit, stocks are down 2 percent and a new round of job eliminations is planned that could cut as many as 13,000 from the workforce.
Since 2009, Merck eliminated 12,500 positions but only reduced headcount by 6,000. The latest round of cuts would bring the total number of jobs eliminated by Merck to 30,000, since 2009. The workforce will drop from 91,000 (July 2011) to about 80,000. The job cuts are to be completed by 2015.
Merck makes Singulair, Januvia and Janumet (their three top-selling drugs). Singulair’s patent is expiring next year which will cut profits as generics hit the market. Adjusted earnings for Merck came to $2.95 billion, up 9 percent over last year. Revenue was $12.15 billion, up seven percent over analyst’s projections.
Time will tell what this means for the Lansdale plant.