In an effort to further slim its budgetary waistline, Merck & Co., though having reported a 7% raise in sales during Q2, has announced plans to cut up to 13,000 jobs by the end of 2015, with up to 40% of reductions scheduled to occur in the US. These cuts are in addition to the 17,000 staff that had already been let go as a result of prior cost-cutting measures. The company disclosed that this new round of layoffs will save an additional $1.3 billion to $1.5 billion annually, on top of the expected $3.5 billion in annual savings expected by the end of 2012, which will aid financial pressures that have come into play due to generic competition, among other factors.
As of June 30 this year, Merck's staff topped out at about 91,000 employees. With this new economically charged plan in mind, by the close of 2015 the company will have reduced its total workforce since December 31, 2009, by 30% – which is when job cuts en masse were originally sparked – in the wake of Merck's acquisition of Schering-Plough.
“Merck is taking these difficult actions so that we can grow profitably and continue to deliver on our mission well into the future," said Kenneth Frazier, Merck president and CEO in a statement. “The environment we operate in is changing rapidly and dramatically, and these steps will help us more efficiently serve customers and patients around the world.”
Despite the past and impending layoffs, the company maintains that some reductions have been offset by new hires. While the cuts in Merck's US workforce look to be dramatic, the global pharma will continue to hire new staff in “growth areas,” such as China and other emerging markets, according to a statement released by the company.
Weighing in on these strategic cuts by Merck, Steven Campanini, director, corporate communications, tells MM&M, “[F]or the new phase of the merger restructuring program, the reductions are planned to come disproportionately from the elimination of non-revenue generating positions, such as administrative and headquarters organizations. We will also be looking at further consolidation of office facilities and ongoing sale or closure of manufacturing sites.”
While Merck will not provide specifics about the particular facilities where cuts are expected to occur, Campanini adds: “It is very important to note that we have hired and will continue to hire in areas like the emerging markets where we have significant opportunities for growth.”