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Merck Restructure to Cut Jobs

02.05.2019 -

US drugmaker Merck & Co. has begun a restructuring program of its manufacturing and supply network, as well as reducing its global real estate footprint.

The disclosure was made in a filing on Apr. 30 to the US Securities and Exchange Commission (SEC), although was notably absent from its first quarter results released on the same day.

Merck has not provided any further details on the cuts, which are expected to be “substantially completed” by the end of 2023 at a cost ranging from $800 million up to $1.2 billion. The company did, however, reveal that it expects about 55% of the related costs will go for employee separation and facility shutdowns, with 45% earmarked for “accelerated depreciation of facilities to be closed or divested.”

The program, explained Merck, is a continuation of its plant rationalization and builds on prior restructuring schemes. The drugmaker, which currently employs around 69,000 people worldwide, added that it will continue to evaluate its global footprint and overall operating model, and this could result in the identification of additional actions over time.

In its first-quarter 2019 results, Merck said its oncology and vaccine treatments helped to push overall sales up 8% year-on-year to $10.8 billion. Growth in oncology was driven by the success of its multi-indication cancer drug Keytruda, which posted a 55% jump in sales to hit nearly $2.7 billion compared to $1.5 billion in the first quarter of 2018.

The company said the sales gains reflect the strong momentum for treating patients with non-small cell lung cancer and ongoing launches worldwide for new indications. Just days ago, the US Food and Drug Administration (FDA) gave the green light for Keytruda to be used in combination with Pfizer’s Inlyta for treating advanced renal cell carcinoma.

Merck also reported a 58% jump in year-on-year sales in China to $725 million, again driven by vaccines and oncology treatments.

Commenting on the results, CEO Kenneth Frazier said the strong start to 2019 demonstrated the strength of its key growth pillars, including oncology and vaccines. He remarked: “Our investments in research and development are paying off, and we are confident in our science-driven strategy, growth prospects, and ability to sustainably deliver value to patients and shareholders.”