Merck & Co., Inc (NYSE:MRK) Layoffs 8,500 Employees in order to Revamp its R&D


The second largest drug-maker in the US based on sales, Merck & Co., Inc (NYSE:MRK) will let go of 8,500 of its employees. The company will also revamp its Research & Development after the US Regulators caused a delay in new medicines.

Merck stated that this layoff of 8,500 employees doesn’t involve the 7,500 employee layoff that was announced earlier. The total number makes up 20% of Merck’s total workforce. The company did not provide any details about where are these layoffs centered; it only said that these layoffs will involve Merck’s all areas, which include sales, management and R&D.

This move by the company hopes to save around $1 billion in 2014; it is a part of a strategy that was proposed by chief of R&D, Roger Perlmutter. He was hired to replace the previous R&D chief Peter Kim and Ken Frazier, Merck’s CEO. During the time of Kim the company saw a reduction in experimental drugs in surgery, osteoporosis and cardiovascular whereas Merck’s competitors kept on introducing new and improved produced in the market.

During a conference call Frazier said that the company is dedicated to increase its focus on important therapeutic areas that need more resources for hospital care, vaccines, cancer and diabetes. He also said that the company hopes to lower its resource utilization in some other of its therapeutic areas.

It is believed that Merck also hopes to decrease its holding of real estate mostly in New Jersey; it will focus on improving competency of its networks involving supply and manufacturing. As part of this huge move headquarter of Merck shall be shifted to Kenilworth, New Jersey, which is closer to New York. It was believed previously that headquarter might be shifted to Summit.

According to the company the money saved from the layoffs will allow an annual increase to $2.5 billion by the year 2015. One half of these savings will be made in Merck’s commercial arm, which will include its marketing and sales force whereas the other half will in R&D.

On Tuesday, share of Merck & Co., Inc (NYSE:MRK) went down by 1.9% ($48.49) in New York on Tuesday. As compared to an increase of 18% in the S&P’s 500 Pharmaceuticals Index of Drugmakers, the company’s stock has gained an increase of 5.3% in the past 12 months.

Merck & Co.
Merck & Co.