Merck KGaA announces cost-cutting initiative, potential job cuts

Merck KGaA on Friday announced plans for a cost-cutting programme across all of its businesses and regions that may include job cuts. The move comes in response to increased price pressures in the US and Europe, and follows a series of drug development setbacks for the company, including the discontinuation last year of its cladribine programme for relapsing-remitting multiple sclerosis.

"Over the next two years Merck needs to address unprecedented market shifts, increasing competition in key product areas and existing inefficiencies in its own organisation to ensure the long-term success of its business model," commented executive board chairman Karl-Ludwig Kley. "While it is regrettable, our preliminary analysis has shown that the overall purpose of our transformation programme and the expected measures to realise it may lead to workforce reductions across all businesses and regions," he added.

Merck noted that it will now begin consultations with employee representatives in different countries with the intention of finding "socially acceptable solutions where they are possible." However, the drugmaker said that until the consultations are further advanced, "it would be premature to announce any detailed cost or headcount reduction plans." The company is scheduled to report its fourth-quarter and full-year financial results on March 6.

The planned efficiency efforts are part of Merck's ongoing transformation programme, which was announced last year and will see the company first establish a new leadership organisation, implement efficiency measures and develop a long-term growth strategy. In July 2011, the company appointed Annalisa Jenkins as global head of drug development and medical, and Belén Garijo as chief operating officer for its Merck Serono unit. Under a second phase of the programme, the drugmaker will focus on pursuing new growth opportunities.

To read more Top Story articles, click here.