Merck KGaA to close Serono's Swiss headquarters, cut around 580 jobs

Merck KGaA announced Tuesday that it will cut up to 580 jobs and close its Serono headquarters in Geneva, Switzerland as part of a transformation programme unveiled in February. The cost-cutting plan, which comes in response to a number of drug development setbacks, is expected to affect all of the company's businesses and regions.

The drugmaker noted it will consolidate all headquarter functions at its Serono site in Darmstadt, Germany, with the loss of 500 positions in Geneva to eliminate duplicate functions. Merck noted that it will transfer key R&D positions from Geneva to Darmstadt, as well as to Boston and Beijing. More than 750 staff at the Serono headquarters in Geneva, which employs a total of 1250 people, will be transferred to other locations.

"The planned measures for Merck Serono's operations in Switzerland are needed to ensure our global competitive position in a rapidly changing market and to secure the long-term future of the company," remarked Merck executive board member Stefan Oschmann. "Regrettably, these planned measures include the closure of our headquarters in Geneva, which would result in workforce reductions and the redeployment of certain Switzerland-based functions to other Merck locations," he added.

According to Merck, approximately 80 positions would also be lost from its three Swiss manufacturing sites, although it will continue production at its Aubonne and Corsier-sur-Vevey plants. The drugmaker indicated that its current manufacturing operations in Coinsins will be relocated primarily to the Aubonne site. The relocations and reductions will begin in the second half of this year and be completed in the first half of 2013, pending a consultation process with employees, the company said.

Commenting on the news, DZ Bank analyst Elmar Kraus noted that the number of jobs that may be eliminated is at the upper end of what was expected, but suggested that "we expect more announcements on efficiency measures at the capital markets day on May 15." Barclays Capital analyst Edward J. Dulac III added that if carried out fully, the layoffs could yield 72.5 million euros ($95.5 million) in savings.

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