March 5, 2021

Prescriptions: Merck Plans More Job Cuts

Updated: Merck will cut up to 13,000 more jobs by 2015, amounting to about 13 percent of its work force, the pharmaceutical company announced Friday in its quarterly earnings report.

The cuts continue a decade-long trend in the pharmaceutical industry of slashing employment to maintain profits in the face of increasing competition from low-price generics.

The American drug industry has cut 299,036 jobs from Jan. 1, 2000, through June of this year, according to the consulting firm Challenger, Gray Christmas.

Two weeks ago, the industry trade group, Pharmaceutical Research and Manufacturers of America, warned that proposed cuts by President Obama to drug reimbursements in Medicare Part D would have “a devastating effect on American jobs.” And medical device makers say they’ll lose jobs unless Congress reverses a new 2.3 percent device tax imposed by the health care overhaul that takes effect in 2013.

Some of the drug industry cuts reflect more outsourcing of research. And the cutbacks were spurred by the recession and a wave of mergers in the pharmaceutical industry, where job cuts are termed “synergies.” Merck, based in Whitehouse, N.J., said it was meeting its target of cutting 20,000 jobs by the end of this year following its $41 billion purchase of Schering-Plough in November 2009.

Seamus Fernandez, analyst with the health care investment bank Leerink Swann, estimated Merck’s next round of job cuts should save about $1.3 billion by 2015, adding up to $2 a share to the value of the company.

“Merck is taking these difficult actions so that we can grow profitably and continue to deliver on our mission well into the future,” Kenneth C. Frazier, president and chief executive, said 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.”

Mr. Frazier, in an earnings call with analysts, said Merck would cut 13 percent of its employees. The company release had said it would cut 12 percent to 13 percent of its base, as measured Dec. 31, 2009. Merck employed 100,000 people at that time, according to its annual report.

Here is the Challenger, Gray Christmas breakdown of announced pharmaceutical job cuts sent to us on Friday:

  • 2000 2,453
  • 2001 4,736
  • 2002 11,488
  • 2003 28,519
  • 2004 15,640
  • 2005 26,300
  • 2006 15,638
  • 2007 31,732
  • 2008 43,014
  • 2009 61,109
  • 2010 53,646
  • 2011 4,771 (through June)
  • TOTAL: 299,046

Article source: http://feeds.nytimes.com/click.phdo?i=f535729ce96233b38e51dffa240154b5

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