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Merck cut 7,200 jobs

Merck has announced it will cut 7,200 posts worldwide by the end of 2011 and close three research sites by 2009

Merck has announced it will cut 7,200 posts worldwide by the end of 2011 and close three research sites by 2009. Approximately 25 per cent of the cuts will affect senior and mid-level executives.

The company is making multiple changes in a bid to create a new, more customer-focused business model. The reduction in jobs will affect 6,800 employees, as 400 of the posts are currently vacant. About 40 per cent of these cuts will occur in the US. The reductions are in addition to 10,400 positions that were cut in 2005.

Merck expects the restructure to affect all areas of the company – common sales and marketing activities will be centralised, the planned rollout of a 'customer-centric selling model' will be accelerated and non-core manufacturing will be outsourced. Basic research is to be consolidated into four locations, with sites in Japan, Italy and Seattle closing by the end of 2009.

"Our focus remains on increasing revenue from our new and in-line products, fully funding innovative R&D, investing in growth opportunities, such as emerging markets, and becoming the most trusted partner in delivering value to our customers," said Richard T Clark, chairman, president and chief executive officer. "With the right long-term strategy and our efforts to reshape Merck's business, including today's actions, I am confident we are building a solid foundation for achieving industry-leading performance in the future."

The company made the announcement as it published a 28 per cent fall in profits for Q3 2008. Profits fell due to significant costs related to the global restructure.

Merck expects the restructure to cost between $1.6bn and $2.0bn and to deliver pre-tax savings of $3.8bn to $4.2bn from 2008 to 2013. The 2005 restructure (including the cutting of 10,400 posts) is on target to deliver pre-tax savings of $4.5bn to $5.0bn at the end of the 2005 to 2010 period.

22nd October 2008

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