Merck's executive board has presented initial plans for an efficiency program spanning all businesses as part of the company's comprehensive transformation program announced last year.
The efficiency program consists of two phases: In the first two years, Merck plans to set up a new leadership organization, implement efficiency measures and develop a long-term growth strategy. In the second phase, the focus will be on exploiting new growth opportunities.
"Over the next two years Merck needs to address unprecedented market shifts, increasing competition in key product areas and existing inefficiencies in its own organization to ensure the long-term success of its business model,” said Karl-Ludwig Kley, chairman of the executive board. “While it is regrettable, our preliminary analysis has shown that the overall purpose of our transformation program and the expected measures to realize it may lead to workforce reductions across all businesses and regions."
Merck will consult with employee representatives in different countries with the intention of seeking socially acceptable solutions where they are possible. Until the consultations are further along, no detailed cost or headcount reduction plans will be announced.
At the beginning of 2012, Merck started the implementation of a new leadership organization that defines the relationship of businesses, group functions and country organizations. The objective is to streamline the organizational structure to be leaner and easier to navigate and to speed up decision-making processes. The realignment will continue in parallel with and support the efficiency program.
In the second phase of the program, Merck will tap areas for future growth based on broader industry and macroeconomic trends. Initial work to explore these growth opportunities has already begun, and Merck will further drive the development of its long-term growth strategy over the next two years.