Merck plans to slash thousands more jobs by late 2015 to wring out additional annual cost savings of up to $1.5 billion that can be plowed back into research and deal making, according to Reuters.
The U.S. drug maker cut 6,500 jobs last year, reducing its workforce to 91,000 employees. The company said it will reduce its workforce by an additional 12% to 13% from the 100,000 employees it had at the end of 2009 after buying Schering-Plough for $41 billion.
A company spokesman declined to peg the actual number of job cuts, saying they would be somewhat offset by new hires in strategic growth areas, such as emerging markets. "The new phase of restructuring will create an additional $1.3 billion to $1.5 billion in annual cost savings," Merck spokesman David Caouette said.
The company eliminated almost 12,500 positions in 2010 but hired about 6,000. "I think we're going to see other firms continue to expand their cost-reduction programs," Morningstar analyst Damien Conover said.
Merck has vowed to maintain research and development spending at stable levels, rather than slash research costs to meet earnings targets. But the company shaved the high end of its 2011 research budget by $100 million, to between $8 billion and $8.3 billion.
With the new job cuts, Merck's restructuring program will yield annual savings of $4 billion to $4.6 billion by the end of 2015, compared with an earlier estimate of $2.7 billion to $3.1 billion by late 2012, Merck said.