Merck, whose earnings are being hurt by the withdrawal of its arthritis drug Vioxx, yesterday said job cuts by year-end will total 5,100, up from an original target of 4,400.
Merck employs more than 400 in Ireland, but it is not clear if any job losses will result in the Republic.
The company said it expects to save $300 million (€225.5 million) in 2005 from the job cuts, which amount to 8 per cent of its work force and are part of a broader cost-cutting plan the company discussed at its annual meeting with analysts.
Merck said it will also save $300 million through 2006 from improved inventory management; $600 million by 2008 through capital initiatives; and $1.2 billion by 2008 through aggressive supplier management. The job cuts, first announced in late 2003, come as Merck prepares for its third straight year of lower earnings. Results were hurt in 2003 and 2004 by disappointing sales of Vioxx amid prior safety concerns.
Vioxx, which had sales of $2.5 billion in 2003, was withdrawn in September after a large trial showed long-term use raised the risk of heart attacks and stroke.
Merck yesterday showcased its pipeline of experimental medicines as proof that it remains a formidable industry player.
Mr Robert Hazlett, an analyst at Suntrust Robinson Humphrey, rated the pipeline "good" but said the new medicines are unlikely to compensate for the loss of Vioxx and the expected sharp decline by 2006 in sales of the cholesterol treatment Zocor, as cheaper generics reach drugstores.
"There's so much to rebuild at Merck - it would be difficult for any company to really thrive in the environment they're going through," Mr Hazlett said.
Merck officials at the all-day meeting said the fate of a newer arthritis drug, Arcoxia, could hinge on results of three large trials designed to show whether it also raises the risk of heart attack and stroke. Those results are expected by 2006.
US regulators have held up approval of Arcoxia, which works by the same mechanism as Vioxx, until its safety is better established. "Although Arcoxia's approval has been delayed, all other new product candidates are on track or ahead of schedule" for approval or submission for US. approval, Merck research chief Mr Peter Kim told analysts.
Merck said it plans to seek approval next year for a vaccine, Gardasil, against the sexually transmitted virus that causes cervical cancer - a potential blockbuster that created the most excitement at the analyst meeting. - (Reuters)
