Union: Merck seeking job cuts

Like other big drug companies, Merck has struggled to keep revenue and profits high.
Like other big drug companies, Merck has struggled to keep revenue and profits high. (AP)
Posted: October 02, 2013

The job cuts are continuing at drugmaker Merck & Co., which has offered buyouts to experienced union workers a year earlier than it expected amid talk of more layoffs of management and salaried employees.

[UPDATE: Drugmaker Merck & Co., said Tuesday morning that it will cut about 8,500 jobs from commercial and research-and-development departments in hopes of reducing annual operating expenses by $2.5 billion by the end of 2015. See blog post here.]

"We hear more cuts are coming in the management ranks," Paul Mercurio, recording secretary for United Steelworkers Union Local 10-00086, which has just under 2,000 members at the Merck facility in West Point, Montgomery County, said Monday.

Merck is based in Whitehouse Station, N.J., and has several other facilities in Pennsylvania and New Jersey.

In April, when Merck and the steelworkers reached a new agreement, which runs through 2016, the pact allowed the company to seek to eliminate up to 90 positions through buyouts. At the time, according to Mercurio, the company did not expect to seek those until 2014. However, he said, Merck went to union leaders on Sept. 20 and offered buyouts of two weeks' pay for each year of service. Union members, who would also get two weeks of union medical and dental coverage for each year of service, have until Friday to decide and, if they accept the terms, must leave the company by the end of 2013.

Merck spokesman Steve Cragle could not be reached for comment Monday evening. After management layoffs occurred in June in the Merck Research Laboratories unit, Cragle told The Inquirer in an e-mail, "The new design has been established to ensure that MRL leaders have the authority to take appropriate actions to facilitate rapid pipeline progress. It is too early to provide numbers or comment on any individuals that may or may not be affected by these changes."

Like other big drug companies, Merck has struggled to keep revenue and profits high in a changing economic landscape. Profitable drugs lost patent protection, and the company has not found similarly lucrative replacements. Public and private insurers have pushed for lower prices on drugs that reach the market.

"I'm not surprised, but I haven't heard anything," Roger Pomerantz said Monday night. Pomerantz was senior vice president and head of infectious diseases until June, when he was let go as part of the ongoing changes that have accelerated since Roger Perlmutter was hired in April to replace R&D chief Peter Kim. Perlmutter previously worked at Merck, but most recently at Amgen.

"When you bring in a new guy with a fresh set of eyes, there are going to be some changes," Perlmutter said May 1. "I'm doing a detailed review of programs, processes, and people. Already two weeks into the job, I can say there are some opportunities for acceleration and productivity enhancement."

Merck said in an SEC filing dated Aug. 7 that it had set aside $418 million in the first six months of 2013 for restructuring costs, mostly employee severance. That was less than in the same period of 2012, but both are part of a new phase of downsizing that began after the late 2009 purchase of Schering Plough. From 2010 through June 30, 2013, that program eliminated 23,810 positions, including full-time employees, contractors, and vacant positions, according to the SEC filing.





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