New Merck eyes job cuts, product 'leverage'

Schering-Plough is no more. The $41 billion Merck merger wrapped up yesterday, and the sun rose today on a combined company that's the world's second-biggest drugmaker. Celebratory executives predicted high single-digit earnings growth over the next several years and pledged to scout for more licensing deals--armed as they are with $8 billion in cash and investments.

That earnings growth won't come without a price, of course. Merck has said it will slash around 15 percent of the combined payroll, or some 16,000 jobs. Together with other streamlining moves, the layoffs are set to save about $3.5 billion annually after 2011.

What about growing sales? According to the company's press release, the "new Merck" has a broad product portfolio that now includes some valuable meds with "long periods of exclusivity." And Merck plans to "leverage" that expanded portfolio to grow revenues, partly through "expanded life-cycle management."

In other words, think new combination products and new formulations of existing blockbusters, which are both meat-and-potatoes strategies these days. Though Merck knows painfully well that regulators don't always go along. Just this week FDA refused to even consider its app for a pill combining Pfizer's best-seller Lipitor and the Merck-Schering cholesterol-fighter Zetia.

- see the Merck release [1]
- read the Star-Ledger article [2]
- check out the news [3] from the Associated Press
- get more [4] from Reuters

Related Articles:
Merck Q3 Results - Q3 Top Pharma Company Earnings Reports
Merck restructures R&D, licensing ops in merger revamp [5]
Merck shareholders bless deal for Schering [6]