Merck ($MRK) early in December agreed to sell the rights to its antipsychotic drug Saphris to Forest Laboratories ($FRX) for $240 million. The move not only gave it a small cash boost, but it turns out it also will help it put another 150 jobs on the restructuring pyre as it looks to shed 8,500 workers and $2.5 billion in costs.
According to The Philadelphia Inquirer, the company has filed a so-called WARN notice saying it will whack the 152 people on the Saphris sales team who work in an office just outside of Philadelphia. The cuts will be effective Feb. 3.
The New Jersey-based company in October outlined the broad cost-cutting plan, its fourth restructuring since 2008, with the intent of squeezing its headcount by 20%. It has been cutting jobs around the world since then. It expects to book $1 billion in savings by the end of 2014. The company is not announcing each layoff, but earlier this month acknowledged 570 jobs would go at a plant in Swords, Ireland, by the end of 2017, with 130 of those being dumped in the next 6 months. In November, it was 500 jobs at a large facility in West Point, PA, and an unspecified number of people from plants in Puerto Rico.
Merck's financial weaknesses are multifaceted. It has lost significant revenue to the patent cliff for drugs like Singulair, once Merck's best-selling drug, which saw sales evaporate by 90% immediately upon patent expiration last year. But its pipeline has been unable to produce significant replacements and it has also seen sales for some newer drugs come up short. Saphris, which was approved in 2009 for schizophrenia and acute bipolar mania, turned in $117 million in sales in the first three quarters of this year, down from the $123 million it earned in the same period in 2012. In fact, sales were so tepid that earlier this year, Merck took a $330 million write-off for the drug to recognize its lost value.
Forest, another struggling drugmaker, picked the drug up from Merck only weeks after one of its own new products in the antipsychotic category got backhanded by the FDA. The agency last month sent a complete response letter to Forest and its Budapest-based partner Gedeon Richter, saying they needed to do more work on their application for cariprazine, a new drug for schizophrenia and mania associated with bipolar disorder.
- here's the Philadelphia Inquirer story
- here's Forest's announcement on Saphris