Merck's patent cliff has the company struggling to cut costs while it scrambles to make up for lost revenue, and sales and marketing has been no exception. Now, the job-cutting ax has come out for Merck's ($MRK) U.S. field force, where 600 positions will be chopped by August. Most at risk: Pennsylvania-based sales folks focused on declining primary care meds.
As Merck spokeswoman Lainie Keller told FiercePharmaMarketing in an email, the reductions are mostly field-based sales reps who are based out of the company's Upper Gwynedd office in Pennsylvania but work from their homes in different states. Spokesman Steven Cragle told the Philadelphia Inquirer the layoffs are primarily due to stepped-back marketing on particular drugs in its primary-care, hospital and specialty businesses.
The job cuts follow a Worker Adjustment and Retraining Notification Act (WARN) notice Merck issued in June, and are part of a larger cost-cutting initiative the drugmaker rolled out last October to "sharpen our commercial and R&D focus," Keller said.
That restructuring, Merck's fourth in recent memory, called for 8,500 sackings that the company said would amount to $2.5 billion in savings by the end of 2015. That's a hefty chunk of Merck's 81,000 workforce--about 10%--and it brings the New Jersey drugmaker's layoff total to around 40,000 workers canned since 2008.
But with a spotty pipeline track record and the generic attack on one-time best-seller Singulair still smarting, Merck is looking for any savings it can rack up. Sales of the former blockbuster allergy drug plummeted by 90% last year shortly after Singulair lost patent protection, and the allergy drug managed just $1.2 billion last year, down from $3.9 billion in 2012--and $5.5 billion in 2011.
And lately, Merck's faltering pipeline hasn't produced the results it needs to make up the slack. The sleep drug suvorexant and anesthesia treatment suggamadex rank among its recent disappointments.
That could soon be changing, however. Amgen ($AMGN) vet Roger Perlmutter has doubled down the company's R&D efforts since taking up the R&D chief post last year, putting significant focus on a fast-growing immuno-oncology field that has attracted the attention of some of Big Pharma's biggest. In that department, Merck's melanoma candidate, pembrolizumab, is currently awaiting FDA approval.
Special Report: The top 10 largest pharma layoffs in 2013 - Merck