Karl-Ludwig Kley, CEO of Merck KGaA, remained coy with shareholders today about how the German drug company intends to dramatically cut its costs.
He did say the company will remain on the sidelines of the big M&A deals this year and next, but it might be able to lay off workers and still buy something in a more moderate price range.
"We do not plan to make any major acquisitions during this first phase of the program," Kley says in remarks prepared for the meeting and reported by Reuters. "However, we will continue to strengthen our business through in-licensing or targeted acquisitions if the opportunities arise."
The CEO says the company's personnel costs were nearly 40% of the company's €8 billion ($10.6 billion) in operating expenses. Most of those workers are in Germany, so in keeping with the country's more tolerant labor laws, Merck intends to slash payroll in a socially responsible manner and preferably on a voluntary basis, Dow Jones reports.
"Both sides expect at the moment that we can conclude the talks relatively soon," he said.
German Merck has struggled on the pharma front in recent years, FierceBiotech points out. Merck Serono's MS pill cladribine failed to get approval from the FDA last year, and Merck KGaA doesn't have any other drugs that look all that promising, thus the need to retrench. The company expects to continue to reduce expenses into 2018.