Merck & Co. to close plants, cut jobs in $1.2B manufacturing squeeze

Merck
Merck & Co., will spend up to $1.2 billion on a manufacturing restructuring that will run through 2023. That is roughly half the amount immuno-oncology drug Keytruda earned in the first quarter. (FiercePharma)

Merck & Co.’s cancer wunderkind Keytruda continues to turn in supercharged sales, $2.27 billion in the first quarter, which bodes well for the future of biologics manufacturing jobs at the company. But woe to those who work at other facilities, because the company has undertaken a manufacturing restructuring that could cost up to $1.2 billion when the dust settles.

The cuts, which were not announced in the company's earnings release but slipped (PDF) into a securities filing Tuesday, have essentially begun and are expected to take up to five years, the company said. The Kenilworth, New Jersey-based drugmaker did not provide specifics about how many jobs or facilities will fall in the restructuring but said about 55% of the costs are expected to go to severance and separation and 45% to “accelerated depreciation of facilities to be closed or divested.”

“We will share information about our plans as decisions are finalized,” spokesperson Pam Eisele said in an email. “This plan is part of our ongoing efforts to optimize our manufacturing and supply network and reduce our global real estate footprint.”

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The drugmaker expects to take about $500 million in charges for the effort this year, including $187 million that were tallied in the first quarter. It said in total the restructuring should run $800 million to $1.2 billion when it is complete in 2023. 

Merck is building its future around new drugs like Keytruda and other cancer fighters under development, as well as a drug for treating hospital-acquired pneumonia and a new antibacterial agent.

Merck has steadily closed older facilities while it pours money into biologics manufacturing. In fact, one site in Ireland that was slated to be closed was salvaged last year by the drugmaker’s hot-selling Keytruda. The company said it would build a new biologics plant at its Swords site near Dublin to produce the blockbuster immuno-oncology therapy. It didn't disclose the size of the investment but said it would create 350 jobs as part of the deal. The company is shooting to have that operational by 2021.

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