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MSD in $1bn cost cutting

Date published: 16/12/2005

Merck, the parent company of MSD (Merck Sharp & Dohme), has announced it is to make additional cuts of $1 billion in the next five years. These cuts come on top of $4 billion previously announced as 7,000 jobs and five plants will be lost.

Merck chief executive officer and president Richard Clark said before an investor strategy meeting: "Merck will remain a research-driven pharmaceutical company, but we need to change our approach to virtually every aspect of our business, and we must act with a sense of urgency.

"The global restructuring programme we announced last month, which is designed to reduce our cost base substantially, is an important first step." He went on to explain the firm intends to improve its research and development productivity by focusing on a carefully chosen set of therapeutic areas.

He added: "While we implement these fundamental changes to our business model, our current roster of innovative products, anticipated new product introductions and cost-savings initiatives will position us to deliver top-line growth and double-digit earnings growth, excluding charges, over the next three to five years."

Market analysts, according to Bloomberg, are now urging Merck to move into acquisitions to strengthen its situation, with biotechnology companies that focus on cancer, arthritis and inflammatory treatments being top of the shopping list. This would break with the Merck tradition of not making major acquisitions.

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