BUSINESS

Merck to cut another 8,500 jobs, reducing workforce by about 20 pct overall to cut costs

10/01/2013 08:44 EDT | Updated 01/23/2014 06:58 EST
WHITEHOUSE STATION, N.J. - The U.S. drugmaker Merck said Tuesday that it plans to cut another 8,500 jobs as part of a plan to reduce its annual costs by about $2.5 billion by the end of 2015.

Company spokeswoman Kelley Dougherty said Merck is not releasing the impact at this time on workers in individual U.S. states or countries, including Canada.

"If there are significant updates that happen on a country-by-country basis we will provide that information at a later date," she said.

In addition, Merck (NYSE:MRK) will move its headquarters from Whitehouse Station, N.J., to existing facilities in Kenilworth, N.J. The company had previously planned to close its Whitehouse Station building and move its headquarters to Summit, N.J., but it determined it could save more money by closing both the Summit and Whitehouse Station locations.

The move is expected to begin next year and be finished by 2015. Merck has been based in Whitehouse Station since 1992.

The latest workforce reductions come on top of about 7,500 in previously announced job cuts that have yet to be implemented. The two rounds of cuts means it is slashing about 20 per cent of its workforce, currently at about 81,000 people.

Merck & Co. said the cost cuts will allow it to better target its investments on the areas with the most potential for returns.

Of the $2.5 billion in cost savings, the company says it expects to realize $1 billion by the end of 2014. Most of savings are expected to come from marketing and administrative expenses and research and development.

The company backed its adjusted 2013 profit prediction of between $3.45 and $3.55 per share. Charges related to the restructuring program are expected to total between $900 million and $1.1 billion for the year.

Merck shares rose 94 cents or nearly two per cent, at $48.55 in Tuesday morning trading. That is near the upper end of its 52-week range of $40.02 to $50.16.

— With files from The Canadian Press