Merck KGaA sets out efficiency program, with cost and job cuts likely

Adding to the list of pharma companies announcing significant structural changes and job cuts, on Friday German drugs and liquid crystals major Merck KGaA’s (MRK: DE) executive board presented initial plans for an efficiency program spanning all businesses and regions to the supervisory board and relevant employee representative bodies. Merck shares dipped 1.7% to 79.28 euros by 16.00 GMT on Friday.

The planned efficiency measures are part of the group’s comprehensive transformation program, which was announced last year and consists of two phases: In the first two years, Merck plans to set up a new leadership organization, implement efficiency measures and develop a long-term growth strategy. In the second phase, the focus will be on exploiting new growth opportunities ahead.

“In its long history Merck has grown to be a successful, world-class company with strong positions in many of its key businesses,” said Karl-Ludwig Kley, chairman of the executive board. “Nevertheless over the next two years Merck needs to address unprecedented market shifts, increasing competition in key product areas and existing inefficiencies in its own organization to ensure the long-term success of its business model. We will therefore progress with our planned efficiency program in order to deliver recurring cost reductions and free up resources for investment in promising growth areas,” he added.