Merck & Co to integrate business operations, closing eight R&D and eight manufacturing facilities, aiming for $3.5 billion annual savings

Merck & Co, which has become the world's second largest drugmaker after its $41 billion acquisition of fellow US drug major Schering-Plough last year, has set out integration plans for the company's R&D, manufacturing and other business operations as part of a global restructuring program. The firm's shares were up 1% at $35.76 in midday trading yesterday.

Merck revealed yesterday that it plans to phase out operations at eight research sites and eight manufacturing sites, as well as to continue to consolidate office facilities worldwide, as part of the global merger restructuring program that began last December. The goal of the restructuring is to create a flexible R&D organization that cultivates scientific innovation, facilitates external collaboration and drives pipeline progress and a reliable, more fully utilized and cost efficient worldwide manufacturing supply chain to support Merck's broader product portfolio, it stated. In total, a workforce reduction of 15%, or some 16,000 jobs, is aimed for worldwide, though strategic recruitment will continue as necessary. In the first quarter of the year, Merck reported 95,000 employees worldwide, down 11.5% from the time of the merger when Merck/S-P had a combined 106,000 workforce.

$3.5 billion savings targeted in 2012