TRENTON, N.J. – Merck & Co. (MRK), under siege because of lost revenues from its recalled blockbuster arthritis drug Vioxx, will cut about 5,100 jobs by year's end, more than originally planned, and will slash hundreds of millions of dollars in spending, Chairman Raymond V. Gilmartin said Tuesday.
Gilmartin, speaking to analysts during Merck's annual business briefing, said the Whitehouse Station, N.J.-based company is accelerating changes to increase growth, but will stick with its strategy of shunning major mergers. It will seek new drug candidates through more licensing deals and internal research, instead.
Gilmartin, chief executive officer of the pharmaceutical giant, reaffirmed earnings guidance for this year and next, saying Merck expects earnings per share of $2.59 to $2.64 for 2004 and $2.42 to $2.52 for 2005. Analysts surveyed by Thomson First Call were expecting earnings per share of $2.62 and $2.47, respectively.
Merck's 2004 forecast is reduced by 50 cents to 55 cents because of lost revenues after pulling Vioxx (search) from the market worldwide when its own internal study showed the popular drug increased the risk of heart attacks. The company has since been beset by lawsuits and a sharply lower stock price.
Merck had announced a restructuring in October 2003, saying it would eliminate about 4,400 positions. Gilmartin said Tuesday that with a total of 5,100 jobs cut, Merck would save $300 million on payrolls next year.
He also briefly outlined other planned savings, including $1.2 billion by 2008 from procurement changes, $300 million by 2006 from inventory reduction, and additional savings in manufacturing costs and on capital spending.
Merck shares rose 22 cents, or almost 1 percent, to $29.27 on the New York Stock Exchange (search).
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox