Merck & Co (MRK.N), taking a cue from other drugmakers that have slashed research spending to bolster earnings, on Tuesday said it plans to cut annual operating costs by $2.5 billion by the end of 2015 and eliminate 8,500 jobs.
By slimming down, Merck aims to narrow its focus to products with the best chance of winning regulatory approval and achieving substantial sales, while jettisoning research products with less likelihood of success.
The planned job cuts, representing more than 10 percent of the company's global workforce of 81,000 employees, would be in addition to previously announced cuts of 7,500 positions.
About 40 percent of the savings from the new initiative, or $1 billion, will be realized by the end of 2014 and will come from tapering marketing and administrative and research and development operations, Merck said.
The restructuring plans come after many Merck products failed to win regulatory approval in the past two years, as well as delays in getting products to market, including drugs to raise good cholesterol, to reverse the effects of anesthesia and to treat osteoporosis.
(Reporting by Ransdell Pierson; Editing by John Wallace)