About 40% of the total reductions will occur in the US. To streamline management layers across the company, Merck will reduce its total number of senior and mid-level executives by approximately 25%. These positions are in addition to the 10,400 positions eliminated as part of the 2005 restructuring program, which was substantially complete at the end of September 2008.
The restructuring effort will involve all areas of the company. For example, Merck will accelerate the rollout of a new, more customer-centric selling model designed to provide Merck with a meaningful competitive advantage and help physicians, patients and payers, improve patient outcomes. The company also will make greater use of outside technology resources, centralize common sales and marketing activities, and consolidate and streamline its operations.
Merck said that its manufacturing division will further focus its capabilities on core products and outsource non-core manufacturing. In addition, Merck is enhancing its research operations to expand access to worldwide external science and incorporate it as a key component of the company’s pipeline, and ensure a more sustainable pipeline by translating basic research productivity into late-stage clinical success.
As a result, basic research operations will be organized to consolidate work in support of a given therapeutic area into one of four locations. This will provide a more efficient use of research facilities and result in the closure of three basic research sites in Tsukuba, Japan; Pomezia, Italy; and Seattle by the end of 2009, the company said.
The company anticipates that pretax restructuring costs of $250 million to $450 million will be recorded in the fourth quarter of 2008. This global restructuring program is expected to be completed by the end of 2011 with the total pretax costs estimated to be $1.6 billion to $2 billion.