Merck & Co., Inc. (NYSE: MRK), known outside the U.S. and Canada as MSD,
today provided further detail on integration plans for the company's
research and development, manufacturing and other business operations as
part of a global restructuring program announced following the November
2009 merger of Merck and Schering-Plough. The consolidation plans
support Merck's strategic direction as a customer focused, innovative
and diversified global health care company, and position the company to
invest in key areas for future growth, including emerging markets,
biologics, vaccines and consumer care.
Merck today announced 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.
Merck continues to expect its total workforce to be reduced by
approximately 15 percent across all areas of the combined company
worldwide as part of the initial phases of its merger restructuring
program. The company said it will continue to hire new employees in
strategic growth areas of the business as necessary.
“Today’s announcement is another important step as we successfully
integrate our global operations on schedule and move forward with
Merck's strategic priorities,” said Richard T. Clark, chairman and chief
executive officer of Merck. “These changes are crucial to drive future
growth and realize the promise of being a global health care leader for
the long term. While we believe these actions are necessary to support
Merck's competitive advantage, they required difficult decisions that
will impact some of our colleagues, their families and local
communities. We will implement our restructuring plans with the utmost
care and respect for the hard-working and talented employees of Merck,"
he said.
Merck said it remains committed to achieving its previously announced
synergy target of $3.5 billion in ongoing annual savings in 2012. With
the plans announced today, Merck expects the initial phases of the
merger restructuring program to result in savings of approximately $2.7
to $3.1 billion in 2012 toward the $3.5 billion target. The company said
synergy target savings will also come from non-restructuring-related
activities, such as its ongoing procurement savings initiative. The
company estimates that cumulative pretax costs for the initial phases of
the merger restructuring program will now range from $3.5 billion to
$4.3 billion. Merck expects that a charge for certain portions of these
costs will be recorded in the second quarter of 2010. Merck said that
approximately two-thirds of the cumulative pretax costs will relate to
cash outlays, primarily due to employee separation expense. About
one-third of the cumulative pretax costs are expected to be non-cash,
relating primarily to the accelerated depreciation of facilities to be
closed or divested.
Merck is taking a careful and thoughtful approach to these actions,
including exploring appropriate local partnerships, business development
initiatives and, in some cases, site sales to help minimize the
potential impact on communities and employees. The company said its
evaluation of these opportunities as well as the company's global
network continues. Merck will comply with all local laws and
regulations, including where applicable, any requirements to inform or
consult with works councils, trade unions or other employee
representative bodies.
Merck Research Laboratories
The Merck Research Laboratories network is being restructured to ensure
efficient and successful delivery of Merck’s pipeline of promising
candidates. The new network will be comprised of 16 major research and
development facilities worldwide. Merck will retain clinical development
and regulatory affairs expertise in major regions around the world
including the U.S., Europe, Asia and Japan.
At the core of Merck's research network are several large
multidisciplinary sites that will support multiple research franchises.
These sites provide the capabilities and resources to advance research
priorities and respond quickly to change. The new network structure
positions Merck to deliver important products that span biologics, small
molecules and vaccines.
As part of today's announcement, Merck plans to phase out operations at
eight research sites over the next two years. These sites include:
Montreal, Canada; Boxmeer (Nobilon facility only), Oss, and Schaijk,
Netherlands; Odense, Denmark; Waltrop, Germany; Newhouse, Scotland; and
Cambridge (Kendall Square), Massachusetts, U.S.
The company's research division will retain its focus on seven key
therapeutic franchise areas: Cardiovascular Disease; Diabetes and
Obesity; Infectious Disease; Oncology; Neuroscience and Ophthalmology;
Respiratory and Immunology; and Women's Health and Endocrine. Merck's
women's health research, currently centered in Oss, the Netherlands,
will be relocated primarily to the U.S. The company remains committed to
discovering and developing treatments and products for women’s health
and will pursue global research collaborations. The continued focus on
core franchise areas is aligned with the company's global scientific
strategy of retaining deep internal therapeutic area and functional
expertise in core areas while strategically collaborating with partners
to access external innovation.
Merck Manufacturing Division
Merck is realigning its global manufacturing network to create a
focused, more fully-utilized and cost-efficient worldwide supply chain
in support of the company's broader product portfolio. The company's
core manufacturing activity will be focused on areas where it has unique
expertise and capabilities, while leveraging a virtual global network of
suppliers. Plans announced today as well as other actions taken since
the merger would reduce Merck's manufacturing network from 91 facilities
at the close of the merger to 77 facilities. This includes 29 animal
health facilities that are the subject of the planned joint venture of
Intervet Schering-Plough with sanofi-aventis's Merial, which are not
included in this restructuring program. The company will continue to
pursue productivity efficiencies and evaluate its manufacturing supply
chain capabilities on an ongoing basis.
Beginning in the second half of 2010, the company will phase out
operations at eight manufacturing facilities and these sites will exit
the global network as activities are transferred to other locations.
Specifically, the company intends to cease manufacturing activities at
its facilities in Comazzo, Italy; Cacem, Portugal; Azcapotzalco, Mexico;
Coyoacan, Mexico, and Santo Amaro, Brazil, and intends to sell the
Mirador, Argentina and Miami Lakes, Florida, facilities. In Singapore,
chemical manufacturing will be phased out at the legacy Merck site, but
it will continue at the legacy Schering-Plough site. The company's
extensive pharmaceutical manufacturing operations will continue at these
two Singapore facilities.
Merck will continue to make new strategic investments to support its
worldwide product supply needs, particularly in emerging markets. In
Latin America, for example, new investments are being made by Merck at
its Xochimilco, Mexico and Campinas, Brazil facilities to increase
capacity.
About Merck
Today's Merck is a global healthcare leader working to help the world be
well. Merck is known as MSD outside the United States and Canada.
Through our prescription medicines, vaccines, biologic therapies, and
consumer care and animal health products, we work with customers and
operate in more than 140 countries to deliver innovative health
solutions. We also demonstrate our commitment to increasing access to
healthcare through far-reaching policies, programs and partnerships.
Merck. Be well. For more information, visit www.merck.com.
Merck Forward-Looking Statement
This news release includes “forward-looking statements” within the
meaning of the safe harbor provisions of the United States Private
Securities Litigation Reform Act of 1995. Such statements may include,
but are not limited to, statements about the benefits of the merger
between Merck and Schering-Plough, including future financial and
operating results, the combined company’s plans, objectives,
expectations and intentions and other statements that are not historical
facts. Such statements are based upon the current beliefs and
expectations of Merck’s management and are subject to significant risks
and uncertainties. Actual results may differ from those set forth in the
forward-looking statements.
The following factors, among others, could cause actual results to
differ from those set forth in the forward-looking statements: the
possibility that the expected synergies from the merger of Merck and
Schering-Plough will not be realized, or will not be realized within the
expected time period; the impact of pharmaceutical industry regulation
and health care legislation; the risk that the businesses will not be
integrated successfully; disruption from the merger making it more
difficult to maintain business and operational relationships; Merck’s
ability to accurately predict future market conditions; dependence on
the effectiveness of Merck’s patents and other protections for
innovative products; the risk of new and changing regulation and health
policies in the U.S. and internationally and the exposure to litigation
and/or regulatory actions.
Merck undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
otherwise. Additional factors that could cause results to differ
materially from those described in the forward-looking statements can be
found in Merck’s 2009 Annual Report on Form 10-K and the company’s other
filings with the Securities and Exchange Commission (SEC) available at
the SEC’s Internet site (www.sec.gov).
Merck & Co., Inc.
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