Merck/Schering merger = 16,000 job cuts

Twitter icon
Facebook icon
LinkedIn icon
e-mail icon
Google icon

Richard T. Clark, CEO and president of Merck, has estimated that its recent $41.1 billion merger with Schering Plough will result in the elimination of 15 percent of the work force, or about 16,000 positions, in both companies.

New Jersey is expected to take the largest impact of job losses as Merck is based in Whitehouse Station and Schering-Plough is based in Kenilworth.

Kathi Fiamingo, the mayor of Kenilworth, where Schering-Plough employs a large chunk of the town's 7,600 residents and provides more than a quarter of the tax revenue, told the New York Times that she was "so shocked that she did not know what to make of the news."

"It's tough on New Jersey and it's tough on the economy," said Jon LeCroy, MD, who follows pharmaceutical stocks for Natixis Bleichroeder in New York told the New York Times. "These are also mergers of desperation, you could say. The biggest thing they're going to do is try to cut costs."

Clark said that the job cuts in Pennsylvania would be "minimal or none at all," despite Merck's three Montgomery County facilities, according to the Philadelphia Inquirer. He added that the company's Pennsylvania's operations, most notably its vaccine manufacturing facility in West Point, belonged to a business line the company was counting on for growth.

The companies also said that the deal should allow them to deliver annual cost savings of about $3.5 billion each year after 2011, due to their redundancy of programs.

"The combined company will benefit from a formidable research and development pipeline, a significantly broader portfolio of medicines and an expanded presence in key international markets, particularly in high-growth emerging markets," Clark said.