Merck plans more job cuts; 2Q profit rises

Posted July 29, 2011 7:26 a.m. EDT
Updated July 29, 2011 9:01 a.m. EDT

Drugmaker Merck & Co.'s (NYSE: MRK) second-quarter profit nearly tripled from a year ago, when about $2 billion in charges hurt results. Merck also said Friday that it will cut up to 11,830 jobs.

The maker of asthma and allergy drug Singulair and Type 2 diabetes pill Januvia said Friday that it's starting another restructuring progam, which will eliminate 12 percent to 13 percent of jobs by 2015. That would amount to 10,920 to 11,830 of Merck's current 91,000 positions.

Merck operates a major production facility in Durham.

The company recently acquired Raleigh-based Inspire Pharmaceuticals and decided to shut down that firm's headquarters while laying off more than 50 people.

Merck also recently sold an RTP facility to FujiFilm.

The company earlier this year reiterated plans to add 150 workers and continue a $300 million expansion of its Durham complex.

(Read the earnings report here.)

The company has been under a restructuring program since it bought Schering-Plough Corp. in November 2009 and started eliminating nearly 20,000 positions. Merck said Friday it's on track to achieve that program's goal — $3.5 billion in annual cost savings — by the end of 2012.

"Merck is taking these difficult actions so that we can grow profitably and continue to deliver on our mission well into the future," Chief Executive Kenneth Frazier said in a statement.

Merck's net income was $2.02 billion, or 65 cents per share, up from $752 million or 24 cents a share, a year earlier. Earning excluding one-time items, it matched analyst expectations of 95 cents per share.

Revenue totaled $12.15 billion, up 7 percent. Analysts expected $11.81 billion.

Merck also raised the lower end of its adjusted profit forecast by 2 cents, to $3.68 to $3.76 per share. But it now expects only $1.95 to $2.17 including charges, down from its April forecast of $2.04 to $2.39 per share including one-time charges. It expects $1.59 to $1.73 in charges during the year, for restructuring, acquisitions and other items.

Favorable foreign exchange rates gave a 4 percent boost to revenue. Merck's top-selling drugs were Singulair at $1.35 billion and Januvia and combination diabetes pill Janumet, which together brought in $1.04 billion.

Prescription drug revenue totaled $10.36 billion, up 7 percent. Veterinary medicines brought in $802 million, up 10 percent, and consumer products such as Coppertune sun care items brought in $541 million, down 1 percent.