Boston, MA 10/04/2013 (wallstreetpr) – Merck & Co., Inc. (NYSE:MRK) is working on reconstruction plans in the attempt of trying to boost its profit margins by essentially cutting down on its operational costs. The process started a few years ago and has been picking up in the recent past. As part of the reconstruction process, merk has announced plans to cut down its work force by 20% which could see about 8500 personnel rendered jobless. Merk expects to save around $2.5 billion from salaries by going forward with the slicing down of its work force. The reconstruction process has been precipitated by the massive sales losses it has been incurring in the generic competition. Its work force currently stands at 81,000. Since 2009 Merck has been able to cut down its work force by nearly 19,000 saving billions of dollars in salaries.
Merck has not been doing well in the market especially, after its best selling drug Singulair saw its sales decline by 80% after expiry of its patent. For the first quarter result, it only recorded revenues totaling $618 million down from $2.8 billion the same period last year. Merck estimates around $1 billion or 40% of savings through its current reconstruction process by the end of 2014. Part of the process will involve reducing its global real estate footprint in New Jersey. The company plans to shift its headquarters to Kenilworth in its existing Merck campus.
The total reconstruction process is expected to cost between $2.5 billion and $3.0 billion with $900 million expected to be incurred in 2013 alone. The savings from the process will be diverted to promising pipeline candidates such as Mk-3475 and Mk-8931. With the process Merk plans to boost shareholder value through the payment of dividends and share buybacks. Acquisitions of profitable ventures is also expected to take centre stage to try and boost revenue avenues
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