Merck cuts 8,500 more; expects $2.5B annual savings

Merck & Co. Inc. (NYSE:MRK) announced it will reduce headcount by 8,500, bringing its pending headcount reductions to 16,000, or about 20% of its 81,000 employees. The pharma expects the restructuring to reduce annual operating expenses by about $2.5 billion by the end of 2015, with about $1 billion of the savings realized by the end of 2014. Merck expects that about half of the savings will come from SG&A and half from R&D. Merck reaffirmed its 2013 non-GAAP EPS guidance of $3.45-$3.55. At June 30, Merck had $18 billion in cash and net income before taxes for the six-month period of $2.8 billion.

As part of the restructuring, Merck said it will focus on diabetes, acute hospital care, vaccines and cancer. The pharma is creating a unit to develop and commercialize MK-3475 (lambrolizumab), a humanized IgG4 mAb against programmed cell death 1 ( PDCD1; PD-1; CD279), which is in Phase II testing for advanced melanoma. In addition, the company will invest in in-licensing and business development activities. Merck said it will out-license or discontinue "select" late-stage clinical assets and reduce its focus on platform technologies. ...