UPDATE: Merck KGaA Gives Details On Planned Efficiency Program
25 2월 2012 - 2:05AM
Dow Jones News
Pharmaceutical and chemical company Merck KGaA (MRK.XE) said
Friday it launched a cost-cutting and efficiency plan in the wake
of increased price pressures in the U.S. and Europe and a series of
drug development setbacks.
The company said the plan could involve job cuts across all
businesses and regions to reduce costs and address "unprecedented
market shifts", but it didn't disclose details, saying management
still needed to speak with relevant stakeholders for a mutually
acceptable solution.
"Over the next two years, Merck needs to address unprecedented
market shifts, increasing competition in key product areas and
existing inefficiencies in its own organization to ensure the
long-term success of its business model," Chief Executive
Karl-Ludwig Kley said in a statement.
With its new cost-cutting drive, the German chemical and
pharmaceutical company joins a long list of other drug makers who
are revamping themselves in response to falling sales and
profitability.
The need to cut costs is partly due to mounting pressure
stemming from health care reforms in the U.S. and Europe, where
governments are increasingly reluctant to reimburse expensive drugs
and advocate the use of cheaper generic medicines. Companies such
as AstraZeneca Plc (AZ.LN), Novartis AG (NVS), Roche Holding AG
(ROG.VX), Pfizer Inc (PFE), Eli Lilly & Co (LLY) have all
embarked on cost saving or restructuring programs to keep costs
under control.
In addition to set-backs in its drug pipeline, Merck has also
been hit by a slowdown in demand at its chemicals division, which
led to disappointing developments in the last year and prompted it
to tighten its outlook time and again.
In the second-quarter, it recorded a 6.5% drop in revenue at its
chemicals division, while in the third-quarter profits fell due
largely to weakness in its performance materials division.
The efficiency measures are part of Merck's comprehensive
transformation program, announced last year, and comprises two
phases, the company said.
In the first two years, Merck plans to set up a new leadership
organization, implement efficiency measures and focus on long-term
growth, while the second phase will be focused on exploiting new
growth opportunities, it added.
Merck KGaA shares fell after the news and at 1545 GMT traded
down 1.2% at EUR79.70, while the DAX benchmark index traded 0.6%
higher.
-By Neetha Mahadevan, Dow Jones Newswires; +49 69 2972 5507;
neetha.mahadevan@dowjones.com
(Sten Stovall contributed to this article.)