Merck has begun the 8% reduction of its workforce—an initiative that the company revealed two weeks ago—with the dismissal of 58 employees at its headquarters in Rahway, New Jersey.
The cuts, which were reported in a state Worker Adjustment and Retraining Notice (WARN), will be effective on November 14.
In presenting its quarterly results late last month, Merck unveiled a plan to cut costs in order to save $3 billion annually by 2027. The company added that it was prepared to “reduce its global real estate footprint,” but did not say which facilities it was likely to eliminate.
Two days later, Merck said that the plan included a reduction of its staff by approximately 6,000. The drugmaker added that it was eliminating administrative, sales and R&D positions, and that it would eventually “hire employees into new roles across strategic growth areas of the business.”
Merck confirmed on Wednesday that the new layoffs are part of its "multiyear optimization."
"By initiating this notification, Merck ensures transparency and compliance with legal obligations, while providing timely communication and support to those impacted," the company said, adding that it continues to employ more than 8,000 in New Jersey, where it has invested nearly $3 billion since 2018.
The changes come as the company readies itself for biosimilar competition to megablockbuster cancer therapy Keytruda, likely starting in the U.S. in 2028. Second-quarter sales results illustrated the company’s dependence on the cancer superstar. For the first time ever, Keytruda’s quarterly sales of $8 billion accounted for more than half of Merck’s $15.8 billion in revenue.
The company is also dealing with a sudden free fall in sales of HPV vaccine Gardasil, which tumbled to $1.1 billion in the second quarter, down from $2.5 billion in the same period last year. Demand in China has plummeted, according to Merck.
Merck isn’t the only Big Pharma company undergoing a significant cost-cutting effort. Over the last two years, Bayer has reduced its headcount by more than 12,000 under an initiative designed to save 2 billion euros ($2.3 billion) through 2026.
Bristol Myers Squibb has launched a “strategic productivity initiative,” which will slash $2 billion in costs through 2027. In April, Pfizer upped the ante on its cost-cutting program, aiming to save $7.7 billion through 2027.