>Merck said it will not boost its spending on research and development in 2005. IMO-It will be better for them to buy a pipeline than build one. This company stayed behind while other were acquiring.
Merck Cuts More Jobs as Earnings Decline
Tuesday December 14, 9:55 am ET
NEW YORK (Reuters) - Merck & Co. Inc. (NYSE:MRK - News), whose earnings are being hurt by the withdrawal of its arthritis drug Vioxx, said on Tuesday it has increased the number of jobs to be cut by year-end to 5,100 from 4,400.
The company said it expects to save $300 million in 2005 from the job cuts, which are part of a broader cost-cutting plan the company discussed at its annual meeting with analysts.
Merck said it will also save $300 million from inventory management through 2006, $600 million through capital initiatives by 2008, and $1.2 billion through aggressive supplier management by 2008.
The cuts come as Merck prepares for its third successive year of lower earnings. Earnings were hurt in 2003 and 2004 by disappointing sales of Vioxx amid prior safety concerns. The drug recorded sales of $2.5 billion in 2003.
Merck earnings will also be hurt next year by generic competition in France and Australia for the company's cholesterol fighter Zocor, its biggest-selling product. Merck expects the drug's $5 billion in annual sales to decline to as low as $4.1 billion next year.
Sales of Zocor could virtually evaporate in 2006 when it faces competition from cheaper generics in the United States. This is one of the biggest concerns of investors, along with Merck's potential legal liability to former users of Vioxx.
Vioxx was withdrawn in September, five years after its launch, when a large trial showed long-term use significantly raises the risk of heart attack and stroke.
Last week Merck said it expects earnings in 2005 of $2.42 to $2.52 a share, down from projected 2004 earnings of $2.59 to $2.64 a share.
Merck said it will not boost its spending on research and development in 2005.
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