Drugmaker Merck says it plans to cut its annual costs by about $2.5 billion by the end of 2015-- through layoffs and moving its global headquarters.
Company officials say they plan to reduce Merck's global workforce by another 8,500 jobs as part of a plan to cut its annual costs by about $2.5 billion by the end of 2015. This is part of the company's global initiative announced Tuesday.
These newest layoffs are in addition to about 7,500 in previously announced. The two rounds of cuts means it is slashing about 20 percent of its workforce currently at about 81,000 people.
In addition, the company announced Tuesday it plans to move its global headquarters from Whitehouse Station, Hunterdon Co., N.J., to existing facilities in Kenilworth, Union Co., N.J.
The company had previously announced it would close the Whitehouse Station building and relocate its global headquarters to Summit, Union Co., N.J.
However, after reevaluating its real estate needs, Merck decided it could achieve better cost savings by closing both its Summit campus and its main Whitehouse Station facility.
The transition is expected to begin next year and be completed by 2015.
Merck’s Animal Health and Consumer Care divisions currently located in Summit will relocate to another facility in New Jersey.
In addition, certain manufacturing, laboratory and other functions currently located in Summit will be relocated to other facilities in New Jersey or Pennsylvania, according to the company.
Merck has been headquartered in Whitehouse Station since 1992. Before that, the company was headquartered in Rahway, N.J.
Merck & Co. says the cost cuts will allow it to better target its investments on the areas with the most potential for returns.
Of the $2.5 billion in cost savings, the company says it expects to realize $1 billion by the end of 2014. Most of savings are expected to come from marketing and administrative expenses and research and development.
The new restructuring program is expected to cut costs by between $2.5 billion and $3 billion.