Merck (NYSE:MRK) released second-quarter profits on Friday that matched Wall Streets expectations, but that didn't stop the drug maker from unveiling plans to take another axe to its headcount by slashing up to 13,000 jobs.
The job cuts from the pharmaceutical powerhouse comes amid serious economic and political uncertainty that is paralyzing much of corporate America.
Whitehouse Station, N.J.-based Merck said it earned $2.02 billion, or 65 cents, a share, compared with a profit of $752.4 million, or 24 cents a share, a year earlier. Excluding one-time items, it earned 95 cents a share, meeting consensus calls from analysts.
Merck, which is the No. 2 U.S. drug maker, said revenue grew by 7.1% to $12.15 billion, topping the Streets view of $11.78 billion. Gross margins expanded to 64.7% from 59.9%.
"Double-digit growth from key products, and successful new product launches in markets worldwide led to Merck's strong second quarter results," CEO Kenneth Frazier said in a statement. We're delivering on our promise to grow both the top and bottom lines while continuing our efforts to streamline and transform Merck.
At the same time, Merck announced plans to aggressively reduce its cost structure, in part by lowering its workforce by another 12% to 13% from its December 2009 level of 100,000. That translates to 12,000 to 13,000 job cuts by 2015.
The latest layoffs come after Merck previously slashed 17,000 jobs as part of its combination with rival Schering-Plough in November 2009. According to Dow Jones Newswires, that means Merck will have eliminated 30% of its work force end of 2009 workforce.
These merger-related restructurings are expected to save the company $4 billion to $4.6 billion annually by the end of 2015, up from $2.7 billion to $3.1 billion previously. Pretax costs for the program range between $5.8 billion and $6.6 billion.
"Merck is taking these difficult actions so that we can grow profitably and continue to deliver on our mission well into the future," said Frazier. "The environment we operate in is changing rapidly and dramatically, and these steps will help us more efficiently serve customers and patients around the world."
Meanwhile, Merck raised the lower end of its earnings guidance, now projecting 2011 non-GAAP EPS of $3.68 to $3.76, compared with expectations on Wall Street for $3.74.
Shares of Merck declined 0.92% to $34.61 ahead of Fridays open, matching a drop of 0.91% on the S&P 500 futures.
Merck said its total pharmaceutical sales grew by 7% last quarter to $10.4 billion, highlighted by a 30% surge in Januvia sales to $779 million and a 26% rise in Remicade sales to $842 million. The company said its Singulair sales gained 8% to $1.4 billion, making it the leading seller.
On the other hand, Vytorin sales fell 6% to $459 million and Cozaar revenue declined 16% to $406 million.