Restructuring Designed to Save $4 Billion

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NEW YORK ( -- Embattled pharmaceutical company Merck, still reeling from pulling Vioxx from the market last year and facing patent expiration on its best-selling cholesterol drug Zocor in 2006, said this morning it will cut 7,000 jobs in the next three years.

Photo: AP
Merck intends to eliminate 11% of its work force by 2008.
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Shut or sell plants
Merck’s plan will eliminate 11% of its work force by the end of 2008. The company also plans to close or sell five of its 31 manufacturing plants in the hopes of saving up to $4 billion.

The Whitehouse Station, N.J.-based drug maker was forced to pull one of its biggest-selling drugs last year when it was found that anti-arthritis prescription medication Vioxx caused an inordinate amount of heart attacks in patients.

Merck’s stock traded as high as $47 a share on Aug. 23, 2004. Five weeks later, the company announced that it was recalling Vioxx and its shares tumbled to as low as $25.74. The stock closed at $30.98 on Nov. 25.

Liability lawsuits
Merck won a key court case in September in a suit brought by a former Vioxx user, but the company still faces thousands of liability lawsuits around the country.

The company, which employs 63,000 people worldwide, said restructuring costs are expected to be from $350 million to $400 million in 2005 and $800 million to $1 billion in 2006. The restructuring is expected to result in pretax savings of $3.5 billion to $4 billion from 2006 through 2010.

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