Merck expands its 5-year plan to cut costs | The Honolulu Advertiser

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Merck expands its 5-year plan to cut costs | The Honolulu Advertiser | Hawaii's Newspaper

Posted on: Friday, December 16, 2005

Merck expands its 5-year plan to cut costs

By Kevin McCoy
USA Today

Embattled pharmaceutical giant Merck will broaden its cost-cutting plans to produce $1 billion in new savings through 2010, seek regulatory approval for two new cholesterol drugs and other medications and continue fighting lawsuits filed over its Vioxx painkiller, company officials said yesterday.

The value of Merck shares, which had fallen more than 40 percent since 2003, rallied and closed at $29.77, up nearly 2 percent.

Merck CEO Richard Clark described the plans as a five-year turnaround, reacting to the realization that the nation's third-largest drugmaker was no longer "the envy of the industry."

"To regain our leadership position, we have to change," Clark told financial analysts at Merck's New Jersey headquarters.

Its strategy includes:

Streamlining management and marketing and focusing research on nine areas, including cardiovascular illnesses, diabetes and Alzheimer's disease. Merck said the moves would produce $1 billion in savings beyond the $3.5 billion to $4 billion it said would be achieved over five years by its previously announced plan to cut 7,000 jobs and close or sell five plants.

Getting five drugs on track for federal review by the first quarter of 2006. The drugs include MK-524A, which Merck said uses a new approach to raise levels of heart-protective HDL cholesterol and also cuts artery-blocking fats. A second drug, MK-524B, would work with MK-524A to reduce levels of so-called bad cholesterol.

Maintaining the strategy of seeking trials for more than 9,200 Vioxx lawsuits.

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