Drugmaker Merck & Co. Inc. (NYSE: MRK) announced Tuesday morning that it will fire another 8,500 employees in an effort to “sharpen” the company’s focus on R&D and returns to shareholders. The 8,500 job cuts come in addition to an already-announced cut of 7,500 jobs and will result in a reduction of about 20% to the company’s current worldwide employee count of 81,000.
The company outlined three broad areas where it expects to improve its performance. First, of course, is cutting costs and allocating resources where potential paybacks are largest. Under this heading comes maintaining a “high level of cash returned to shareholders” in dividends and stock buybacks.
Second, Merck says it plans to sharpen its commercial focus and increase its geographic focus on 10 prioritized markets: the United States, Japan, France, Germany, Canada, the United Kingdom, China, Brazil, Russia and Korea.
Third, the company will prioritize its R&D efforts “to focus on [drug] candidates capable of providing unambiguous, promotable advantages to patients and payers.”
Merck reiterated its full-year adjusted earnings per share guidance of $3.45 to $3.55. The company expects to take restructuring charges totaling $900 million to $1.1 billion in its third quarter.
Merck’s shares are up 2.7% in premarket trading this morning, at $48.95 in a 52-week range of $40.02 to $50.16. The Thomson/First Call consensus price target for the shares is around $51.80.
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