16 000 jobs fear as groups set to merge
Pharmaceuticals group Merck today announced a $41.1bn (£29.7bn) takeover of Schering-Plough in a deal creating a new global drugs giant.
Pharmaceuticals group Merck today announced a $41.1bn takeover of Schering-Plough in a deal creating a new global drugs giant.
The two US groups - with a combined UK workforce of nearly 3,000 - are expected to join forces later this year, bringing together the makers of blockbuster treatments including cholesterol drugs Zetia and Vytorin.
But Merck said the deal is likely to be followed by an eventual reduction of around 15 per cent in the combined global workforce, which suggests some 16,000 jobs could be lost.
Major pharmaceutical firms worldwide have announced tens of thousands of job losses in recent months as they suffer amid competition from cheap generic rivals.
The sector is consolidating at a fast pace to battle slowing sales, with Pfizer less than two months ago unveiling a $68bn deal to buy Wyeth.
Both Merck and Schering-Plough have sizeable operations in the UK, with Merck employing 1,300 staff through its UK subsidiary Merck Sharp & Dohme and a UK workforce of around 1,500 at Schering-Plough.
Merck has two main UK sites - its UK regional headquarters at Hoddesdon in Hertfordshire and a manufacturing site at Cramlington in Northumberland.
Schering-Plough operates out of a head office in Welwyn Garden City, a research and development laboratory in Newhouse, Scotland, and an animal health division in Milton Keynes.
Merck said it was too early to say what impact the merger would have on the UK operations and staff numbers.
The firms announced heavy redundancy programmes last year, but said today the deal should allow them to deliver annual cost savings of about $3.5bn each year after 2011.
Richard Clark, chief executive of Merck, said the takeover would create a firm "built for sustainable growth and success".
He added: "The combined company will benefit from a formidable research and development pipeline, a significantly broader portfolio of medicines and an expanded presence in key international markets, particularly in high-growth emerging markets.
"The efficiencies we gain will allow us to invest in strategic opportunities, while creating meaningful value for shareholders."