Merck ‘evaluating global footprint’ with $1.2bn manufacturing restructure

07-May-2019 - Last updated on 07-May-2019 at 13:31 GMT

(Image: Gety/Metamorworks)

Merck continues its multi-year restructuring process with a program that could cost up to $1.2bn and has a provisional end date of 2023.

Revealed alongside its first quarter financials, the company filed with the US Securities and Exchange Commission (SEC) to note that it would be undertaking a global restructuring for the next four years.

A spokesperson for Merck, known as MSD outside the US and Canada, told us that this announcement is the continuation of a restructuring process that completed last year.

The aim of this restructure is to “optimise [Merck’s] manufacturing and supply network and reduce its global real estate footprint,” the SEC filing stated.

The restructure could cost between $800m (€714m) and $1.2bn (€1.07bn) up to 2023, which will be associated with ‘employee separation expense’ and facility shutdown costs.

When asked which plants could be impacted by the restructure, the spokesperson told us that such plans were not yet finalised.

However, it appears that much of the work on the reorganisation will take place this year, with the company stating that approximately $500m of the costs will be shouldered in 2019.

The spokesperson reiterated the SEC filing to explain the reasons behind the move: “We will continue to evaluate our global footprint and our overall operating model to ensure our structure supports the future of our business.”

First quarter financials

Beyond restructuring, Merck was able to release Q1 financials results that saw the company post an increase in worldwide sales of 8% year-on-year.

The company noted that part of this growth was achieved through a 58% growth of sales in China.

Overall, the biggest driver of its pharmaceutical division’s sales was Keytruda (pembrolizumab), which accounted for $2.26bn in the first quarter and was 55% up on the previous year’s quarter.

Kenneth Frazier, CEO of Merck, concluded, “Our investments in research and development are paying off, and we are confident in our science-driven strategy, growth prospects and ability to sustainably deliver value to patients and shareholders.”