Merck to Cut 7,000 Jobs After Loss of Vioxx

Merck, the American drug company damaged by last year's withdrawal of the painkiller Vioxx, said yesterday that it planned to cut 7,000 jobs, and close five factories and three research facilities.

The shake-up, aimed at saving $4bn (£2.3bn) a year by 2010, is the first large-scale move by Richard Clark, the chief executive who took over the troubled firm in May. The job cuts represent about 11% of Merck's global staff. The New Jersey-based company said that about half the job losses would be in the United States.

Merck is facing some 6,400 lawsuits over Vioxx. The drug was pulled from the market after it emerged that it raised the chance of heart attacks or strokes among people who had taken it for more than 18 months. One trial ruled in Merck's favour, another against. In the first case, jurors awarded the plaintiff's family $253m. A third trial is set to begin today in Houston.

Merck's problems do not end there. Like other big pharmaceutical firms, it has struggled to develop new treatments as patents expire on its blockbuster drugs. Merck expects revenue from the Zocor cholesterol drug, its biggest seller, to fall from $4.5bn to $2.6bn next year as its patent expires. The osteoporosis drug Fosamax, its number-two drug, loses its patent in 2008. It warned that profits would fall again next year by more than 4%.

Mr Clark called the restructuring the "first step in positioning Merck". "We still have work to do," he added.

Wall Street felt the cuts were not deep enough. Shares in Merck fell 2.4% in early trading to $30.24. They were trading at above $45 before Vioxx was withdrawn in September last year. Vioxx had annual sales of $2.5bn.