Merck to implement cost-cutting programme

German drugs and chemicals group Merck has announced plans for a cost-cutting programme across all its businesses that may include job cuts. “Over the next two years Merck needs to address unprecedented market shifts, increasing competition in key product areas and existing inefficiencies in its own organisation to ensure the long-term success of its business model,” Chief Executive Karl-Ludwig Kley said in a statement. The maker of drugs and liquid crystals used in flat screen televisions did not say how much it aimed to save, how it planned to cut costs or which businesses would be affected. “We have a view on what needs to be achieved, but we will consult with the employee representatives on a country-by-country basis and we will consider any pragmatic proposals,” Kley said. The move comes after Merck pulled the plug one of its biggest pipeline drugs last year, saying US drug regulators’ concerns about the risks of its cladribine pill will put an end to any development or marketing plans for the multiple sclerosis (MS) treatment. In June, the company dropped development of the multiple sclerosis pill cladribine, which had been its most promising experimental medicine. In July 2009, European regulators rejected its cancer drug Erbitux for use in lung tumors. The company is still studying Erbitux in lung tumors. Oschmann told JPMorgan Chase & Co. analysts in January that the chances of getting the Erbitux approved for that use in Europe were less than 50 per cent. “They need to improve returns in the pharma business,” Adrian Howd, an analyst at Berenberg Bank in London, said in a telephone interview. “There’s scope for significant margin expansion there.”