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November 28, 2005
Merck, Finally
Posted by Derek
Everyone's been waiting for it, and today the ax finally dropped at Merck. It had to. The company still has over six thousand Vioxx lawsuits piled up, and one of their biggest moneymakers (Zocor, simvastatin) is going off patent (and that's not their only patent problem). Their advanced research pipeline has taken a terrible pounding the last couple of years, too, with the loss of a couple of Phase III compounds and the post-approval death of Pargluva.
It's not easy to tell from the press release, but it looks as if many of the 7,000 jobs that Merck is cutting will come from manufacturing. They're closing five production sites outright and trimming some others over the next two years. Discovery isn't being spared, though, since Merck's also closing a basic research site. (That's how you know things have gotten bad at a big pharma company). No details on which one yet, but I think we can assume that it's not going to be Rahway, and I don't see how it can possibly be West Point, PA either.
That would mean that the folks at Merck-Cambridge and Merck-La Jolla (Update: whoops - that one's been closed since June) must be pretty jumpy, and I don't blame 'em. I listened to a fair amount of the company's conference call from this morning, and a spokesman said that the employees at each site designated for closure would be notified over the next two days. There won't be any public announcements until then.
As someone who's been through some rounds of closures and layoffs (a memorable one of which happened at almost this exact time of year, come to think of it), my sympathies go out to Merck's employees. I don't believe that their company has ever been through something like this before. I'm sorry to see y'all joining the club. And you people at Pfizer, I'm afraid that your membership will be up for renewal soon. . .
Update: here's a list of Merck's research sites. . .
Comments (23)
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1. SP on November 28, 2005 8:23 PM writes...
Are you sure it's a domestic site? They have one in Italy, and one in Montreal- I believe Vioxx came from Montreal, so they might pay the price.
Permalink to Comment2. Derek Lowe on November 28, 2005 8:58 PM writes...
Merck Frosst, that's the Montreal one. That would be quite a cut, wouldn't it? There's also the former Rosetta site in WA. I'm adding a link to the main post with a list. . .
Permalink to Comment3. weirdo on November 28, 2005 9:25 PM writes...
You're forgetting Turlings Park, UK. I don't think they'd save enough money closing the Cambridge, Mass site.
Permalink to Comment4. Petros on November 29, 2005 2:57 AM writes...
Weirdo beat me to at.
I'd guess the guys at Terlings PArk are sweating heavily
It's a big, CNS only, site and despite heavy efforts has yet to deliver a compound to market (NK1 antagonists being their best effort to date), whereas Montreal has delivered both Vioxx and Singulair.
And, in contrast to the rest of Europe, it isn't difficult to make people redundant in the UK
Permalink to Comment5. Julian on November 29, 2005 6:52 AM writes...
That would be 235 jobs disappearing from Montreal.
Permalink to Comment6. tom bartlett on November 29, 2005 9:34 AM writes...
It is sad news. Merck really did nothing wrong, and, in time, hopefully, will be vindicated. But that won't help the med chemists in the near term.
Permalink to Comment7. JP on November 29, 2005 10:59 AM writes...
By the way, Merck has no site in Cambridge, MA - it's MRL-Boston, right next to the Harvard Med school complex in the city of Boston, across the river from Cambridge.
Permalink to CommentThis is virtually a brand new facility, and was still being staffed, with numerous job postings. At least that was the case before this latest announcement.
8. Timothy on November 29, 2005 11:33 AM writes...
There used to be this company called DowCorning, and they didn't do anything wrong either. The market, juries, and tort lawyers are fickle misteresses, however.
Permalink to Comment9. tom bartlett on November 29, 2005 1:53 PM writes...
"The market, juries, and tort lawyers are fickle misteresses, however."
The tort lawyers have MAINTAIN their fickle mistresses.
Permalink to Comment10. weirdo on November 29, 2005 2:56 PM writes...
Montreal was a manufacturing site. My understanding is that Terlings Park is the research site being considered.
Permalink to Comment11. Derek Lowe on November 29, 2005 3:41 PM writes...
I've heard today that it's going to be the UK site, too. I guess we'll soon find out how good our sources of information are. . .
Permalink to Comment12. milo on November 29, 2005 4:29 PM writes...
No matter what happens, it is a damn shame. Not the kind of news that people want to hear 'round this time of year. Having never been through any sort of lay off, I am not sure what it is like, but I figure it is not a very good experience.
Permalink to Comment13. bronxite on November 29, 2005 4:38 PM writes...
Cutting the Rosetta site would be interesting, but it seems like a wise decision. How much did MRK pay for RSTA? I wanted to short the stock when it was still trading. Thankfully I was too lazy at the time.
Permalink to Comment14. Derek Lowe on November 29, 2005 4:53 PM writes...
Milo, I can tell you that you're right, it most definitely is not. Different companies handle it in different ways, but no matter what, there are toxic levels of fear and uncertainly involved.
Permalink to Comment15. Insider on November 30, 2005 4:44 PM writes...
I can confirm that it is Terlings Park UK that will close - I should know because I work there! I should point out though that this site has actually delivered two drugs to the market - MAXALT and EMEND!
Permalink to Comment16. beenthere on December 1, 2005 12:47 AM writes...
Terlings Park has been in existence for decades, maybe two drugs was not enough. Merck made a big investment in neuroscience many years ago it just hasn't paid off. Both the San Diego and Terlings Park sites were focused on neuroscience delivered very little. That is why they have both been cut. Merck was a little arrogant after their decades of cardiovascular success and thought neuroscience would be alot easier than it was.
Permalink to Comment17. Kay on December 1, 2005 6:46 AM writes...
Dear Derek,
Please write a column regarding your view of the internal climate at VEB Pfizer. I am just wondering whether toxic levels of fear have spilled into the halls of this organization, and I wonder whether this will slow progress of in-house new NMEs (with new mechanisms of action) to market?
Permalink to Comment18. anonymous on December 1, 2005 11:00 AM writes...
> Cutting the Rosetta site would be interesting, but it seems like a wise decision. How much did MRK pay for RSTA? I wanted to short the stock when it was still trading. Thankfully I was too lazy at the time.
Unlikely, since Merck dissolved its internal bioinformatics group in the Nov 2003 layoffs - with its leader ending up at a competitor, GSK.
Permalink to Comment19. Dave M on December 1, 2005 2:19 PM writes...
Just wanted to point out: "Merck plans to eliminate 250 of its 43-hundred jobs at its plant in Rahway, New Jersey."
Permalink to Comment20. UKpap on December 2, 2005 5:46 PM writes...
Despite the closing of Terlings Park and San Diego, other CNS research being done at other Merck research sites, licensing CNS compounds continued. They wouldn't abandon CNS as therapeutic area, would they?
Permalink to Comment21. chris on December 2, 2005 6:30 PM writes...
hey Insider, drop us a line.
Permalink to Comment22. another insider! on January 27, 2006 6:32 PM writes...
Terlings Park has been open since 1985 - so only two decades - not 'several'. Two compounds to market is then about right (one every ten years being the industry average). The Vioxx lawsuits play a part, but are not the whole story - the pipeline is not the best either. Although neuroscience continues at other sites, pyschiatry is one of the main areas to be cut back, due to the behavioural models being notoriously difficult to set up.
Permalink to Comment23. Barry Lee on June 15, 2008 2:38 PM writes...
Terlings Park closed in 2005!! Fantastic! This means that the three biggest scumbags ever to walk the planet (initials RE, JK, and CH) are out of work - can't thank anyone enough!
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