Workers at Merck Serono’s doomed headquarters in Geneva are planning strike action if Merck does not extend the timeframe for consultation with union leaders over job cuts.

Employees have already staged ‘coffee and croissant’ protests and have now threatened industrial action at the planned closure of the plant.

Merck estimates that up to 500 jobs will be lost and 750 transferred. However, trade union Unia claims that up to 1,500 positions will be affected in total.

A spokesperson for the Swiss employee group said the terms and condition provided by Merck under its transfer plans are “really unattractive and mean lower quality of life if accepted”.

Merck revealed its efficiency plans back in April as part of measures aimed to make net savings in the Serono division of €300m by 2014. It estimates the restructuring costs will be approximately €600m.

Karl-Ludwig Kley, Chairman of Merck’s Executive Board, said the company faces “unprecedented market shifts and increasing competition in key areas” and is “fortunate” it can address these issues from a “position of relative strength”.

He warned that if Merck does not take action it faces “tackling these issues from a much weaker position”.

Mr Kley added that the efficiency programme is not solely reserved for Merck Serono and will “affect all businesses in all regions” but remains convinced the plans “will lay the foundation” for Merck to build on new opportunities.

Profits after tax nearly halved (-48.7%) at Merck despite sales at Merck Serono and Merck Millipore divisions witnessing growth.

Total group revenues increased by 3.2% to €2.6 billion as overall sales improved by 3.5% to €2.5 billion.

However, profits fell to €177m in the first three months of the year compared with €344m in the same period a year ago.

Karl-Ludwig Kley, Chairman of the Executive Board at Merck, admitted the company had delivered only “a reasonable operating performance” in the first quarter of 2012.

Merck revealed at the end of last month it planned drastic cutbacks in its Serono division cutting 500 jobs and transferring another 750 as part of plans to close its Geneva headquarters.

But despite the planned cuts, the division’s Q1 sales grew by 5.4% as global demand for Rebif generated income of €430m and demand for Erbitux earned €214m.

Its Merck Millipore division also saw sales increase by 7.3% to €653, driven by solid results from its Lab Solutions and Process Solutions business units.

Merck now predicts modest increase in profits for the full year for its Serono division before the planned efficiency savings and an increase in profits in line with sales at Merck Millipore.

Merck KGaA intends to focus on cutting jobs and reducing costs over the next two years, with no major acquisitions planned.

The ‘German Merck’ plans voluntary redundancies in Germany and will cut its costs through 2018, with a first phase until the end of 2013.

Merck CEO Karl-Ludwig Kley (pictured) told shareholders that given opportunities, the company would “continue to strengthen our business through in-licensing or targeted acquisitions.”

The company claimed there is “no alternative” to shedding staff.

The acquisition of life science research company Millipore in 2010 helped Merck KGaA to achieve an 11% increase in revenue over 2011, and the company predicts a slight revenue increase over 2012.

However, Merck’s net profit for 2011 fell by 2%, and increasing competitive and market pressures are predicted over the next few years.

The company’s austerity restructure is expected to last through 2013, during which time it plans to avoid major takeovers.

This decision follows a number of pipeline setbacks, including the FDA’s rejection of Merck Serono’s MS drug cladribine in 2011.

Kley’s statement contrasts with the view expressed recently by Lilly CEO John Lechleiter: “I don’t think we can save our way out of the enormous challenge we face. The best course is to maintain our focus on advancing our pipeline.”

Merck KGaA saw record-breaking levels of revenue in 2011 as sales topped €10 billion for the first time.

Revenue was up 10.6% to €10.2 billion following the 2010 acquisition of the Millipore Corporation and growth in the Group’s four divisions – Merck Serono, Merck Millipore, Consumer Healthcare and Performance Materials.

Karl-Ludwig Kley, Chairman of Merck’s Executive Board, said the Group delivered a “good operational result in a challenging year” but confirmed that despite topping €10bn in revenue job cuts would still be made.

The company revealed last month it plans to cut jobs across all businesses and regions under new efficiency plans it aims will reduce costs and exploit new growth opportunities. (Read here)

Mr Kley says that the efficiency plans recognise the “competitive and market pressures” Merck faces in the future.

Despite the record breaking levels of revenue, overall operating result was down 11.5% to €985 million and net profits decreased 2.3% to 617 million Euros.

Sales increased by 17% to €2.78 billion and gross margin rose by 8.4% to €7.4bn. However, marketing and selling expenses were up 7.1% to €2.39bn and royalty, licence and commissioning expenses increased after increased sales of Rebif and Erbitux. R&D costs also jumped to €1.5bn after expensive late-stage clinical trials by Merck Serono.

Total revenues of Merck Serono increased 2.9% to €5.92bn compared to €5.75bn in 2010, which was described as a “solid performance” by the Group. Global sales of Rebif topped €1.69bn after increased demand in the US. Targeted cancer treatment Erbitux recorded sales of €855 million due to strong growth in emerging markets.

In Merck’s other divisions, Merck Millipore almost increased sales by half (48%) to €2.39 billion after growth in North America, Latin America and Asia. Its consumer health care arm saw revenue increase 5.1% to €484 million in 2011, and its Performance Materials division increased revenue slightly by 1% to €1.46bn.

The Group’s Executive Board now expects total revenues to increase slightly in 2012 and 2013.

Merck is set to cut jobs under new efficiency plans it aims will reduce costs and exploit new growth opportunities.

The measures are part of the Group’s comprehensive transformation programme which it says is needed to tackle unprecedented market shifts, competition and its own existing inefficiencies.

The number of jobs losses has not yet been decided, but Karl-Ludwig Kley, Merck’s Chairman, says that initial analysis may lead to “workforce reductions across all businesses and regions”.

A consultation process will now be conducted by the Group with employee representatives in different countries to seek solutions where possible.

Mr Kley says the approach reflects the company’s strong tradition it has with its employees at Merck. “We have specifically not published potential figures related to the efficiency programme as we are committed to engaging constructively with the relevant stakeholders to achieve a mutually acceptable solution,” he said.

The Group’s Executive Board plans to focus on all businesses and regions and consists of two phases.

The first phase, carried out in the next two years, plans to establish a new leadership organisation and install cost-cutting measures to develop long-term growth. The implementation of a new leadership committee began at the start of the year with the objective to increase decision making processes.

The second phase aims to exploit new growth opportunities. The company says that initial exploration of areas for future growth based on broader industry and macroeconomic trends has also commenced.

“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,” said Mr Kley. “We will therefore progress with our planned efficiency program in order to deliver recurring cost reductions and free up resources for investment in promising growth areas.”

German pharma giant Merck KGaA has appointed two young executives in leading roles: Isabel De Paoli as Head of Corporate Strategy and Friederike Rotsch as Head of Corporate Auditing.

Both executives will report to Karl-Ludwig Kley, Chairman of Merck’s Executive Board.

Isabel De Paoli (37) worked as a consultant at the Boston Consulting Group and a manager at private equity firm Permira Beteiligungsberatung before joining Merck’s Chemicals Business Development in 2006. She moved to the Merck Serono division in 2009, and then became Head of Global Strategic Planning Oncology.

Dr. Friederike Rotsch (39) worked as a lawyer at Hengeler Mueller before joining Merck’s Legal Department in 2005, with responsibility for corporate governance. Her role involved supporting the company’s acquisition of Serono and the divestment of its generics business. In 2007 she became Head of Corporate Legal Services at Merck.

“I am pleased that we are filling leadership positions within Corporate Auditing and Corporate Strategy, two important functions, with experienced managers from within our ranks,” said Karl-Ludwig Kley. “Both Group functions will be playing a key role in the further development of Merck.”

Based in Darmstadt, Germany, Merck KGaA trades in the UK as Merck.

Merck saw revenues increase by 3.8% to €2.5 billion and net profit rise 7.5% to €227 million in the third quarter after solid performances by its pharmaceuticals and Millipore divisions.

Revenues at Merck Serono increased 5.4% to €1.4bn after increased global sales of Rebif and Erbitux (pictured) whilst its Millipore division saw revenue reach €588 million compared to €559 million the same period a year ago.

Karl-Ludwig Kley, Chairman of the Executive Board of Merck KGaA, says the results leave the Group “well positioned as we head into the end of the year”.

Its Executive Board now forecasts annual Group revenues between €10-10.2 billion and the debt resulting from the 2010 acquisition of Millipore to decrease at an “excellent pace”.

Administration expenses were down 2.7% to €124 million with other operating expenses and income also declining slightly by 1.3%. R&D costs increased to €371 million in Q3 due to a combination of late-stage clinical trials and the strong Swiss franc.

Earnings before interest and tax were also down 8.4% with underlying core operating result – which excludes Merck Serono and Millipore – decreasing by 21.5% of revenues as a result of the weakening of the Performance Materials division, the Group claimed.

Generic organic revenue growth in Merck Serono increased nearly 9% after its multiple sclerosis treatment Rebif recorded global sales of €426 million and the cancer treatment Erbitux earned € 218 million, primarily as a result of growth in emerging markets.

“The Merck Group produced solid third-quarter revenue growth in a difficult environment, driven mainly by good performances from the Merck Serono and Merck Millipore divisions,” said Karl-Ludwig Kley. “We are making progress in driving our change agenda forward and we will provide important updates on this endeavour in the first half of 2012.”

Merck KGaA posted healthy profits in Q2, despite being hit by a number of ‘one-time adjustments’.

Revenues increased by 16% to €2.6 billion following the acquisition of the Millipore Corporation, but integration costs and increased operating expenses hit profits.

Karl-Ludwig Kley, Chairman of the Executive Board of Merck KGaA, says the “solid” figures “give us a healthy basis on which our new management team can build”.

Profits were helped by global sales of multiple sclerosis treatment Rebif which increased by 5.2% to €423 million. The group’s divisions also enjoyed an increase in revenues with Merck Serono’s profits up 2% to €1.4bn; the Consumer Health Care division up 3.9% to €118m; with Merck Millipore amounting revenues of €584m.

But operating expenses more than doubled in the quarter to €270m from €109m in the same period a year ago. An impairment loss of €161m due to overcapacity at the Corsier-sur-Vevey Large Scale Biotech (LSB) production plant in Switzerland was also suffered, as well as a provision of €20 million after the FDA and EMA rejected its MS cladribine tablets.

Merck says it realises it needs to make improvements to its pharma pipeline, as well as internal processes and structures, if it is to meet future financial targets.

“We are striving for leaner processes and we are reviewing our cost structures,” said Mr Kley. “Generating attractive returns on invested capital and cost management continue to be the top priorities on our agenda. The first steps have already been taken this year. These include the changes in the Merck Executive Board, in Merck Serono and Consumer Health Care as well as decisions resulting from our pipeline review.”

The company’s Executive Board now believes the total revenue for 2011 for the Group will increase between €10bn and €10.4bn.