Merck KGaA plans two years of austerity

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.”