Drug giant, Merck, has announced plans to cut 8,500 employees as part of a restructuring meant to increase marketplace competitiveness.
Over the next two years, in addition to the massive layoffs, Merck also announced that it would be implementing significant cost-cutting measures amounting to about $2.5 billion dollars, according to The New York Times. Merck’s research and development unit has undergone some serious setbacks, the Times reported.
Merck’s chief executive, Kenneth C. Frazier, said that the cuts are part of Merck’s measures to both increase competitiveness and ensure the drug maker is “better positioned to drive innovation and to more effectively commercialize medicines and vaccines for the people who need them,” the Times reported.
This is not the first round of layoffs for Merck in recent moths. In a prior announcement, Merck discussed laying off 7,500 staff members. The total staff reduction, according to the Times, is about 20 percent, leaving 81,000 workers worldwide.
The moves may be tied to broader issues involving Merck’s research group and other areas within the firm. The incretin mimetic, Januvia, a Type 2 diabetes medication that has long driven Merck’s quarterly earnings is under investigation by the U.S. Food and Drug Administration (FDA). The drug has been associated with alleged serious injuries including cellular changes in the pancreas and pancreatic cancer. Not unsurprisingly, the mounting injury reports have led to mounting litigation.
Fosamax, a bisphosphonate medication also manufactured and marketed by Merck, is the focus of thousands of lawsuits brought over injury allegations that include femur fractures, osteocrenosis of the jaw (dead jaw syndrome), esophageal cancer, atrial fibrillation, and severe musculoskeletal pain. Some lawsuits include claims that Merck was aware of the serious side effects tied with its strongly marketed Fosamax medication, while never advising consumers and the medical community of these potential reactions.
In related news, device maker Medtronic recently cut thousands of staff in the wake of a debacle over Infuse, its controversial bone graft product. When the 2,000-person staff cut was announced, Medtronic CEO, Omar Ishrak, told The Star Tribune that, “These are never easy decisions but are necessary.” According to Medtronic executives, the cuts should save the device maker $225 million annually. Half of the layoffs impact U.S. employees, and most of those have been completed; the remainder are scheduled for 2014, said Medtronic spokeswoman Cindy Resman. Medtronic employs some 45,000 people worldwide, according to The Star Tribune.
Medtronic announced another layoff about one year ago, which involved 1,000 staff members in the U.S. and overseas. Meanwhile, Medtronic recently reported strong fiscal growth and full year earnings in some of its units, according to The Star Tribune; stock also rose nearly 5 percent.
Medtronic issues are likely associated, in part, with an ongoing Infuse debacle over the way in which the device maker conducted Infuse marketing and research. Infuse was presented as a solution to harvesting bone from patients’ hips during vertebrae fusions, according to Healthworks Collective. Recently two independent studies overseen by Yale University revealed serious issues with these claims, indicating that there is little, if any, difference in efficacy for these procedures when Infuse is used compared to traditional bone graft. In fact, the device maker sought out Yale researchers after a June 2011 study published in The Spine Journal revealed that Medtronic-paid researchers never reported significant potential complications tied to the use of Infuse in spinal surgery. Some accusations, according to BMJ, included that Medtronic downplayed Infuse’s adverse reactions. Researchers also found that, among published Infuse trials, 56-88 percent of Infuse’s known efficacy outcomes were reported while six out of 17 Medtronic-conducted clinical trials were never publicized, according to BMJ. Also, 23 percent of known adverse events that were recorded in the Infuse trial data were ever included in the journal publications.