MSD reveals the first details of its job cut plans

MSD's plan to reduce its headcount by around 6,000, first revealed a couple of weeks ago, looks like it will start at its headquarters in Rahway, New Jersey.

Confirmation of that has come in the form of an update (PDF) from the New Jersey Department of Labour and Workforce Development, which indicates that it has been notified of 58 job losses at Rahway that are due to be effective by 14th November.

The company – known as Merck & Co in the US and Canada – said earlier that the workforce reductions will be phased in over the coming months, but left details of the specific departments and roles under wraps; although, reports have suggested that the initial wave of layoffs will predominantly affect administrative, sales, and R&D staff.

It is aiming to cut $3 billion off its annual costs by the end of 2027 as it prepares for the end of patent protection for blockbuster cancer drug Keytruda (pembrolizumab) the following year.

Keytruda contributed $8 billion to MSD's revenues in the second quarter, accounting for just over half of its total, and the company has been scrabbling to compensate for an expected fall-off in sales from biosimilar competition; for example, with its recent $10 billion takeover agreement for UK-based Verona Pharma.

The job reductions – affecting around 8% of the group's total workforce – are part of a broader restructuring strategy that MSD said will streamline its operations and improve long-term competitiveness by redirecting resources from mature parts of its business to newer growth areas. That will include new hires in categories contributing to that growth.

The company has also said it intends to reduce its 'real estate footprint', without giving further details, and will make changes to its manufacturing network to 'align' it with customers – which has been interpreted as a sign of increased investment in the US in answer to President Donald Trump's repeated threat of tariffs in pharma imports.

MSD chief executive Rob Davis said whilst announcing the cost-cutting programme that it was important for the group to place additional resources behind "the impressive opportunity we have with […] 20-plus launches [that] we need to fully fund." He asserted that the restructuring should be seen more as a reallocation of resources than simply cutbacks.