As Merck celebrates rising flow of Keytruda cash, execs plot facility shutdowns, layoffs in $1.2B reorganization
While Merck was publicly celebrating its number 1 position in the PD-1/L1 market with lots of fresh growth to report in Q1, they quietly posted plans for another round of restructuring on the manufacturing and supply side of the business that will cost up to $1.2 billion to implement.
The pharma giant outlined those plans in an SEC filing posted bright and early Tuesday morning. The company clearly plans to chop into its workforce as it shutters some facilities, but there’s no news on where the ax is being aimed in its global operations.
Here’s the run down from the Merck filing:
The Company has approved a new global restructuring program (the “2019 Restructuring Program”) as part of a global initiative focused primarily on further optimizing the Company’s manufacturing and supply network, as well as reducing its global real estate footprint. This program is a continuation of the Company’s plant rationalization and builds on prior restructuring programs. The Company will continue to evaluate its global footprint and overall operating model, which could result in the identification of additional actions over time.
The actions contemplated under the 2019 Restructuring Program are expected to be substantially completed by the end of 2023, with the cumulative pretax costs to be incurred by the Company to implement the 2019 Restructuring Program estimated to be approximately $800 million to $1.2 billion. The Company estimates that approximately 55% of the cumulative pretax costs will result in cash outlays, primarily related to employee separation expense and facility shut-down costs. Approximately 45% of the cumulative pretax costs will be non-cash, relating primarily to the accelerated depreciation of facilities to be closed or divested.