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Merck plans US sales cut backs

Published on 16/05/08 at 12:19pm

Merck is to slash its US sales force, making 1,200 redundant by the end of July after the FDA unexpectedly delayed rejected two high profile drugs.

The cuts, which the company called 'difficult but necessary', come after the US regulator issued the company with two 'not approvable' letters in quick succession.

The first was for Merck's two-in-one asthma treatment, which would have combined its own blockbuster oral treatment Singulair with Schering-Plough's Claritin, which has long been available without a prescription.

The second hit Merck's developmental cholesterol lowering compound Cordaptive, which contains the manufacturer's own extended-release niacin and laropiprant, a novel flushing pathway inhibitor.

Data had supported the proposed use of Cordaptive, either alone or with a statin to treatment of elevated LDL ('bad') cholesterol, low HDL ('good') cholesterol and elevated triglycerides levels.

Commenting on the job losses, Kenneth Frazier, Merck's president of global human health, said: "With eight successful launches of Merck products approved in the US since 2006 now behind us, and with an unexpected delay in a new product approval, we decided to accelerate the achievement of efficiencies we anticipate gaining as we transition to our new commercial model in the US."

Frazier continued: "Merck is taking this step as part of our previously disclosed, continuing efforts to optimize our cost base and improve Merck's effectiveness and efficiency across all aspects of our business."

The employees involved will know their fate by the end of the month.

Market analysts have greeted the announcement and its cost-saving implications favourably. The global trend in sales forces is to move away from large, primary-care focused teams to smaller, specialist ones because of patent expiries on older primary-care led drugs and the emergence of more secondary-care led products.

Merck's plan's follow similar measures announced by Wyeth, which said in March it would cut 1,200 sales reps after the launch of generic rival to ulcer drug Protonix.

Like its rivals, Merck has faced pressure on cost, pipeline and generics as patents approach expiry: along with Pfizer, Merck faces the potential erosion of more than 50% of its 2005 revenues.

Merck has already seen big cuts in its workforce in the past decade - just over two years ago the company announced a restructure that has since seen around 8,000 jobs lost worldwide and five plants closed.

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