As part of Merck’s sweeping restructuring plan, the company will be laying off at least 500 people from its Montgomery County complex late next month.
Merck recently issued the official notice to state and local officials about the 500 layoffs at the West Point campus. It’s is one of Merck’s largest manufacturing facilities, employing about 8,500 workers, and houses research labs for lots of drugs and vaccines, including Zostavax.
The layoff details follow Merck’s recent announcement of plans for a global downsizing of 20 percent of its workforce.
“We are initiating this process so that we can appropriately fund and resource those research programs that can create the highest benefits for patients,” says Kelley Dougherty, a spokesperson for Merck. “So we are narrowing our focus.”
Erik Gordon, a business professor at the University of Michigan, says Merck and many of the other major drug companies are “wrong-sized” for today. They’re facing declines in their supply of hugely profitable, successful drugs, and as a result are looking to outsource research and development operations.
“They’re going to let smaller companies take the risk of developing drugs, to the point they’re showing promise and then they’re going to do licensing deals to acquire the drugs from the smaller companies or they’ll just buy the smaller companies,” says Gordon.
Companies are also losing exclusive rights to their big blockbuster drugs, while the cost of developing new ones is going up.
The West Point layoffs are slated to take place around Christmas. Dougherty didn’t have more specifics but said more layoffs are possible down the road.
Merck is based in New Jersey. It recently closed a plant in Kenilworth, letting go 113 workers. It’s also moving its headquarters to that location and getting rid of its space in White House Station, N.J.