Merck to Lay Off Thousands of Workers, Again

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Drug maker Merck just announced it plans to lay off thousands of employees and put in place billions of dollars in cost-cutting measures over the next two years.

The move, which involves the layoffs of 8,500 staff and $2.5 billion in cuts, is being implemented over the restructuring of its research and development unit, according to The New York Times, which noted the unit has undergone a number of critical setbacks.

Kenneth C. Frazier, Merck’s chief executive, said the moves are being implemented in an effort to increase the firm’s competitiveness and enable Merck to be “better positioned to drive innovation and to more effectively commercialize medicines and vaccines for the people who need them,” according to the Times. Meanwhile, Merck previously announced another cut of 7,500 staff; together, Merck is looking at a 20 percent staff reduction to 81,000 employees worldwide.

The moves are tied to significant issues in Merck’s research group.

Merck’s Type 2 diabetes drug—Januvia, an incretin mimetic—is often tied to the drug maker’s quarterly earnings; however, Januvia has been under investigation by the U.S. Food and Drug Administration (FDA) over its potential ties to pancreatic cancer and pancreatic cell changes, as well as recently filed and mounting wrongful death lawsuits. Merck is seeing a drop in share prices.

Merck’s bisphosphonate drug, Fosamax, is also the focus of growing litigation and thousands of lawsuits brought against Merck over Fosamax allege serious injuries, such as femur fractures, osteocrenosis of the jaw (dead jaw syndrome), esophageal cancer, atrial fibrillation, and severe musculoskeletal pain. In some cases, lawsuits allege, Merck was aware of side effects of the heavily marketed medication yet never advised consumers and the medical community.

Meanwhile, device maker Medtronic recently cut 2,000 jobs globally. At the time, Medtronic CEO Omar Ishrak told The Star Tribune that “[t]hese are never easy decisions but are necessary.” The layoffs, according to Medtronic executives, are expected to save the company $225 million annually. Half of the Medtronic jobs being eliminated are located domestically and most cuts have already occurred. The remainder are scheduled for fiscal year 2014, according to Medtronic spokeswoman Cindy Resman. Medtronic employs about 45,000 people globally, according to The Star Tribune.

Last year. Medtronic announced 1,000 more job cuts would be made in the United States and overseas. The company recently reported strong fiscal growth in the last fourth quarter, as well as strong full-year earnings in its Cardiac and Vascular Group, The Star Tribune reported. In fact, the stock price also saw a nearly 5 percent rise.

Some Medtronic woes likely involve recent issues concerning the way in which its bone graft product, Infuse, was researched and advertised. Infuse was positioned as a solution to eliminate the need to harvest bone from patients’ hips in vertebrae fusions, according to Healthworks Collective. Two independent studies overseen by Yale University found critical issues with the product, including that there is little, if any, difference in the efficacy of Infuse over traditional bone grafts.

Medtronic approached Yale University researchers following a June 2011 study published in The Spine Journal that revealed Medtronic-paid researchers never reported serious potential complications associated with Infuse in spinal surgery. Some accusations, wrote BMJ, involved Medtronic minimizing Infuse’s adverse responses. Researchers also discovered that, among the published trials on Infuse, just 56-88 percent of the product’s known efficacy outcomes were reported, while six out of 17 Medtronic clinical trials were never published, according to BMJ. In fact, only 23 percent of the known adverse events recorded in the Infuse trial data were ever discussed in the journal publications.