I'll live-blog the Merck call, later here (as other duties beckon me this morning), but for now, know that 2008 Cholesterol Joint Venture Equity Income at Merck is projected to be more than $700 million less than last year -- off by about 30 percent year-over-year. Quoth MarketWatch:
. . . .Pharmaceutical giant Merck & Co. said Wednesday that it will cut 7,200 jobs by the end of 2011 to lower costs, with 40% of the reductions coming from the U.S. Merck also will cut its number of senior and mid-level executives by about 25%. As of Sept. 30, Merck had about 56,700 employees. The job cuts plan came as Merck said its third-quarter net income fell to $1.09 billion, or 51 cents a share, from $1.53 billion, or 70 cents, a year earlier. Sales declined to $5.94 billion from $6.07 billion. Excluding items, the company said it would have earned 80 cents a share. Merck also forecast full-year profit excluding non-recurring items of $3.28 to $3.32 a share. It was expected to earn 79 cents a share in the third quarter and $3.28 for the year. . . .
It has been a busy day on my other gigs, so instead of doing more local color on the Merck Q3 conference call, I'll let you all hear directly froma very able source -- Ed Silverman, late of PharmaLot.com, here:
| Discussion about Merck layoffs |
And, for his part, this morning, Merck CEO Dick Clark had this to say [Schering CEO Fred Hassan might do well to follow Mr. Clark's lead, here]:
. . . .We've always been straightforward and realistic when speaking to investors about Merck's business and intend to continue to communicate openly and candidly about where we stand and what we plan to do to accomplish moving forward. The experiences and events of 2008 have been instructive to me and the leadership team. We will be proactive in addressing all challenges facing our business. . . .
Although we've seen an additional 8% decline in new prescriptions since the initial release of the SEAS results, the rate of volume and share declines for the JV has slowed throughout the year.
However the overall cholesterol market growth has been slower than expected. And while we expected the JV brands will remain competitive in terms of managed care, provisioning in 2009, we anticipate a reduction in formulary coverage from 2008 levels. . . .
Indeed.
2 comments:
I figure the cuts will have to be bigger than originally proposed (10%).
A straight across match--Merck brings in more $ than S/P does. If Merck is at 57K people and is trimming to 50K--how can Hassan hold S/P's numbers at (roughly) 50K-with his recent PTP?
It don't add up.
Then add to it, if the $ continue to decline for Vytorin/Zetia, he will have to cannibalize even more.
This is independent of any more bad news for the company.
Really is beginning to look like it is time for a merger. Maybe BMS? Then again, Pfizer was Freddy's buyout buddy before.
I certainly agree that additional cuts at Schering are a foregone conclusion, given the Vytorin/Zetia dive in sales, and that Merck, a much more diversified, and larger pharma company is making deeper cuts than Hassan has, thus far.
Dick Clark said this morning that Merck's survival as an independent pharma player is at stake. I think he is right.
My skeptical nature tells me that Hassan won;t be lucky with a merger partner this time.
This time he'd be lucky to get 1.5 times sales for the pig he's hawking, at the moment. And that is a price below today's NYSE close.
He'll ultimately likely be indicted -- if he does such a low-ball deal -- JMHO.
And no one is going to pay up-market prices for this property, now.
Hello, Rock -- meet "Hard Place".
Thank for your thoughts!
Namaste
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