Lower sales and revenue numbers can mean only one thing in 2025: it’s time for job cuts. Merck has announced layoffs at its organization, setting its sights on a multi-year cost-saving plan to bring the business back on track. The company has announced a new strategy to cut $3 billion in costs, and not only will this involve restructuring at Merck, but also a sale of real estate. On Tuesday, shares of Merck & Co. Inc. fell after the business reported that it had seen disappointing sales numbers of two of its three primary drugs.
The drop prompted an immediate response from the organization as it tried to reassure investors that it was on track to bring its numbers back up. Unfortunately, these numbers will require the elimination of a significant headcount of employees, although the exact figures have not been revealed.
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Merck Layoffs Announced: $3 Billion In Savings Expected by the End of 2027
The scale of the Merck layoffs has not been revealed, but the company indicated that it would target roles in the administrative, sales, and research-and-development positions. The Merck restructuring appears to be comprehensive, eliminating workers across the board rather than limiting it to one department. The company also did not reveal when the cuts will begin, but we expect that employees will have a few weeks to prepare while the organization plans out the details of the cut.
Merck’s cost reduction strategy of $3 billion in annual cost savings is expected to be completed by the end of 2027. It is likely that the company will slowly conduct multiple rounds of cuts gradually to ensure the business isn’t disrupted at once. Merck indicated that the restructuring will help with an annual cost saving of around $1.7 billion, and the rest of the savings will be managed by other expense cuts.
Chief Executive Robert Davis explained that the restructuring program at Merck will help to “redirect investment and resources from more mature areas of our business to our burgeoning array of new growth drivers.”
Merck Is Also Shrinking Its Real Estate, but There Are Other Investments to be Made
Merck is also looking at real estate sales in 2025 to bring down its overall footprint and redirect resources to its key projects. The company recently invested in a $1 billion biotechnology center in Delaware, which is expected to serve as the primary manufacturing center for its Keytruda cancer treatment, which is one of its growing treatment lines right now. It is unclear how and where the real estate cuts will occur, but it is unlikely that this center will be disrupted in the immediate future.
The Merck layoffs and restructuring efforts make more sense when you also consider the company’s expected acquisition of Verona Pharma, which includes a $10 billion deal that should be completed in the fourth quarter of 2025. The acquisition should expand Merck’s cardio-pulmonary pipeline and portfolio, but it could also be a reason for the company to commit to its job cuts. Acquisitions are often accompanied by restructuring efforts to move employees around and ensure no department is overstaffed, which could be the case here.
Merck is the Latest to Adopt the Pharma Industry’s Layoff Strategy
Merck’s job cuts and cost reduction plans are indicative of a large trend of downsizing that has attacked the Pharma industry in full force. Earlier this year, Moderna announced that it was cutting 10% of its staff, primarily in the digital department. Similarly, Biogen also announced that an unspecified number of roles would be cut back in January, and these were targeted at the research division.
Fierce Biotech reports that just this month, Rocket Pharmaceuticals announced a 30% cut to its staff after its gene therapy trial was put on hold, and around the same time, Adicet Bio also cut 30% of its workers after the discontinuation of a project. Adaptimmune is expected to eliminate a whopping 62% of its staff, and this includes some executive cuts. The biopharma sector is thriving with many successful therapy and drug trials, and those who have been able to capitalize on the rise of GLP-1 drugs have also seen great financial numbers, but overall, the threat of layoffs has not spared this industry either.
The shifting regulatory landscape has a large role to play in this, however, a large number of firms are looking at layoffs to cut costs and redirect resources to projects that show signs of success. The workers caught in the crossfire have not had an easy year. These cuts may work temporarily, but the industry will also have to re-evaluate how it operates, as making a regular habit of cutting workers. This trend will only result in a talent drain to other up-and-coming organizations that can do more with these trained experts, whether in marketing or research. Job cuts may appear to be a quick solution, but businesses that understand how to utilize their workforce will see better results in the long run.
We’ll update this space with more updates on the Merck layoffs when we learn more. Check back in to see how things progress. Subscribe to The HR Digest for more insights into the evolving landscape of work and employment in 2025.
