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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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October 1, 2013

Merck Cuts Back. Way Back.

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Posted by Derek

I've been stuck underground on a stalled subway train, but the rumor that was passed on to me last night turns out to be true: Merck is doing some big, serious cuts. They're cutting back about 20% worldwide, and it's going to hit every part of the company. More details as they become available. . .

Comments (113) + TrackBacks (0) | Category: Business and Markets


1. annon8 on October 1, 2013 8:57 AM writes...

..I've been stuck underground on a stalled subway train! That pretty much sums it up for Merck! They have been stuck for the past 8+ years. No one has a clue as to how to extricate Merck from this morass. Perhaps, it is much more easier to layoff the people, shut down the government etc. Arrggh!

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2. Anonymous on October 1, 2013 9:00 AM writes...

Summit site is closing, emerging markets initiative dead...

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3. bhip on October 1, 2013 9:12 AM writes...

Best wishes to all my friends at Schmerck....

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4. Anon on October 1, 2013 9:16 AM writes...

But we need to train more PhDs and MSs!

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5. anonymous on October 1, 2013 9:36 AM writes...

Problem is easy to fix. Find a CEO with the passion for research and drug discovery like Roy Vagelos. A research company should be run by a scientist, because scientists discover drugs not business people.

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6. SteveM on October 1, 2013 9:57 AM writes...

I know little about Ken Frazier, but when has a lawyer ever led a technology company (or any company) to greatness?

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7. fourtytwo on October 1, 2013 9:59 AM writes...

Re: #5

The problem is anything but easy to fix. If it was, the whole industry wouldn't be headed in the same direction. I also know from my time at Pfizer that some scientists make a pretty lousy job of running businesses.

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8. The Aqueous Layer on October 1, 2013 10:09 AM writes...

Problem is easy to fix. Find a CEO with the passion for research and drug discovery like Roy Vagelos. A research company should be run by a scientist, because scientists discover drugs not business people.

There are quite a few folks that think the scientist running Lilly isn't exactly doing a bang-up job down there, despite coming from the scientific ranks...

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9. DA Evans on October 1, 2013 10:17 AM writes...

Fantastic (irony here) !! can't wait to here details of the carnage.

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10. Anonymous on October 1, 2013 10:21 AM writes...

The industry's problem is very easy to fix: Bring back all the people that have been cut, fire all the people that were kept. Because doing the opposite of every management decision is probably the best thing for each company.

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11. Goldmember on October 1, 2013 10:24 AM writes...

Hey, here's how Merck can resuscitate its dying body: by, you know, actually doing research.

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12. petros on October 1, 2013 10:28 AM writes...

Does bringing in R&D heads from academia actually deliver? Peter Kim's tenure at Merck seems to have had few positives

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13. Lunar landing on October 1, 2013 10:31 AM writes...

@#6 another case of generational amnesia. John Horan was a former CEO of Merck during some very good times for the compan and he was an attorney.. Not defending lawyers here just questioning your understanding of history. Also there are a lot of pharma companies being run by scientists that are not doing well. Really has to do with vision not so much with profession.

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14. Chrispy on October 1, 2013 11:04 AM writes...

It appears that 20% of the company has lived up to Perlmutter's mandate to bet their jobs. Clearly he is an inspiration.

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15. Anonymous on October 1, 2013 11:09 AM writes...

It seems to be musical chairs as to where the HQ will be. Readington, Summit, Kenilworth... where next? Resurrect Newhouse,UK? It seems like management is in chaos.

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16. Boner on October 1, 2013 11:11 AM writes...

What ever happened to Odanacatib?

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17. Anonymous on October 1, 2013 11:14 AM writes...

Merck's next HQ

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18. Anonymous on October 1, 2013 11:16 AM writes...

Merck's next HQ could be a Fleetwood Bounder.

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19. David Formerly Known as a Chemist on October 1, 2013 11:37 AM writes...

How do you make your pharma company more competitive and more responsive to patient's needs? Slash R&D!

"These actions will make Merck a more competitive company, better positioned to drive innovation and to more effectively commercialize medicines and vaccines for the people who need them," said Kenneth C. Frazier, chairman and chief executive officer, in a statement. "Today's announcement further underscores that we are committed to improving our performance in the short term while also investing for the long term to create value for patients, customers and shareholders."

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20. Lyle Langley on October 1, 2013 11:55 AM writes...

Rahway or West Point? West Point or Rahway? One will be closing and the good money is on Rahway.

At #5,

I know it's the rose colored glasses that get put on by the scientists on this website that all Pharma needs is a good ole fashioned scientist CEO. Unfortunately, that's not the answer. Yes, if one could bring back Dr. Vagelos, that would be a good start - however, unless we are also brining back the investors of the same time, it's not going to do anyone any good. Scientists as CEO's are not the panacea - ask Lilly.

Really want to bring about change? Pool all of your resources and buy Merck (or any other Pharma) and go private. Then, and ONLY then, will the scientists/business people have control over the business. Any other scenario that still includes the NYSE/Nasdaq is a fools play.

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21. Anonymous on October 1, 2013 11:56 AM writes...

Clearly Frazier's bonus is tied to short term profit targets. And since he'll be gone with his huge bonus check and retirement package within a few years, why would he care if Merck has no future beyond that?

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22. Hap on October 1, 2013 12:17 PM writes...

Translation: "We need food now, so if we cut off our left leg, we'll have enough food for awhile and we'll be able to hunt better in the future. After all, we may not know anatomy, but our cavemates don't really care."

This can only work out well, right?

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23. Curious Wavefunction on October 1, 2013 1:02 PM writes...

I think Anthony Nicholls's of OpenEye put it quite well in his post on the site:

"I have come to believe (and I admit that this is only a theory) that as more and more of pharma’s budget was funneled into advertising and direct marketing to both the general public and to doctors themselves, the path to the top in pharma ceased to be via the lab bench and instead was by way of Madison Avenue. So where do I get this idea? Let’s look at a few examples. When I first started visiting AstraZeneca (then just Zeneca) in the mid-1990s, it was run by Sir Tom McKillop. McKillop, a PhD in chemistry, had formerly been technical director at ICI, the company that de-merged to produce Zeneca. Stories abound about him stopping by to discuss chemistry with researchers (including tautomerism with our good friend Peter Kenny!). But who succeeded Sir Tom? David Brennan. And where did he come from in the organization? Sales. GSK’s Andrew Witty rose up the ranks from that company’s sales and marketing department.

Jeff Kindler of Pfizer is a lawyer who had replaced another business man, and who has recently been replaced himself by an accountant. Before 1994, Merck’s CEO was Roy Vagelos, a scientist with 100 publications and a member of the National Academy of Sciences. After a variety of business types, Merck’s most recently elected CEO is Kenneth Frazier, a lawyer.

You would think (or at least hope) that pharma would learn its lesson from other industries. Remember John Sculley? He ran Pepsi until he was brought in by Steve Jobs to run Apple in 1983. In ten years of running the company Sculley increased sales from $800M to $8B. Great, except that he fired Steve Jobs and nearly destroyed the company. Like today’s pharma CEOs, he knew a lot about selling but not much about what he was selling."

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24. anonymous on October 1, 2013 1:07 PM writes...

Medicine is all about credibility to physicians. Merck seems to have lost some credibility. The way to get it back is focus on the best research to make the best medicines. A scientist CEO, if picked properly, could only help bring back credibility in the medical community. Lest we forget that medicine is for the people...

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25. Anonymous on October 1, 2013 1:09 PM writes...

at #20,
German Merck Serono is privately held, but it is as much in the innovation crisis as any other big public pharma company. Altough the idea is attractive.

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26. Anonymous on October 1, 2013 1:10 PM writes...

at #20,
German Merck Serono is privately held, but it is as much in the innovation crisis as any other big public pharma company. Altough the idea is attractive.

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27. Chemjobber on October 1, 2013 1:32 PM writes...

I would really like to believe that what we need is 1) CEOs who have been scientists and 2) businesses that are free of the pressures of Wall Street.

However, those who say that we need scientist-CEOs can point to Regeneron's leadership and Roy Vagelos. I suggest that Lechleiter at Lilly (former process chemist) and Tom D'Ambra at AMRI (former med chemists) are evidence that chemists can be mixed bags at leadership as well. I'd welcome evidence to the contrary.

Also, Boehringer Ingelheim had layoffs during the Great Recession, yes? (although not to the same degree? I do not know either way.).

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28. Anonymous on October 1, 2013 1:37 PM writes...

Glycofi is being sold...

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29. Anonymous on October 1, 2013 1:41 PM writes...

HQ is being relocated to Kenilworth, Summit is closing and jobs will be strewn around NJ and PA.

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30. Anonymous on October 1, 2013 1:51 PM writes...

Isn't slashing R&D a bit like kicking out the farmers so that there are fewer mouths to feed?

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31. Lyle Langley on October 1, 2013 2:16 PM writes...

@25 (26);

No doubt that privately held companies are not free from issues; but they are the only way to be free of Wall Street. The CEO is beholden to the share holders, and with the investor attitudes of today, I believe it would be a very "special" scientist CEO to turn the tide. Such a "special" person does not need to be a scientist either, just those CEO's are very hard to find.

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32. Goldmember on October 1, 2013 2:34 PM writes...

We don't absolutely *require* scientists at the helm; MBAs or lawyers who actually bother to bring themselves up to speed on the science, have long-term vision and understand scientists' needs would also do.

Unfortunately that species is non-existent. Today's MBA's and lawyers have been almost exclusively trained in the fine art of value inflation and fakery and their main goal is to make sure they get their $10 million bonus and make a quick exit.

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33. Dave on October 1, 2013 2:36 PM writes...

Purdue Pharma is another privately held pharma company that has faced challenges similar to the publicly traded ones.

@14 Christy - Loved your comment! "It appears that 20% of the company has lived up to Perlmutter's mandate to bet their jobs. Clearly he is an inspiration." Can't wait to share it with colleagues.

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34. NoDrugsNoJobs on October 1, 2013 2:47 PM writes...

To focus simply on the CEO is a bit of a red herring. Merck's CEO did not create the regulatory, legal and pricing environment we find ourselves in. Its getting harder and harder to find drugs that can advance the standard of care in many areas as that standard of care has risen.

The regulatory environment today is many times more perilous than past generations and that is why you might have observed so many of your former co-workers are now in regulatory or have gone into legal or elsewheres, thats where the jobs are at. These days a pharma business must be able to convince payors that the drug will merit the use and this is not easy to do - it requires ever increasing clinical study sizes and much riskier and harder to meet criteria. The fda has not grown softer, they have rejected many drugs that would have been a shoo in a couple or three decades ago.

Pharma companies of all stripes must comply with millions and millions of pages of increasingly byzantine regulations related to all aspects of their business, compliance costs are through the roof. Fines assessed against the major pharma companies routinely now run into the billions with no relief in sight. All of these things make our drugs more and more expensive without making them much better I surmise.

Its a different world. One may wax sentimental for the good old days when scientists ran things but the reality is, a lawyer is probably as or more appropriate at the helm as a scientist due to all of the non-drug discovery related factors that are crushing the business model. I don't like it all but as good as it might feel to blame this CEO or that CEO, the reality of our situation is so much more daunting and complex. Nothing short of a dramatic reorganization of the entire drug approval and regulation process will save us from further carnage.

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35. Anonymous on October 1, 2013 2:47 PM writes...

@24 Curious Wavefunction

Sir Tom Mckillop also made a complete arse of running the Royal Bank of Scotland. The biggest loss in UK corporate history. Yes these 'superstars' should just stick to what they know.

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36. Vulgar on October 1, 2013 3:12 PM writes...

Still can't believe the scale and rapidity of what has befallen Merck over the past few years. Now resembles a rump organisation with a pretty hollow sounding survival plan.
Kinder to break up and provide a chance for at least part of its legacy to survive?
When the history of the Industry in the 21st Century is written.....

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37. Volpar on October 1, 2013 3:13 PM writes...

Still can't believe the scale and rapidity of what has befallen Merck over the past few years. Now resembles a rump organisation with a pretty hollow sounding survival plan.
Kinder to break up and provide a chance for at least part of its legacy to survive?
When the history of the Industry in the 21st Century is written.....

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38. Lyle Langley on October 1, 2013 3:16 PM writes...

@34, NoDrugsNoJobs...
"Fines assessed against the major pharma companies routinely now run into the billions with no relief in sight."

Poor, poor Pharma. They are just simply going about their business and get hit with these fines. It's not like they were doing anything illegal/unethical to incur those fines.

Plus, it's not like Pharma doesn't have departments in DC just to keep track of these "byzantine" regulations. No, they, again, are simply at the mercy of the regulators and their department of 2 people just can't handle the workload.

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39. Objective on October 1, 2013 3:16 PM writes...

I like DL's optimism reflected in the title "Merck Cuts Back. Way Back."

There is so much DEADWOOD at companies like Merck. a 20% cut will not move the needle either way.

Its best that these large conglomerates focus on Manufacture and marketing. Which means there is no need for any active research within Merck (not that they know how to do that!). Only the Licensing group, Manufacture and Sales - should make up Merck. Roger would be better off helming the Licensing group, evaluating and bringing in advanced assets exclusively (post Phase-IIB). Research should be done at small biotech outfits (in collaborations with Universities if needed).

the glory days of Merck will return. Kapishh !!

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40. Matthew Herper on October 1, 2013 3:24 PM writes...

#8 and #20: Vagelos is unique -- it's not just Merck that is evidence of that, but also Regeneron and Theravance. But just because Vagelos and Art Levinson made good CEOs doesn't mean all scientists will make good CEOs.

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41. Anonymous on October 1, 2013 3:29 PM writes...

"There is so much DEADWOOD at companies like Merck. a 20% cut will not move the needle either way."

Yes it will: they'll do 20% less, but still be just as inefficient, if not more, because large-scale cut-backs like these *never* manage to pick out the deadwood scattered and hidden through every unit.

"Only the Licensing group, Manufacture and Sales - should make up Merck. Roger would be better off helming the Licensing group, evaluating and bringing in advanced assets exclusively (post Phase-IIB)."

So if they're going to buy in fully developed assets at full market price (expected cash flows plus premium, as other companies compete for these assets), how and where do they create value, exactly?

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42. Objective on October 1, 2013 3:52 PM writes...

@41. let the business types figure that out. look at Valeant for ex.

In today's world there is no benefit for companies like Merck to maintain large, obese R & D units. They only hold you hostage from a value creation point of view.

Ground breaking and Ballsy research can only be done in an enterprising small biotech environment (generously speaking). Merck can identify and put their hooks into these outfits and bring value to their pipeline (only late stage).

This will vitalize drug discovery and might....

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43. Anonymous on October 1, 2013 4:00 PM writes...

So who will fund the need for more biotechs? Big Pharma? You think any biotech will want to be controlled from the start by Big Pharma? And do you think pharma-controlled biotechs will be any more successful than big pharma R&D teams?

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44. Hap on October 1, 2013 4:02 PM writes...

And how do they figure out which assets to pick up? Even when companies try to accurately choose assets (especially undervalued ones), the inherent unpredictability of trial outcomes and the underlying activities and disease knowledge (and decreased knowledge of other people's assets) tends to rear its ugly head. That's (of course) when someone in upper management doesn't decide to ignore the data they do have and throw $700M at an asset because it looks so shiny and cool.

You'd have to figure a way to get rid of those expensive workers while keeping money flowing reliably to all those marketers (the ones that p!*&@ed the FDA off and helped increase the safety and financial barriers to drug approval) and upper management (the guys in the lifeboats waving to the passengers) would be like catnip to business types, if such a method existed.

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45. Anonymous on October 1, 2013 4:07 PM writes...

22% hit in people in WP

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46. MoMo on October 1, 2013 4:15 PM writes...

If they get rid of the right 20%, those who do not innovate, can't make a decision when needed or impede the honest and hard working mem and women of Merck, they won't even be missed.

They probably could have upped that number to 40%.

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47. Anonymous on October 1, 2013 4:36 PM writes...

@46: Unfortunately, the non-performers tend to be in middle management, who are also the ones asked to identify and cut out the non-performers.

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48. Clueless on October 1, 2013 5:33 PM writes...

after all those layoffs, have they and we learned anything?

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49. Anonymous on October 1, 2013 5:52 PM writes...

@48: Yes - Pharma is caught in a death spiral.

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50. Anonymous on October 1, 2013 6:00 PM writes...

Didn't Peter K and Kathleen M say years ago that BRGOS was the guarantee of the future of the company? Didn't they get rid of all the "dead wood", cough cough, I mean "experienced" scientists that the MBAs told them were costing the bottom line too much $$$ in terms of salary and benefits because they didn't "fit" the "new model"? Wasn't replacing them with a combination of cheap WuXi FTEs, recent graduates and hourly paid temp scientists from the bottom feeding "scientific staffing companies" the key to future? Weren't all the young prima donas /self=promoters that remained and assumed most of the senior positions of responsibility going to innovate and fix research? With such a novel, visionary plan, what went wrong?

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51. Dr. Manhattan on October 1, 2013 6:31 PM writes...

"There are quite a few folks that think the scientist running Lilly isn't exactly doing a bang-up job down there, despite coming from the scientific ranks..."

And he was previously at AstraZeneca, along with his Swedish gang. In particular, the over the top Human Safety Committee, which consistently pushed for lower doses, leading to huge safety margins...and marginal efficacy in trials.

Good luck to my friends at Merck! Been through it more than once myself.

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52. Grim Leaper on October 1, 2013 6:48 PM writes...

@49 is right. It's clear nobody knows how to fix what ails pharma. Its forseeable future promises unending cycles of mergers and job cuts, until the 10 little indians... piff.

I think there's a curious subtext in Permutter's call out to only four disease areas. Oncology, vaccines, diabetes, and "hospital care" (antibiotics?) presage a big shift away from rational drug design of small molecules and toward biologicals and targets that are easier to validate. This seems plausible since it parallels Perlmutter's historical record at Amgen.

If so, Merck will transition away from its vestigial disease areas: neurology/pain, cardiovascular, osteoporosis, and arthritis/ respiratory. Presumably these targets will see the bulk of today's cuts, and the inevitable succeeding rounds to come.

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53. Your boy on October 1, 2013 7:05 PM writes...

It is sad to see this once great company in constant disintegration for the past 10 years...I presume this is what happens when nepotism built a weak organization of yes men sycophants who focus on useless initiatives, mind-numbing drink the Kool Aid powerpoint presentations and manage to trump the hardcore science that could actually deliver products.

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54. Edward Smith on October 1, 2013 7:10 PM writes...

Worth every penny!
Kenneth C. Frazier
Base Pay
$1,500,000 Bonus + Incentive Comp
$2,500,000 Total Cash Compensation
Stock Award Value
$3,284,997 Option Award Value
$3,799,998 Total Equity

Total Other

Total Compensation

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55. Objective on October 1, 2013 7:12 PM writes...

@ 50. anyone with greater than 10-year plus service has figured out "how to game the system". (outside research - even ken frazier is adopting this strategy).

when everyone top to bottom is "gaming the system" to get easy cash -- it is very very difficult to discover new therapies unless it happens to fall into your lap and cries "mommy" (even that cherry is dropped by these incompetent folks -- lovingly called deadwood in these companies.

why blame Wall Street or merck brass -- they come in and toe the line. I now feel that Seamus fernandez should have asked Merck to can research totally. that would have made a difference.

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56. Its a Shame on October 1, 2013 7:15 PM writes...

Its a shame that it took over a century to build a world class research organization but less than a decade to destroy it. The Titanic is sinking and the deck chairs will be rearranged once more. Dr. Perlmutter will not be able to rescue this crew since they have been demoralized by his predecessors. Good luck to all those that go down with the ship but those that got away, they are the lucky ones!

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57. Anonymous on October 1, 2013 7:19 PM writes...

Isn't this why they have guns in America?

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58. Anon on October 1, 2013 7:44 PM writes...

As a current Merckie, it is sad to see the state of affairs at this company. Merck's research in reality is second class - most compounds in late stage had PoC established by a competitor. Yet the arrogance is unmatched. Every department thinks that it is the best, and failure is due to someone else.
This madness will not end. I would strongly advice even those who are "lucky" enough to keep their jobs to jump ship ASAP. Most smaller companies are more stable at Merck at this point.

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59. former merckie on October 1, 2013 8:18 PM writes...


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60. former merckie on October 1, 2013 8:18 PM writes...


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61. Anonymous on October 1, 2013 10:32 PM writes...

@Grim leaper

As a former Amgenite, what is the parallel you see? Perlmutter came in and trashed Prolia very publicly, playing up the virtues of Fosamax, and delayed the program for 2 years. Then he and his cronies try to rescue the company on this molecule, from the prior team which was also trashed, because their own efforts produce nothing. The Vioxx team, Seidenberg, Harper and the other Merckies like Reider were clueless about biologics, and many other things too, like running organizations. If I were at Merck, this would be my biggest concern.

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62. Lighter Fluid on October 1, 2013 11:52 PM writes...

Anyone else want to quote Horace, Ars Poetica at this point?

I would, but don't wish to induce the wrath of the Latinists here!

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63. bjärni on October 2, 2013 3:12 AM writes...

The government doesn't make jobs, the industry makes jobs

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65. Anonymous on October 2, 2013 3:39 AM writes...

"@24 Curious Wavefunction

Sir Tom Mckillop also made a complete arse of running the Royal Bank of Scotland. The biggest loss in UK corporate history. Yes these 'superstars' should just stick to what they know."

Indeed. And as the AZ pipeline problems started on his watch, you could argue that he made a complete arse of running AZ as well.

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66. UK Chemist on October 2, 2013 5:32 AM writes...

Agreed as he appointed Jan Lundberg.

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67. Topaz Merck on October 2, 2013 5:44 AM writes...

So it was TOPAZ and then we had BRGOS that led to shedding many jobs! I was at the far end of TOPAZ before I was gone in late 2007. What new name did the "do nothing" mangers have coined this time around to get rid of the people? Did I hear "APOCALYPTIC?"

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68. anon on October 2, 2013 6:07 AM writes...

They're closing summit because they can't get a helipad.

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69. Historian on October 2, 2013 7:39 AM writes...

Someone mention Horace and Ars Poetica? The ancient empires of Rahway, Groton and Alderley absorbed lesser empires and in turn have been sacked by Goths with MBAs.

Sign of the times when for years my inbox has been peppered with headers like, "Is Your Continuous Delivery Strategy Embracing Change Management?" Damned if I know or care.

All is not lost. In time, the ancient Roman homelands brought forth Leonardo, Puccini and Primo Levi. Chemists' collective creativity will out, but sadly creativity alone does not pay the bills.

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70. anonymous on October 2, 2013 8:42 AM writes...

During a minor layoff in the days of Vagelos. All senior managers took a 10% pay cut. This may not be much but symbolic and always makes people feel like everyone is taking some hit. Have not seen any CEO take a pay cut at Merck recently.

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71. Anonymous on October 2, 2013 9:42 AM writes...

Surely we chemists must shoulder *some* of the blame in all the problems the industry is encountering?
Or did we all always carry out effective, dilligent, apolitical, selfless work at the bench only to be scuppered by having a lawyer CEO...

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72. Hap on October 2, 2013 9:58 AM writes...

Probably, but management effects might be washing it out at this point. If what you do that can't make new drugs is what your boss wants you to do (or what is likely to be viewed positively by upper management and thus preserve your job for awhile), then you can guess what you're probably going to do.

In addition, previous commentary (I can't find it here right now, but in an earlier layoff thread - whether it was actually affecting or representing the thoughts of anyone in charge of doing anything substantitative I don't know) indicated that whether you were doing anything good or bad was irrelevant to whether you were deleted or not. In that environment, if what chemists and biologists do doesn't matter to what pharma does, then it seems either that 1) it's irrelevant to the problem or 2) changes in it are unlikely to improve outcomes.

I imagine places like In The Pipeline could help - if chemists can figure out what's wrong with what they do, at some point the bloodletting will end and there will be money (somewhere, and for someone, maybe not us) to do drug discovery. In that case, it would help to know what people weren't doing right, and how they can do better.

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73. pharma professional on October 2, 2013 11:34 AM writes...

agree with #46 and #47.

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74. beentheredonethat on October 2, 2013 2:12 PM writes...

Kim was a total disaster. Rot started when the small productive sites (IRBM, Montreal, Terlings Park, Banyu) were cut. Too late to stop the rot now methinks.

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75. anonymous on October 2, 2013 3:15 PM writes...

stongly agree with #74

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76. Anonymous on October 2, 2013 3:48 PM writes...

Merck's pipeline has almost nothing of value. The company will be bankrupt before long, and senior management know it. And it was Kim's fault. Well done Peter!

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77. anony-mous on October 2, 2013 5:13 PM writes...

@58: "As a current Merckie, it is sad to see the state of affairs at this company. Merck's research in reality is second class - most compounds in late stage had PoC established by a competitor. Yet the arrogance is unmatched."

I agree with your 2nd point but not completely with your 1st. That said, perhaps a greater concern is that even when very difficult research leads to totally novel (and efficacious) molecules that represent First in Class approaches to major diseases, we have evolved to such a risk-averse state that we're afraid to / can't afford to prosecute them! This, IMO, casts a long shadow on the future of MRL. Dark days indeed !

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78. Anon who posted #58 on October 2, 2013 7:24 PM writes...

Anon #77 - From what I know, Merck has only odanacatib as as a novel mechansim in the late stage. Everything else is a me too in terms of PoC (lets see - Hep C Protease, CETP, HPV, PD1 and the list goes on). Merck got lucky with Januvia (Novartis had extended delay). The other novels that Merck has right now are from legacy-SP. If one compares the novel mechanisms that Novartis, and even GSK and BMS has brought to the market, this is a poor record in terms of doing research.
My point is that Merck rally has nothing to be proud of. It operates sort of like a cheap Chinese company, scrambling to execute fast once someone else has done the innovation. Maybe WuXi should buy Merck?

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79. Ex-merckie on October 2, 2013 7:49 PM writes...

No innovation can happen when the programs and the projects are moved from one place to another place on a yearly basis. In the past few years, under the leaders like kim and tillyer, they have been trying the best in class approach with nothing coming out of "first in class". The only outcome we got at the end is the reduced productivity and constant reorganization for no reason, and now the big layoff.

It would be interesting to see how much Kim got paid for his diasterous career at Mrl.

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80. Anon who posted #58 on October 2, 2013 8:02 PM writes...

The other concerning aspect that I see is Merck focusing on oncology and biologics (and something else). Merck's track record in both is pathetic (being polite here), so this seems to be doubling down on failure. Stupid strategy anyone?

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81. Anonymous on October 2, 2013 8:19 PM writes...

Agree! Boston site has not produced anything good in any area. Oncology especially biologic for oncology is the leading trend and mrl has no choice but to dive in. They shelfed Pd-1 for 1-2 yrs trying to sell it and finally turned around after bms success with ctla-4

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82. anonymous on October 2, 2013 9:51 PM writes...

Have seen the lack of effciency first hand being on the Mercky side. I bet there will be another round of 5000 layoffs in 2 yrs.

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83. Anon54 on October 2, 2013 11:40 PM writes...

I think what is missed is that in general these companies have not selected for the best talent. I am no just talking about those in the c-suite, but others that are below them. What good is it to have a "scientist" CEO when those feeding him information are MBAs with backgrounds in finance or sales? This creates quite a buffer between the decision makers and those who really know the science.

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84. Kelvin on October 3, 2013 5:46 AM writes...

@83: That's because companies these days (with Merck as one example, but certainly no exception) tend to hire for "cultural fit", filtering out all the psychotic misfits and mavericks who actually innovate by breaking the rules and challenging the status quo:

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85. Anonymous on October 3, 2013 5:49 AM writes...

@78: A reverse merger with WuXi. Every 28 year old MBA "management consultant" 's wet dream. Just think of the endless cost savings.

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86. Nick K on October 3, 2013 6:11 AM writes...

I couple of years ago I came across a post on a CafePharma thread which revealed the scenario GSK is using for long-term planning. In a nutshell, the prediction was that, by 2020, there would only be five survivors out of the current 15 big Pharma firms. Furthermore, the aggregate sales of these firms were predicted to be only a third of today's figure.

This scenario is looking more and more plausible with time.

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87. anony-mous on October 3, 2013 6:12 AM writes...

@85: Now THAT will improve innovation FOR SURE. SOLD !!!

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88. Lyle Langley on October 3, 2013 10:19 AM writes...

The axe (and details) fell at West Point. I'm sure someone else here has the full details, but what I've heard (1st hand) isn't pretty.

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89. Rich Titler on October 3, 2013 2:55 PM writes...

Yes, WP is seeing massive layoffs.

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90. Anonymous on October 3, 2013 7:35 PM writes...

Any news about BRIE in Boston?

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91. Anonymous on October 3, 2013 8:03 PM writes...

Boston site is changing quite a bit. Neuro, immuno, onc, IMr and diabetes will all be in place from target discovery through lead id. Trying to capitalize on a biotech hub.

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92. Anonymous on October 3, 2013 8:47 PM writes...

Welcome back Neuro. What a journey in a short period of time - Terlings Park - San Diego - Boston - West Point - Boston again. Is 2nd time a charm or 3rd?

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93. Anonymous on October 4, 2013 12:19 PM writes...

@79 If you look at the Merck insider transcations page on yahoo finance you'll see Kim cashed out $19 million in options the Nov before his "retirement".

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94. Anonymous on October 4, 2013 1:07 PM writes...

Confirmed number in WP is 75% of research will be cut. Don't see how this place will ever recover from this.

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96. Anonymous on October 4, 2013 5:41 PM writes...

@94 Assuming you are not exaggerating, which I suspect you are, they recover by "placing" the 25% who've either contributed to, or taken credit for development compounds in the recent past or who are tight with the decision makers at the top of the food chain and "separating" the remaining 75%, particularly if they've been there for more than 5 years. They then replace the 75% with a combination of low wage, hourly paid contract workers (with 1-5 years experience) from "scientific staffing agencies" (such as Kelly Scientific and Aerotek) and cheap WuXi FTEs.

The cliff notes version of the link @95 posted by Sisyphus tells you all you need to know. If you think you are vulnerable invest now in a copy of Rosetta Stone Mandarin:

This week, the pharmaceutical giant Merck announced it will cut 8,500 jobs in an effort to remain competitive in a rapidly changing drug industry. Earlier this year, Merck announced plans to cut 7,500 jobs, bringing the total of workers let go to 16,000. In all, Merck intends to lay off one out of every five of its employees.

At the same time, top Merck officials are urging Congress to loosen the nation's immigration laws to allow more foreign workers into the United States. In a Sept. 10 letter to House Speaker John Boehner and Minority Leader Nancy Pelosi, Merck Executive Vice President for Human Resources Mirian Graddick-Weir urged that the U.S. admit more high- and low-skilled immigrants to "address the reality that there is a global war for talent" and to "align our nation's immigration policies with its workforce needs at all skill levels to ensure U.S. global competitiveness."

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97. anony-mous on October 5, 2013 5:31 AM writes...

"Earlier this year, Merck announced plans to cut 7,500 jobs"

Can someone PLEASE send me a bona fide link for the so-called announcement referred to above? I following this topic like a hawk (at least I thought so) and I certainly NEVER saw (or at least don't recall) such an announcement.
Thanks in advance !

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99. Anonymous on October 5, 2013 9:38 AM writes...

Will the layoffs trigger the WARN act? At the West Point/Upper Gwynedd site? I spoke with a labor lawyer and its likely that this would count as a single site.

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100. Anonymous on October 5, 2013 2:24 PM writes...

@98. No. Every law has loopholes.

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101. biotecher on October 6, 2013 7:23 AM writes...

I was at one of Roy Vagelos' book signing talks where he explicitly said that big pharma should get out of pre-clinical R&D because large, bureaucratic organizations are not suited to that activity. So why don't they? Wall Street. This leads to the "Hollywood" model where studios do distribution and financing of projects at outfits like Dreamworks (i.e. big pharma does marketing/sales and funds biotech's with option payments). Might be the future, and the current pains here are an evolution in that direction?

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102. Anonymous on October 6, 2013 7:33 AM writes...

@100: Pharma companies still have to add/create their own value somehow, so if they can't add value through their own internal innovation, then how? Buying in new drugs from biotech won't add value, if the price already reflects the full market value of a fully de-risked development candidate...

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103. Anonymous on October 6, 2013 3:32 PM writes...

I have an idea: let's start a pharma company and run it through anonymous comments on a blog, rather than by a CEO!!

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104. LillyEmployee on October 6, 2013 3:41 PM writes...

@#34 - NoDrugsNoJobs: That comment sums it up pretty well. I fully agree.

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105. Anonymous on October 10, 2013 6:08 PM writes...

Perhaps we could solve all the problems that the industry is facing using Spotfire? It is soooo good and useful to analyze complex problems...

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106. Current Merckie on October 12, 2013 9:01 AM writes...

A few concrete examples can give the level of disfunction within Merck.

In mid-2012, colleagues running mass specs were moved to a new building at Rahway. This was done despite knowing they would move again to Kenilworth 1 Q 2013. After the move, it was realized the new building lacked the electrical capacity to handle their equipment. Who moves a lab without 1st checking electrical capacity? Why move a lab twice within a 1 yr time frame?

It's similar across the company. In the Whitehouse corporate headquarters, quality colleagues were told they would move 3 different times over a 2 yr period. Each time the move was suddenly canceled at the last minute. A move by the legal group was canceled 1 day before the actual move (and well before all the announcements of moves to Summit and Kenilworth).

These are examples of the extreme mismanagement within Merck. How much planning & forethought goes into lab move when they forget about electricity?

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107. We're all serfs on October 12, 2013 12:51 PM writes...

Ahhh Spotfire - surely nothing encapsulates the desperate lack of ideas and integrity in industrial R&D than the universal infatuation with this overpriced conjuring-trick.
I suspect an inverse relationship between likelihood of lay-off and expertise with it...

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108. Anonymous on October 13, 2013 5:18 PM writes...

Sounds a lot like Roche Nutley. Moronic doesn't describe the non sense (both from an operations perspective or the mismanagement of R &D, specifically med. Chem.) that went on at Roche. To all those looking for jobs...stay away from big pharma or startups. Look into biotech (the prominent ones)...that is where the future is, at least for now. Good luck!

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109. Anonymous on October 14, 2013 7:37 AM writes...

Where exactly (or even inexactly) have the 10s of thousands purged from the ranks of Big Pharma in this ongoing orgy of reorganization ended up? Are there really enough Biotechs and start ups out there to absorb all these refugees? I am assuming that unless their job title at the time of severance is director or associate director they aren't just playing musical chairs and moving to the next Big Pharma that they've never worked at before.

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110. Nick K on October 14, 2013 7:29 PM writes...

108: In the UK at least, many former chemists have retrained as Science teachers. I personally know two PhD chemists who are now working as plumbers.

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111. The Rat Catcher on October 17, 2013 9:24 AM writes...

The violin that was played as the Titanic sank in 1912 has gone on public display before it goes up for auction this weekend. Perhaps this should be the next purchase by Merck........

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112. Anonymous on October 19, 2013 7:21 AM writes...

@98. I just heard somebody said that WARN notice is not required if company has layoff every 30 days. Don't know if it's true or what it actually means.

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113. anon worker on January 29, 2014 9:31 AM writes...

If Merck is so concerned about making money why the hell is it thinking of selling off the consumer products division?

If Merck is bogged down in over-regulation that stifles new drug development, why would Merck consider the profitable animal health division ripe for getting rid of?

Too much management - all struggling for the next idea to avoid being laid off themselves. No one is listening. What Merck needs is a flatten organogram and real leadership under a banner of something everyone can follow.

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