Merck's Executive Board today presented initial plans for an efficiency
program spanning all businesses and regions to the Supervisory Board and
relevant employee representative bodies. The planned efficiency measures are
part of the Group's comprehensive transformation program, which was announced
last year and consists of two phases: In the first two years, Merck plans to
set up a new leadership organization, implement efficiency measures and develop
a long-term growth strategy. In the second phase, the focus will be on
exploiting new growth opportunities ahead.
"In its long history Merck has grown to be a successful, world-class
company with strong positions in many of its key businesses," said
Karl-Ludwig Kley, Chairman of the Executive Board.
"Nevertheless over the
next two years Merck needs to address unprecedented market shifts, increasing
competition in key product areas and existing inefficiencies in its own organization
to ensure the long-term success of its business model. We will therefore
progress with our planned efficiency program in order to deliver recurring cost
reductions and free up resources for investment in promising growth areas.”
Kley added: "While it is regrettable, our preliminary analysis has
shown that the overall purpose of our transformation program and the expected
measures to realize it may lead to workforce reductions across all businesses
and regions."
Paying tribute to the traditionally strong relationship with the employee
representatives at Merck, the Group will now start the consultation processes
with the respective employee representatives in different countries, with the
intention to seek socially acceptable solutions where they are possible. Until
the consultations are further advanced, it would be premature to announce any
detailed cost or headcount reduction plans.
"We have a view on what needs to be achieved, but we will consult with
the employee representatives on a country-by-country basis and we will consider
any pragmatic proposals," Kley said. "We have specifically not
published potential figures related to the efficiency program as we are
committed to engaging constructively with the relevant stakeholders to achieve
a mutually acceptable solution. This approach reflects the strong tradition of
Merck."
At the beginning of 2012, Merck has started the implementation of a new
leadership organization which defines the relationship of businesses, Group
functions and country organizations. The objective of the new leadership
organization is to streamline the organizational structure to be leaner, easier
to navigate and to speed up decision-making processes. This realignment will
continue in parallel to and support the efficiency program as well as the
development of the Group's long-term growth strategy.
In the second phase of the transformation program, Merck will tap areas for
future growth based on broader industry and macroeconomic trends. Initial work
to explore these growth opportunities has already been started and Merck will
further drive the development of its long-term growth strategy over the next
two years. Merck is convinced that the ability to effectively implement any
major strategic initiatives in the future will be predicated on successfully
implementing the new leadership organization and completion of the efficiency
program.