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Merck announces 7,000 layoffs—continued attack on jobs and wages in US
The pharmaceutical company Merck announced on November 28 that it would lay off 7,000 workers over the next three years, closing down 5 of its 31 production plants. The cuts, half of which will be in the US, represent more than 10 percent of the company’s global workforce. The move is only the latest in a series of announcements of layoffs and wage cutting at major American companies.
The 7,000 jobs are unlikely to be the last to be eliminated. Richard Clark, who took over as the company’s CEO earlier this year, said that the cuts are “an important first step in positioning Merck to meet the challenges the company faces now and in the future.” Merck has not yet released all the details on its cost-cutting plan; however, it has announced that plants in New Jersey, Georgia and Pennsylvania, as well as in Japan and Canada, will be scaled back, sold or shut down.
Merck’s difficulties are a manifestation of broader problems plaguing the entire pharmaceutical industry. The company faces the end of patent protection on a number of its key, “blockbuster” drugs, particularly the cholesterol-reducing drug Zocor. According to US law, other companies can produce generic versions of a drug after it has been on the market for a certain period of time. Pharmaceutical companies rely on their patented blockbuster drugs, which they spend billions of dollars to market, for the bulk of their revenues.
The company is also facing numerous lawsuits over its last major blockbuster, Vioxx, which it was forced to recall in September 2004. Much evidence exists demonstrating that Merck attempted to cover up the connection between use of Vioxx and an increased risk for heart attacks. The company has already lost one lawsuit, while another was found in its favor. Before it was recalled, Vioxx was heavily marketed and was used by millions of people for whom it was no more effective than much cheaper over-the-counter medications.
Pfizer, the largest US drug company, announced layoffs earlier this year. While other companies are still pulling in high profits, they face similar problems—a heavy reliance on a few major drugs to boost revenues, combined with growing public distrust. This will likely lead to further layoffs and cost reductions throughout the industry in the coming years.
The announcement at Merck comes on top of a number of recent mass-layoff announcements, including 30,000 jobs slotted to be eliminated at auto giant General Motors and massive wage and job cuts at auto parts manufacturer Delphi.
Read More
http://www.wsws.org/articles/2005/dec2005/jobs-d02.shtml
Merck’s difficulties are a manifestation of broader problems plaguing the entire pharmaceutical industry. The company faces the end of patent protection on a number of its key, “blockbuster” drugs, particularly the cholesterol-reducing drug Zocor. According to US law, other companies can produce generic versions of a drug after it has been on the market for a certain period of time. Pharmaceutical companies rely on their patented blockbuster drugs, which they spend billions of dollars to market, for the bulk of their revenues.
The company is also facing numerous lawsuits over its last major blockbuster, Vioxx, which it was forced to recall in September 2004. Much evidence exists demonstrating that Merck attempted to cover up the connection between use of Vioxx and an increased risk for heart attacks. The company has already lost one lawsuit, while another was found in its favor. Before it was recalled, Vioxx was heavily marketed and was used by millions of people for whom it was no more effective than much cheaper over-the-counter medications.
Pfizer, the largest US drug company, announced layoffs earlier this year. While other companies are still pulling in high profits, they face similar problems—a heavy reliance on a few major drugs to boost revenues, combined with growing public distrust. This will likely lead to further layoffs and cost reductions throughout the industry in the coming years.
The announcement at Merck comes on top of a number of recent mass-layoff announcements, including 30,000 jobs slotted to be eliminated at auto giant General Motors and massive wage and job cuts at auto parts manufacturer Delphi.
Read More
http://www.wsws.org/articles/2005/dec2005/jobs-d02.shtml
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