Merck to cut 8,500 jobs and slash costs by $2.5BN amid R&D refocus

US pharmaceutical giant Merck announced Tuesday it would cut 8,500 jobs – on top of the 7,500 positions it axed in 2011 and 2012 — as it seeks to slash $2.5 billion from its annual operating costs by 2015.

Merck also said it would be shifting its R&D focus on to high-growth areas such as treatments for diabetes, cancer and Alzheimer’s, and severing research products with less chance of success, to bolster its bottom line. It will also sell its New Jersey facility to help reduce overheads.

Like other pharmaceutical giants, Merck has been hurt by competition from generic drugs, failed trials and regulatory delays. 

Shares in the company rose 2.3 percent.

"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 Merck Chief Executive Kenneth Frazier 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."

About 40 percent of the cost-cutting, or the equivalent of $1 billion, will be achieved this year. Cuts will be made in marketing and administrative areas of the company as well as R&D.