UPDATED: The ax drops at troubled Merck as big restructuring gets underway

The pink slips are starting to fly at Merck ($MRK) R&D. The rumor mill was running full tilt on Monday morning, with comments flowing across Twitter that planned layoffs are in the works. And a company spokesperson confirmed that the first of a planned wave of 8,500 in fresh job cuts are being made now.

In The Pipeline's well-connected Derek Lowe kept the grapevine buzzing with a brief note commiserating with staffers waiting for word of their fate. "I've heard from more than one source that this week is when everyone in Merck's chemistry hears the details of the job cuts and rearrangements announced recently. Good luck to all concerned..."

It didn't take long for the comments to start rolling in, some from staffers complaining of the low morale.

"Biology gets the news this week as well," noted one post. "As an added bonus, it's a 'sit and wait by the phone to hear your fate' approach to layoffs--classy..."

That set the tone for a number of tweets this morning, as well as a message from someone familiar with the licensing group at Merck, saying that they're all expected to interview for their jobs.

Merck isn't saying much specifically, and evidently it doesn't plan to. But there was confirmation that the notices are coming and will keep coming for some time.

"We outlined our intent on Oct. 1," wrote Merck spokesperson Kelley Dougherty in an e-mail to FierceBiotech. "That said, I can confirm that notifications are happening across the company and will continue throughout this year and next."

Earlier today Merck reported a painful 35% plunge in profits on top of a disappointing release on third quarter sales. In their call with analysts Monday, top executives outlined some vague plans to sell off products--including some R&D projects--as they push plans to reorganize. 

The company announced at the beginning of this month that it plans to carve out $2.5 billion in annual expenses, eliminating a total of about 20% of its 81,000 staff jobs, when these new cuts are added to existing restructuring plans. While Merck didn't detail exactly where the cuts will be made, CEO Ken Frazier said at the time that most of the layoffs will take place in New Jersey, where the company is based.

This is the latest in a series of Big Pharma restructurings, all brought about by weak R&D productivity and painful generic competition as some of the industry's top blockbusters lost patent protection. In Merck's case a painfully slow rollout of late-stage prospects was afflicted by a series of setbacks. There was a delay for odanacatib, a demand from regulators to weaken its planned dosing for the sleep drug suvorexant, another rejection of sugammadex and the failure of Tredaptive, once touted as a blockbuster contender. 

Anyone with additional insights into the restructuring is invited to drop me a line directly at [email protected] The era of social media has brought a bright spotlight to details that once remained hidden in Big Pharma. And this genie is not going back into the bottle.

- here's the report from The Wall Street Journal on the restructuring (sub. req.)

Special Report: The top Phase III R&D setbacks of 2013 - Tredaptive

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