Merck's third quarter financial results reflect an $80 mil. charge associated with the company's post- Vioxx global cost reduction program, CEO Richard Clark said during a third quarter earnings call Oct. 24.

The charge relates specifically to the elimination of about 825 positions across the organization, he said.

"The position eliminations are the result of a significant ongoing review we've had underway to assess our resources subsequent to the voluntary withdrawal of Vioxx ," the exec stated.

The announcement represents the completion of Vioxx-related cost reduction activity, Clark added.

In October 2003, Merck announced plans for a headcount reduction program that ultimately resulted in the elimination of 5,100 positions, the company said.

However, the third quarter elimination of 825 positions was a part of separate cost-cutting effort resulting directly from the Vioxx withdrawal in September 2004, Merck said.

Shortly after removing the COX-2 inhibitor from the market, Merck said it would shift Vioxx sales reps to other products.

Clark was named to the CEO's post in May to succeed Ray Gilmartin, who retired (¹ Also see "Merck CEO Clark Brings Managed Care Expertise To Post; Gilmartin Retires" - Pink Sheet, 5 May, 2005.).

The new chief exec said the company will continue to review costs "in a more comprehensive way" to achieve additional reductions going forward.

Opportunities still exist to improve business processes by looking "at the business differently," Clark said.

The exec said he will present more details on Merck's initiatives toward year-end. The company is planning to hold an annual business briefing Dec. 15.

Merck's third quarter sales dipped 2% to $5.42 bil., which reflects a 3% decrease related to the Vioxx withdrawal offset by 1% growth in other revenue, the firm reported. Net income increased 7.2% to $1.42 bil.

- Jessica Merrill

Merck Completes Vioxx-Related Cost Reduction Program

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