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The restructuring includes the elimination of certain roles and a reduction in the company’s global real estate footprint.
Merck announced plans to reduce costs in existing areas and reinvest the savings into new sectors by 2027.
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Big changes are coming to Merck.
The company announced its financial results for the second quarter of 2025, which included plans to significantly reduce costs in certain areas of the company in order to reinvest those funds into other areas.1 The cost-cutting/reinvestment initiative will see the elimination of certain roles, although Merck stated that new roles will continue to be created in other sectors.
Sales were down about 2% from second-quarter 2024, with worldwide totals hitting $15.8 billion for the most recent quarter. Sales of Keytruda grew by about 9% for a total of $8 billion. The company also saw growth in its animal health division, which brought in $1.6 billion during the quarter. According to the company’s forecasts, Merck projects its worldwide sales to hit between $64.3 and $65.3 billion for the year.
The earnings statement also went into detail about a new initiative that Merck is calling its multiyear optimization initiative. The restructuring program will result in an estimated $3 billion in savings by the end of 2027. The company expects to save about $1.7 billion-per-year until 2027.
According to Merck, a portion of these savings will come from the elimination of roles in certain sectors, including administration, sales, and R&D positions. New hiring will continue for roles that the company considers to be growth areas. Merck’s statement does not go into detail about the company’s overall headcount and whether that will be reduced, or if the eliminated roles will be fully replaced by new roles in other areas.
The initiative also sees Merck reducing its global real estate footprint. The statement does not go into specifics, only saying that Merck will optimize its manufacturing network while making changes to reflect changes in the business.
However, in a different section of the earnings statement, Merck provided details about its intentions to increase investments in US manufacturing and R&D capabilities. This includes a $1 billion facility in Wilmington, Delaware, that will serve as the primary manufacturing site for Keytruda. There are also plans for a $895 million expansion of Merck’s animal health manufacturing facility in De Soto, Kansas.
In the statement, chairman and chief executive officer Robert M. Davis said, “Earlier this month, we were pleased to announce our pending acquisition of Verona Pharma, which augments our portfolio and pipeline and is another example of acting decisively when science and value align. Today, we announced a multiyear optimization initiative that will redirect investment and resources from more mature areas of our business to our burgeoning array of new growth drivers, further enable the transformation of our portfolio, and drive our next chapter of productive, innovation-driven growth. With these actions, I am confident that we are well positioned to generate near- and long-term value for our shareholders and, most importantly, deliver for our patients.”
Merck also expects its recently announce acquisition of Verona Pharma to significantly impact its earnings, although it did not reflect that potential in its second quarter 2025 report. The deal will bring Verona’s COPD maintenance treatment Ohtuvayre under Merck’s umbrella.2
In a statement issued in early July, when the deal was announced, Davis said, ““This acquisition of Verona Pharma reflects the commitment we have to delivering innovative treatments to patients and our ability to execute on our science-led and value-driven business development strategy. Ohtuvayre complements and expands our pipeline and portfolio of treatments for cardio-pulmonary diseases while delivering near- and long-term growth as well as value for shareholders. This novel, first-in-class treatment addresses an important unmet need for COPD patients persistently symptomatic based on its unique combination of bronchodilatory and non-steroidal anti-inflammatory effects. We look forward to welcoming the talented Verona Pharma team to Merck.”
According to the terms of the deal, Merck will pay $107 per ADS of Verona shares (which equals eight individual shares) for a total of about $10 billion. The transaction is expected to close by the end of 2025.
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