Merck Beats Earning Estimates & Co., the second largest U.S. drug maker by sales, beat earnings estimates after they a cut in promotions and research spending. First-quarter profits were 88 cents a share, 9 cents above the average of 16 analysts’ estimates by Bloomberg. Last year the company decided to fire 8,500 workers in a move to save $1 billion, trimming research and development, sales and management. Combined sales of Merck’s top product, the diabetes pill Januvia and related drug Janumet, increased 3 percent to the $1.33 billion from a year before. Overall, pharmaceutical sales fell 5 percent to $8.5 billion.

R J Shah is a Zintro expert with over 32 years of pharmaceutical industry experience. “It is a really good idea to cut down on operation costs and overhead to ensure profitability of the company. Further work can be done jointly in technical areas to increase productivity, automation on-line controls, energy recovery, energy savings, etc. to ensure the company continues to improve in quality and performance and makes more of a profit. The lean manufacturing and de-bottling concept can really help the company in further improving its performance.”

Zintro expert Anjeev Sharma is a marketing professional with over 23 years of experience. “It is worthwhile to make efforts to bring profitability to the organization, and most companies would strive for the same. But Merck needs to understand that trimming their work force on all fronts to see bottom line increases is a short term effect which may show short-term positive effects. The company also needs to understand that decreasing their work force may also mean a shortage of R&D efforts, a decrease in coverage of the marketplace which may in the long-term be detrimental to the organization. This decrease is seen in the marketplace financials, as sales fell to five percent less at 8.5 billion.

“It is imperative that global business be built on robust systems built upon R&D effort, which may lead to new product pipelines or an adequate force to cover market for adequate market share. While immediate results may be positive due to a cut in manpower costs, a decrease in sales can become the parallel result. And with a decrease in R&D manpower, the company can expect more damages, as with no new products the company can slip to fewer sales. It would be good if the company decreases manpower in one department at a time to see its impact, before going on full throttle to decrease manpower across board all over.”

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