Merck Eliminating 7,200 Jobs

Merck, the world’s eighth-largest drug maker by revenue, is eliminating 7,200 jobs, or 13% of its workforce, as sales of some key products have been flat or slumping.

The New Jersey firm has also been plagued by a variety of production problems with its vaccines, troubles that have limited supplies and reduced revenue. Shingles vaccine Zostavax remains back-ordered, although many orders were filled in December, while hepatitis A vaccine Vaqta is only being shipped for children. It is expected to become available for adults in the second quarter.

Shortages hit hepatitis B vaccine Recombivax in January, due to the need to upgrade some manufacturing equipment, with only a version for children available now.

Sales of the cholesterol drugs Merck jointly sells with Schering-Plough have been hammered for a year by reports questioning their efficacy and safety.

Credit Suisse analyst Catherine Arnold sees Merck cutting marketing and administrative costs by a few hundred million dollars in 2009, boosting research spending by $100,000 or more and facing a slightly higher tax rate.

Over 2008, shares fell 48%.