TRENTON, N.J. — Merck & Co. is buying Schering-Plough Corp. for $41.1 billion in a deal that gives Merck key new businesses, access to a promising pipeline of new products and the chance to further cut costs, including eliminating about 16,000 jobs.
Merck hopes the cash-and- stock deal helps it better compete in a drug industry facing slumping sales, tough generic competition and intense pricing pressures.
The deal announced Monday would unite the maker of asthma drug Singulair — Merck — with the maker of allergy medicine Nasonex and form the world’s second-largest prescription drugmaker. Merck and Schering are already partners in a pair of cholesterol fighters, Vytorin and Zetia, although concerns about safety and effectiveness have hurt sales.
Schering’s shares skyrocketed, and Merck’s fell, typical for a company doing a big acquisition and funding part of it with new shares. Schering shares jumped $2.50, or 14.2 percent, to $20.13, and Merck shares fell $1.75, or 7.7 percent, to $20.99.
The companies say the deal will boost earnings per share in the first full year after it closes and that they’ll be able to save $3.5 billion a year after 2011.
The news comes six weeks after Pfizer Inc. announced a $68 billion deal to acquire Wyeth and on the same day as reports that Genentech Inc. is close to striking a $95-per-share sale to cancer-drug partner Roche, after rejecting a deal for months.
Erik Gordon, an analyst and professor at the University of Michigan’s Ross School of Business, said the Obama administration’s health-care plans have much to do with the recent spate of mergers and their focus on cost-cutting.
“If anything, the pressures for these kind of mergers . . . are stronger now that people are hearing what the new administration is thinking about for health-care reform,” he said.
Merck and Schering-Plough, along with most rivals, are eliminating thousands of jobs and restructuring to cut costs as generic-drug use grows and the recession drives consumers to spend less on drugs.
Merck spokeswoman Amy Rose told The Associated Press there won’t be any immediate changes in staffing. Combined the firms employ 106,000.
