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Originally published Wednesday, October 22, 2008 at 12:00 AM

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Merck will end Seattle research, costing 240 jobs

Merck, one of the world's largest pharmaceutical companies, said Wednesday it will close its Rosetta research site in Seattle next year and eliminate or transfer about 240 jobs.

Seattle Times business reporter

Merck, one of the world's largest pharmaceutical companies, said Wednesday it would close its Rosetta research site in Seattle by the end of next year and eliminate or transfer about 240 jobs.

The South Lake Union facility houses 300 employees, most doing research at Rosetta Inpharmatics, and others at Rosetta Biosoftware developing software for biopharmaceuticals companies. Merck bought Rosetta for about $630 million in 2001.

A "significant number" of scientists working for Rosetta Inpharmatics, which develops technologies for drug discovery, will be offered transfers to a facility in Boston, a Merck spokesman said.

Rosetta Biosoftware will continue operating and intends to remain in the Seattle area. A spokesman initially indicated that the unit, which employs about 60 people, would be separated from Merck, but later clarified that it will remain a part of the company.

New Jersey-based Merckannounced on Wednesday a major restructuring of its operations, consolidating work in four locations. Besides Seattle, Merck will close sites in Japan and Italy.

The planned cuts mark a setback for the Seattle biotechnology sector, many of whose publicly traded companies have been marred by layoffs and poor market performance this year. Local subsidiaries of big biopharmaceutical companies like Gilead and Amgen have typically been more stable sources of employment; in fact, Gilead said Wednesday that it was leasing additional space on Eastlake Avenue E. But Merck's announcement is a reminder that in a competitive industry, even giant companies must struggle to reinvent themselves.

Merck said it would cut 7,200 positions across its global operations by the end of 2011. Forty percent of those cuts will occur in the U.S. The company, which currently employs about 56,700 people, also will shrink its senior and mid-level staff by 25 percent. Like other pharmaceutical giants, Merck is struggling to come up with new products and offset falling sales in some of its key products . In the third quarter, Merck saw its net income drop to $1.1 billion, down by nearly a third from the same period last year.

"Our current sales trends for key products, compounded by known industry and emerging economic factors, have led us to reassess the environment in which we expect to be operating between now and 2010," said Merck Chief Executive Richard Clark.

Ángel González: 206-515-5644 or agonzalez@seattletimes.com

Copyright © 2008 The Seattle Times Company

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