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by Patti Charek

Alkermes Plans Own Drug Lines

At nearly 20 years old, Alkermes Inc. is entering an era of "self discovery." It is moving away from a long-held strategy of making drug delivery tools and is now developing and commercializing its own products in-house.

Finally reaching profitability three years ago, it has been a long, hard road for Alkermes. The Cambridge-based company now wants to take a new path, one coupled with the uncertainty of rearing potential new therapies. Alkermes has put together a proprietary pipeline and has bold plans to put eight drugs into human trials by March 2009. Seven of its drugs are based on known compounds, but one, called ALK33, is an entirely new chemical entity.

What is making this transformation possible, is the company's healthy bottom line. In fiscal 2008, it netted $166 million on revenue of $240 million, up from a profit of $9.5 million on $239 million in revenue the year earlier. All that extra cash could have been invested back into its partnering and manufacturing efforts, but Alkermes decided to use the profits to back its new drug development model. It was just sound financial logic, according to James Frates, chief financial officer for Alkermes. "The drug delivery model only gets you so far. So once you've developed those delivery technologies, you can start to use those for your own. You can control your own fate much longer, and that just gives you greater growth opportunities," he said.

Alkermes CEO David Broecker explained that the company wanted a development element to its business, but the much-publicized collapse of its inhaled-insulin device deal with Eli Lilly forced Alkermes to lay off 150 employees and close its 4-year-old manufacturing plant in Chelsea. It cost the firm about $30 million in restructuring charges and ultimately caused company management to rethink its future. "Clearly the loss of the (Eli) Lilly program was disappointing to all of us ... and now we had this sense of urgency to really go after these proprietary products. That is when we put the stake in the ground," said Broecker.

Armed with its new strategic focus, the company went on a mission to "win the hearts and minds" of its 600-plus employees, according to Broecker. Scott Chizzo, CEO of the Waltham-based Maxiom Consulting Group Inc., said, "The concept is to take it from being a contract manufacturer of sorts, to a fully integrated pharmaceutical company. It is actually a very challenging strategy ... it involves a real change in mind-set," said Chizzo, whose company lists Alkermes as a client. Chizzo said the company's achievement in bringing the drug Vivitrol to market gave it the confidence to pursue becoming a full-fledged R&D biotech. (Source: Stephen DeSantis, Mass High Tech, 10 October, 2008)

J&J Study Finds Generic Less Effective in Treating Crohn's

Johnson & Johnson's Remicade fought the bowel disorder Crohn's disease better than the generic medicine prescribed by doctors, a result that may help J&J win thousands more patients for its second-best-selling drug. Remicade eased symptoms in 44 percent of patients when used on its own, and in 57 percent when combined with azathioprine, the generic that doctors typically turn to when initial treatments fail. Both of those regimens beat the 31 percent remission rate for azathioprine alone. The study also found Remicade to be about as safe as the generic.

About half of the 500,000 Crohn's patients in the US take azathioprine, said study author William Sandborn, a gastroenterologist at the Mayo Clinic in Rochester, Minn. J&J sponsored the study to see how many of those might do just as well starting off on Remicade, a switch that may earn the company as much as $22,000 per patient. Remicade, an anti-inflammatory also used against rheumatoid arthritis, generated $3.3 billion for the company last year. A boost among Crohn's patients could help J&J offset losses it is suffering as other top sellers, such as the schizophrenia pill, Risperdal, cede ground to cheaper generic copies.

Crohn's is a chronic disease that can cause abdominal pain, diarrhea, rectal bleeding, weight loss, and fever. There is no known cause, nor a cure. "Eighty percent of patients need surgery to repair bowel damage after 15 years, a sign of the inadequacy of treatment," Sandborn said.

The disease is typically treated first with steroids or aminosalicylates. If those don't work, doctors usually move to azathioprine and, if that fails, to Remicade. While the generic drug costs about $2,000 annually, as much as 11 times less than a year of Remicade, "what this data says is it's less expensive but it's also less effective," Sandborn said. (Source:  Bloomberg News, The Boston Globe, 7 October 2008)

RXi Licenses UMass Technology

Worcester-based RXi Pharmaceuticals Corp. has licensed exclusive worldwide rights to University of Massachusetts Medical School technology for the oral delivery of RNAi-based drugs. The technology was developed by Dr. Michael Czech and Dr. Gary Ostroff, professors of molecular medicine at UMass. Czech is chairman of the school's molecular medicine department and an RXi co-founder. Ostroff is an RXi "collaborator." The company said oral delivery of RNAi-based drugs "could open up significant market opportunities for RXi." RNAi, which was pioneered by RXi founder, UMass professor and Nobel Prize winner Craig Mello, intends to treat diseases by interfering with the genes suspected of causing those diseases. (Source: Matthew L. Brown, Worcester Business Journal, 14 October, 2008)

Lilly to Acquire ImClone for $6 Billion

Eli Lilly & Co.'s winning bid of more than $6 billion for cancer drug maker ImClone Systems means a billion-dollar payday for former rival bidder Bristol-Myers and vindication for corporate raider and ImClone chairman Carl Icahn. Lilly said it would pay $70 per share for New York-based ImClone. The acquisition, Lilly's largest ever, helps the Indianapolis drug maker prepare for looming patent expirations and builds "a true oncology powerhouse," Lilly chief executive John Lechleiter said. Lilly will lose patent protection for its two top-selling drugs, the antipsychotic Zyprexa and the antidepressant Cymbalta, in 2011 and 2013, respectively. The deal also brings to an end one of the more dramatic buyout sagas in recent history.

Lilly's bid topped two previous offers from Bristol-Myers, which partnered with ImClone to develop and market the blockbuster drug Erbitux. In July, Bristol-Myers offered $60 per share for the 83 percent of ImClone it doesn't already own and later raised that bid to $62 per share. But Bristol-Myers said it would stop the bidding there. CEO James Cornelius, a former Lilly executive and board member, said his company was pleased to have started a process that led to a "substantial increase" in ImClone's value. Bristol-Myers stands to pocket about $1 billion for its 14 million ImClone shares, while still sharing in the revenue from Erbitux. The drug maker gets 61percent of the North American revenue from Erbitux and splits sales three ways with ImClone and Merck & Co. in Japan. (Source: The Boston Globe, 7 October, 2008)

Pfizer Alters Focus in Rush for New Drugs

Pfizer Inc. will abandon early stage research on heart drugs as part of a strategy to sharpen its focus on ailments such as cancer, Alzheimer's disease, and diabetes where the chances of a bigger profit are greatest. The company is in a rush to find new medicines for when the cholesterol pill Lipitor loses patent protection in 2011. Lipitor had $12.7 billion in sales last year, one-quarter of Pfizer's revenue.

As part of its shift, the company will sell or share rights to at least 11 medicines in early testing for diseases the company no longer believes profitable enough, said Martin Mackay, the head of research and development. That includes treatments for heart failure, high cholesterol, and obesity. Besides Alzheimer's, cancer, and diabetes, the company will pursue remedies for inflammatory diseases, pain, and schizophrenia. "These are the disease areas with a higher medical need where the science is really breaking," Mackay said. Pfizer's research budget of about $7.2 billion is unlikely to change next year, he said. The intensified focus won't affect drugs in the last of three stages of testing needed for US approval.

By ending heart disease research, Pfizer abandons an area of medicine that propelled its rise. Pfizer acquired Lipitor from Warner Lambert Co. in 2000, when the drug had less than $1 billion in annual sales, and transformed it into the best-selling pill in history. Lipitor sales have slumped since 2006, when generic copies of a similar drug, Merck & Co.'s Zocor, were introduced. The restructuring won't result in laboratories closing and will shift many research employees to other areas, the company said. (Source: Bloomberg News, 1 October, 2008)

Amgen's Osteoporosis Pill Shown to Reduce Spinal Fractures

Amgen's experimental bone drug reduced the risk of spinal fractures in women with osteoporosis by 68 percent in a pivotal clinical trial, a robust result that raises the probability the drug can help restore the luster of the embattled biotech company. The drug, called denosumab, also reduced the risk of hip fractures by 40 percent compared with a placebo and the risk of other fractures by 20 percent.

Amgen needs denosumab, the first potentially major drug from its research lab in years, to be a big success. Sales of its flagship anemia drugs have been battered by safety concerns. Amgen's stock, which was trading at $75 in early 2007, had fallen below $40 by March of this year. But the stock has since rebounded to more than $60 on the prospects for denosumab.

Amgen had announced in late July that denosumab had succeeded in the clinical trial, which involved 7,800 postmenopausal women with osteoporosis. But the company did not say at that time how much the drug had reduced the risk of fractures, which could help determine whether denosumab will be a blockbuster or just another competitor in a crowded global market for bone-density drugs that is valued at about $8 billion.

The 68 percent reduction in vertebral fractures compares favorably with the 40-50 percent reductions achieved in clinical trials involving other pills now mainly used to treat osteoporosis. However, one drug, Reclast from Novartis, has achieved a 70 percent reduction in spinal fractures compared with a placebo. The hip fracture reduction of 40 percent achieved by denosumab was generally in line with the reduction achieved by other drugs. Scientists cautioned that the best way to compare drugs is head-to-head in a clinical trial. Comparing across trials can be misleading because patients' characteristics can differ.

Amgen has said it planned to apply for federal approval of denosumab, which could reach the market next year. Analysts have been estimating sales of anywhere from $1 billion to several billion dollars just to treat osteoporosis. Amgen, which had revenue last year of $14.8 billion, is also testing denosumab as a treatment for bone complications arising from cancer or the treatment of cancer. The main drugs now used for osteoporosis are a class known as bisphosphonates, which include Fosamax from Merck and its generic equivalents; Boniva from Roche and GlaxoSmithKline; Actonel from Procter & Gamble and Sanofi-Aventis; and Reclast. The use of denosumab is likely to cost more than $1,000 a year.

About 10 million people in the US, mainly postmenopausal women, suffer from osteoporosis and more than 30 million others have low bone mass that puts them at risk of the disease. (Source: Andrew Pollack, New York Times News Service, 17 September, 2008)

In Largest Gift, Harvard Gets $125 Million for Biological Institute

Harvard University said it received the largest individual gift in its history, a $125 million donation from entrepreneur Hansjörg Wyss, an alum of Harvard Business School who is ranked on Forbes's list of billionaires. The money will underwrite a new biological engineering institute where scientists will research everything from new materials inspired by the natural world to restoration of diseased tissue.

"It's really wonderful," said Provost Steven E. Hyman of the gift, which creates the Hansjörg Wyss Institute for Biologically Inspired Engineering, to be located in the new science complex being built in Allston. "This is both an exciting cornerstone area for our new expanded efforts in biological engineering . . . [and] a way of tying together the Cambridge side of the river with the Boston side of the river - the medical school, but also our affiliated hospitals."

The institute's goal will be to bring together people from across disciplines, from computer science to surgery to physics. It reflects a continuing push away from Harvard's past philosophy of "each tub on its own bottom," the phrase used to describe the fragmented relationship between Harvard's schools. The new thinking reflects the collaborative effort the Harvard Stem Cell Institute initiated in 2004, which brought together clinicians from affiliated hospitals, basic science researchers, and others to raise $70 million to date. Also, earlier this year, Harvard Medical School received $118 million in federal funding over five years to create a collaborative center to turn research into medicine more quickly.

The new institute also reflects a rise in status for engineering, which has gone from a division within Harvard to a school of engineering and applied sciences. "This gift underscores Harvard's ability to lead and to make very significant contributions in a field that is of increasing importance to scientists in a number of areas, and to science more generally," Drew Faust, president of Harvard, said in a statement.

The donation will fund seven faculty positions and provide operating funds for the institute. Donald Ingber, professor of bioengineering at the Harvard School of Engineering and Applied Sciences, will direct the institute, which will build on the "seed institute" that already existed, the Harvard Institute for Biologically Inspired Engineering. The institute will focus on several areas, including the emerging discipline of synthetic biology, which seeks to make working with cells and genes more like building circuits. It will also include a "living materials program" that will develop materials and devices that mimic the engineering principles of the natural world. It will also include the field of biological control, which looks at how living systems are organized and tries to develop ways to control them. (Source: Carolyn Y. Johnson, The Boston Globe, 8 October, 2008)

Broad Lands $86 Million in NIH Funds for Gene Research Tools

The Broad Institute of MIT and Harvard has been awarded a six-year, $86 million grant from the National Institutes of Health (NIH) to develop tools intended to dramatically aid researchers in taking genetic discoveries to treatments. The Institute, one of nine research centers in the program, is developing what are called chemical "probes," small molecules that can be used to discover targets, helping to bridge the gap between modern biological knowledge and human health.

The NIH selected Broad to be a major component of the Comprehensive Screening Centers in the Molecular Libraries Probe Production Centers Network (MLPCN). The centers will share in the work of building libraries of small-molecule probes that will be screened using high-throughput methods to identify compounds that could be potential drug targets. The institute will be using a portion of the grant to hire more researchers and purchase more equipment. Stuart Schreiber, director of the chemical biology program at Broad, stated that now is the right time for this kind of program because the sheer volume of data that researchers can now obtain from these types of high throughput experiments has increased exponentially while costs have dropped.

Broad will make its data from the program openly available to the scientific community, both academia and the biopharmaceutical industry alike. "I would be elated if industry were to utilize these tools. These kinds of probes can lead to drug targets, and will act to financially de-risk the specific projects for pharma companies," Schreiber said. The project at the Broad will place particular emphasis on the areas of diabetes, cancer stem cells, infectious disease and psychiatric conditions. (Source:  Stephen DeSantis, Mass High Tech, 5 September, 2008)

Genzyme Marks MetroWest Growth

In September Genzyme officially opened its $125 million, 180,000-square-foot, 350-employee Framingham Science Center. Genzyme's 14-building, 1 million-square-foot Framingham campus now employs about 2,000 people, the biotech company's largest concentration of employees worldwide. The company has had a presence in Framingham for nearly 20 years.

Researchers at the new science center will focus on genetic diseases, cancer, immune diseases, kidney diseases, cardiovascular diseases, endocrinology and neurological disorders. "It's just a building, a tool," said Richard Gregory, Genzyme's senior vice president and its head of research, adding that it is the people inside the building, with a commitment to patients, which makes the company successful.

The center is part of an expansion of Genzyme's research, development and manufacturing operations around the world. In addition to the science center, a $250 million cell culture manufacturing facility is also under construction in Framingham. At some point in the future, a matching building to the new science center will be also added to the campus. A $150 million expansion of the company's cell culture manufacturing facility in Allston began last year. The company is also building in France, Germany and China. The new science center is also Gold (LEED) certified for "green features" like high-efficiency lighting, heating and cooling systems. (Source: Eileen Kennedy, Worcester Business Journal, 29 September, 2008)

Gene-Targeted Drug Could Help Heart Patients

A drug touted as the first gene-targeted heart therapy reduced hospitalizations and deaths when given to heart failure patients with a specific genetic profile, researchers said. The drug, bucindolol, was dropped by its maker nearly a decade ago after it failed to top a placebo in a 2,700-patient study. But a new study of roughly 1,000 patients shows that it works more effectively than the standard drugs in its class in patients with "favorable" genetic features. Scientists have also developed a genetic test that predicts which patients will benefit most from the drug.

The patients are enrolled in a gene-targeting arm of a test of heart failure drugs called beta blockers, which reduce the heart's workload. The study, called the Beta-Blocker Evaluation of Survival Trial, or BEST, showed that researchers could predict how well the drug will work based on the presence of two mutations in genes that regulate the heart's activity. In patients with the most favorable genetic profile, bucindolol reduced: heart disease deaths by 48 percent; deaths from all causes by 38 percent; deaths and transplants by 43 percent; and hospitalizations for heart failure by 44 percent.

"These are the best results that have ever been achieved," says Michael Bristow, chairman of ARCA Biopharma, the company that resurrected the drug and is attempting to bring it to market. "These are very impressive results. They certainly could herald a new era in cardiovascular care," says Sidney Smith of the University of North Carolina at Chapel Hill and one of a handful of experts that set national heart-treatment guidelines. "This is what we've been hoping for - a way to predict which patients would respond to specific therapies," he says.

Based on the results of the new trial, Bristow says the FDA has agreed to review the company's application for government approval, along with a separate application for a genetic test. The agency's decision on the applications could come as early as May 1, 2009, he says. (Source: Steve Sternberg, USA Today, 22 September, 2008)

Sanofi-Aventis Acquires Zentiva for $2.6 Billion

French pharmaceuticals company, Sanofi-Aventis has won the approval of the board of Czech generic drug maker Zentiva for its takeover offer after raising its bid to about $2.6 billion. Jiri Michal will remain as CEO of Zentiva which makes and sells generic drugs in Central and Eastern Europe, including products for pain, cardiovascular diseases and disorders of the central nervous system. As part of its growth strategy, Sanofi-Aventis is expanding its presence into emerging markets that are characterized by high growth, low and medium disposable income, and affordable pharmaceutical products.

Sanofi-Aventis Europe and Zentiva have agreed that for the foreseeable future Zentiva will conduct its business under the brand names of Zentiva, whether alone or in association with Sanofi-Aventis brand names, and that its Prague headquarters will continue to be the center of expertise for Zentiva's development, manufacturing, supply chain and marketing activities in affordable medicines in the CEE regions.

The acquisition is the most recent case of consolidation in the generic drug industry. In other examples, Teva Pharmaceuticals is buying Barr Pharmaceuticals, and Daichi Sankyo has acquired Ranbaxy Laboratories. (Source: Sanofi-Aventis, 24 September 2008)

Biogen Idec MS Pill Found to Slow Damage

Biogen Idec Inc.'s experimental pill to treat multiple sclerosis prevented brain lesions associated with the disease from getting worse, a study found. The pill, called BG-12, reduced the conversion of new spots of inflammation into permanent damage in a trial of 56 patients.

In MS, neurons are stripped of an insulating coating known as myelin by the immune system, causing the cells to malfunction. That leads to MS symptoms such as muscle weakness and loss of coordination, according to the Mayo Clinic. Biogen has received approval from US regulators to speed the review process for its pill. If cleared for sale in the US, BG-12 could be the first oral medication for MS patients to reach the market.

"There are two elements: You want to keep the lesions from forming in the first place and then, even if a lesion developed, you want to know the damage is reduced, and that's what you're seeing," said Mike Panzara, the chief medical officer for Biogen Idec. "Even if a lesion does develop on BG-12, injury is less because it's less often the lesions become permanent."

About 29 percent of the lesions in the brains of patients on BG-12 turned into signs of permanent damage, compared with 44 percent of those in the placebo group, the study showed. The company began final-stage testing on BG-12 in January. The trials, on more than 2,000 patients with a recurring form of the disease, will last two years. The drug is being compared with a placebo and with Teva Pharmaceutical Industries' Copaxone, an approved treatment for the disease.

Biogen Idec sells the MS drugs Avonex, which is given as a once-a-week injection, and Tysabri, an infusion given once a month in a doctor's office or hospital clinic. About 1 million people worldwide suffer from MS. (Source: Bloomberg News, The Boston Globe, 19 September, 2008)

Biogen Idec Ends Work on Rheumatoid Arthritis Drug

Biogen Idec has announced it will halt work on a drug for rheumatoid arthritis because it failed in studies. Baminercept missed its primary and secondary goals in a clinical trial with patients who did not respond to drugs known as disease modifiers, Biogen said. The company also based its decision on preliminary results from a study of patents who didn't respond to drugs called tumor necrosis factor inhibitors. (Source:  Bloomberg News, The Boston Globe, 10 October, 2008)

Indevus Shares Double on Drug Agreement With Teva

Indevus Pharmaceuticals Inc. more than doubled in trading after it said Teva Pharmaceutical Industries Ltd. would pay as much as $142.5 million for rights to a drug for the treatment of stuttering. Pagoclone has already been shown in midlevel trials to work against stuttering. Indevus may receive as much as $92.5 million from Teva for testing and milestone payments and up to $50 million more in royalties. Teva will pay Indevus to complete the second round of trials needed before FDA approval, according to a statement. (Source: Bloomberg News, The Boston Globe, 27 September, 2008)

Novartis To Beef Up Vaccine Research in Cambridge

Novartis is doubling down on vaccine research. The Basel, Switzerland-based drug giant announced that it is opening a new facility and hiring an additional 150 people by the end of 2009 for a Research Center of Excellence in Virology in Cambridge. That will boost the company's employment in Cambridge to more than 1,800 workers.

Researchers in the new center will study vaccines for widespread viruses, including HIV, flu, cytomegalovirus, and respiratory syntical virus. The vaccine business, shunned as a backwater for cheap commodities as recently as five years ago, is suddenly booming - and Novartis clearly aims to capitalize on this growing field through its new center.

Vaccines generated an estimated $16 billion in sales in 2007. Premium-priced vaccines are back in. Merck's Gardasil, for a virus that causes cervical cancer, generated $1.5 billion in sales in 2007, its first full year on the market. That's enough to support quite a few research jobs. (Source: Luke Timmerman, Xconomy | Boston, 12 September, 2008)

Stem Cell Registry Set for Umass Medical School

Massachusetts has launched the International Stem Cell Registry, intended to be an online resource center for information on human embryonic stem cells for biomedical researchers and the public. The center is based at the University of Massachusetts Medical School in Shrewsbury, alongside the Massachusetts Stem Cell Bank. The stem cell registry was partially funded by a $570,000 grant from the Massachusetts Life Sciences Center, a quasi-public organization established by the state. (Source:  Todd Wallack, The Boston Globe, 12 September, 2008)

Boston Scientific Says Stents Cleared by FDA

Boston Scientific Corp., the leading seller of heart stents, says US regulators have agreed to lift the remaining restrictions preventing the company from issuing new versions of the artery-clearing devices. The FDA told the company it planned to remove the penalties imposed in January 2006 when the device maker was cited for manufacturing violations, said James Tobin, Boston Scientific's chief executive, in a conference call with analysts.

The move should lead to approvals for two new stents to open blockages in the carotid artery and kidney, and a balloon catheter for unclogging blood vessels. It also removes a potential hurdle for future products the Natick company aims to introduce in the $4 billion market for heart stents and other devices. (Source:  Bloomberg News, The Boston Globe, 23 October, 2008)

Boston Scientific Stent Wins FDA Approval

Boston Scientific Corp. said the FDA approved the medical device maker's new Taxus drug-coated stent. The approval comes as Boston Scientific and its stent competitors try to recover from a yearlong downturn in sales for the devices, which are used to prop open clogged arteries. The drug-coatings are used to prevent the growth of scar tissue. The Taxus Express2 stent is the only stent on the market approved for use in vessels as small as 2.25 millimeters, the company said.

In 2006, studies began to show that patients with the drug-coated stents were more likely to develop potentially fatal blood clots months and even years after they were implanted. Doctors have since become more cautious about using them instead of bare-metal stents and companies have in turn released studies trying to shore up the safety profile of drug-coated stents.

Boston Scientific said Taxus is so far the world's most frequently implanted stent, with 4.6 million used and the drug already has an extensive record clinical trial and long-term follow-up record. The company plans to launch the new stent immediately. The stent is also approved to treat the recurrence of a narrowing artery in patients who have a bare-metal stent.

Taxus stents compete heavily with Johnson & Johnson's Cypher stent. Other competitors include Abbott Laboratories Inc.'s Xience V and Medtronic Inc.'s Endeavor drug-coated stents. (Source: Manufacturing.net, 25 September, 2008)

Waltham's ImmunoGen Grants License to Bayer Healthcare

Biotechnology company ImmunoGen Inc. said Bayer HealthCare has licensed a tumor-fighting technology developed by ImmunoGen for $4 million upfront. Bayer licensed the Tumor-Activated Prodrug technology, and will use it to develop cancer drugs. Along with the initial payment, Bayer will make development milestone payments to Waltham-based ImmunoGen if drug candidates made with TAP progress through clinical testing. Those payments could reach $170.5 million per drug, and if the products reach the market, ImmunoGen would also receive royalties on sales. (Source:  The Boston Globe, 22 October, 2008)

Major Drug Makers' Sales Suffer in the Third Quarter

Drug makers Merck & Co., Wyeth, and GlaxoSmithKline PLC all posted lower profits for the third quarter, partly due to the intensifying generic competition weighing on the entire pharmaceutical industry. And in what it characterized as an advance strike to counteract that and other problems, Merck said it will slash about 7,200 jobs, or nearly 13 percent of its workforce, in its second major restructuring in less than three years.

Merck, which currently has 250 employees at its research center in Boston's Longwood Medical Area, plans to expand its Massachusetts operations as part of the restructuring. Spokesman Ian McConnell said the company is shifting its molecular profiling group from Seattle to Boston by 2009. Merck is also shifting its basic research for the oncology and Bone Respiratory Immunology and Endocrine groups to Boston by year's end. McConnell said the company, which already has partnerships with many Bay State institutions, such as Harvard University and Vertex Pharmaceuticals Inc., also hopes to forge more partnerships with outside groups.

The restructuring is "not a reaction to our performance in 2008 or the economy," chief executive Richard Clark said. "I think it's a competitive advantage" to make the company leaner and more flexible. Clark said 60 percent of the job cuts will come overseas, and they'll affect workers in sales and marketing, manufacturing, administration, and even basic research. Three research centers will be closed - Seattle, Japan, and Italy - and the company is evaluating which factories will be closed in a few years.

Sales were hurt by the continuing decline of Merck's cholesterol drugs Vytorin and Zetia, lower sales for nearly all its vaccines, partly related to manufacturing problems, and generic competition for former blockbuster osteoporosis drug Fosamax, which saw sales cut in half this quarter to $354 million.