Merck has launched a sweeping cost-cutting effort designed to save $3 billion annually by the end of 2027, the company said in its quarterly report.

“The company launched a new multiyear optimization initiative to enable the transformation of its portfolio by generating an expected $3.0 billion in annual cost savings from productivity actions, which will be fully reinvested to support new product launches and its pipeline across multiple therapeutic areas,” Merck said.

In July 2025, as part of this initiative, Merck approved a new restructuring program, in which it expects to eliminate certain administrative, sales and R&D positions. The company will, however, continue to hire employees into new roles across strategic growth areas of the business. In addition, Merck will reduce its global real estate footprint and continue to optimize its manufacturing network, aligning the geography of its global manufacturing to its customers and reflecting changes in the company’s business, the company added.

Merck anticipates cumulative pretax costs related to the program to be approximately $3.0 billion. For the second quarter of 2025, the Company recorded charges in its GAAP results of $649 million related to this restructuring program.

The company expects the actions under the restructuring program to result in annual cost savings of approximately $1.7 billion, which will be substantially realized by the end of 2027. This restructuring program is part of the multiyear optimization initiative expected to achieve $3.0 billion in annual cost savings by the end of 2027.

Meanwhile, Merck continued to make long-term investments in its U.S. manufacturing and R&D capabilities. “This includes the start of construction for a $1.0 billion, 470,000-square-foot state-of-the-art biologics center of excellence in Wilmington, Delaware, which will serve as a launch and commercial production facility and the primary U.S. manufacturing site for KEYTRUDA. In addition, the Company announced an $895 million expansion of its Animal Health manufacturing facility in De Soto, Kansas; the 200,000-square-foot facility will increase capacity for Animal Health vaccines and biologic products.”