GENEVA: German pharmaceuticals group Merck KGaA said Tuesday it would close the headquarters of a subsidiary in Geneva, cutting 580 Swiss jobs and redeploying 750 others.
The job losses at biotech firm Merck Serono were part of a wider restructuring plan "to create a leaner, more agile organisation," the company said in a statement.
"The planned measures for Merck Serono's operations in Switzerland are needed to ensure our global competitive position in a rapidly changing market and to secure the long-term future of the company," said Stefan Oschmann, head of the Serono division.
"Regrettably, these planned measures include the closure of our headquarters in Geneva, which would result in workforce reductions and the redeployment of certain Switzerland-based functions to other Merck locations," he added.
The company said it planned to start staff reductions and relocations in the second half of 2012, and complete the closure of the Geneva operation in the first half of 2013.
Merck Serono, Merck's biggest division, currently employs some 17,000 people worldwide, with about 1,250 in Geneva.
It will now operate out of a single campus in Darmstadt, Germany, to eliminate "duplications of functions" at two European headquarters, Merck said.
Some research and development jobs would also be transferred to Boston and Beijing, it added.
Merck Serono is to keep its manufacturing facilities in the Swiss towns of Aubonne and Corsier-sur-Vevey, but plans to cut 80 production jobs as well.
The chairman of the board of Merck Serono, Francois Naef, blamed the shut-down on rising research costs, the expiry of a patent on one of the company's flagship drugs -- multiple sclerosis treatment Rebif -- and failure to develop profitable new ones.
"We make a third of our earnings with Rebif. In 2011 Rebif sales were 1.69 billion euros ($2.2 billion)," he told AFP, saying competitors were preparing to go into production on similar drugs.
"Also, we saw two of our medications fail, Erbitux, an anti-cancer drug used against colon cancer that didn't have the expected results against lung cancer, and Cladribine, an oral medication for multiple sclerosis that didn't get regulatory approval."
The company said it will begin consultations with employees on April 25. It plans to sell its Geneva headquarters, a gleaming glass office complex just five years old.
The decision to shut down what was seen as a Geneva success story provoked hostile reactions locally.
"This decision is obscene for a profitable company whose parent firm's earnings surpassed 12 billion Swiss francs (10 billion euros, $15.8 billion) for the first time," said Socialist lawmaker Nicolas Rochat.
"This restructuring is unacceptable given that the group decided last Friday to increase its stockholder dividend by 20 percent."
Geneva's labour minister Francois Longchamp called it the largest-ever retrenchment in Switzerland's French-speaking region.
Last month, Merck announced that its 2011 earnings were hit by one-off charges and that tough economic conditions would weigh on profits this year and next.
The company's net profits last year fell by 2.3 percent to 617.5 million euros ($814 million).
Shares in Merck KGaA showed a gain of 0.24 percent to 82.58 euros in midday trading on the Frankfurt stock exchange, which was 0.52 percent higher overall.
Merck purchased the Swiss group Serono in 2006 for 16 billion Swiss francs.
The firm was formerly co-owned by businessman Ernesto Bertarelli, known for winning the America's Cup with his yachting team Alinghi.