Merck, the pharmaceuticals giant, has announced 7,200 job losses, bringing the number of redundancies at the industry's ten largest companies to more than 60,000, as evidence emerges that the global economic crisis is affecting spending on medicines.

The news came as GlaxoSmithKline (GSK) and Wyeth, the American drugmaker, also announced downbeat third-quarter results.

GSK's turnover fell 4 per cent to £4.9billion. Turnover in the United States, the world's largest pharmaceuticals market, fell 13 per cent to £2.1billion as the patents expired on some of GSK's bestselling drugs, opening the door to competition from cheaper generic medicines. The fall was mitigated by sterling's weakness in July, August and September.

Merck said that its third-quarter sales had fallen 2 per cent to $5.9billion (£3.6billion) and net income was down from $1.5billion to $1billion. Wyeth reported flat profits for the quarter and said that a key experimental Alzheimer's disease drug would be delayed.

Shares in Merck fell $1.96, or 6.5 per cent, in New York to close at $28.01, while Wyeth fell $3.72, more than 10 per cent, to $31.06. GSK ended the day up 1 per cent because its results were better than market expectations.

The decline in valuations could herald a new era of sector consolidation. Severin Schwan, chief executive of Roche, the Swiss pharmaceuticals group that has made a $43.7billion offer to take over Genentech, an American biotech business, said: “I don't want to deny that when the valuations of companies in which we are interested go down, we have a better chance of accomplishing a deal.”

Andrew Witty, chief executive of GSK, said that he would look for acquisitions in emerging markets, consumer healthcare and in the biotech industry, but he did not envisage big acquisitions in the next few years. The company has suspended an ambitious £6billion share buyback programme for 2009 to ensure that it has enough cash to fund future acquisitions.

GSK's American consumer health business has suffered slightly as cash-strapped consumers opt to buy cheaper generic medicines over the counter.

Mr Witty said that a downturn could benefit consumer healthcare, if governments in Europe and North America become more likely to allow previously prescription-only medicines to be sold over the counter. He told The Times: “As governments have to deal with financial questions, they will make changes to the regulations on more drugs because it's a good way to reduce government expenditure on medicine.”

Mr Witty is planning more acquisitions of rights to sell over-the-counter versions of medicines from GSK's rivals, similar to the purchase of Alli, a weight-loss pill, previously available on prescription from Roche as orlistat. GSK will hear from European regulators if it has been approved for over-the-counter sale in Europe within the next few months.

Brian Bourdot, a Deutsche Bank analyst, said: “GSK's earnings remain defensive and relatively predictable in the context of macroeonomic uncertainty. That said, the EPS decline in local currencies reflects the current struggle for growth GSK is experiencing, impacted by generic competition to leading brands.”

Many of the job cuts in the sector have been to sales teams as the old pharmaceutical model becomes obsolete in the face of revolutionary new products and more direct-to-consumer medicines. Merck has already cut 10,400 jobs, Pfizer, the world's biggest drugs company, has said that it will lose 10,000 staff. GSK has plans for about 5,000 redundancies. AstraZeneca, the Anglo-Swedish group, has said that it will cut about 4,600 people from its workforce and Novartis, the Swiss cancer specialist, has announced plans to let go 2,500 staff.

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