By LINDA A. JOHNSON AP Business Writer TRENTON, New Jersey (AP) — Merck & Co. is buying Schering-Plough Corp. for $41.1 billion in stock and cash in a deal that gives the companies more firepower to compete in a drug industry facing slumping sales, tough generic competition and intense pricing pressures. The deal announced Monday would unite the maker of asthma drug Singulair with the maker of allergy medicine Nasonex and form the world's second-largest prescription drugmaker. Merck and Schering are already partners in a pair of popular cholesterol fighters, Vytorin and Zetia. The latest combination comes only a few weeks after Pfizer Inc. announced it has agreed to pay $68 billion for Wyeth. Big companies across the pharmaceutical industry are facing slumping sales as the blockbuster drugs of the 1990s lose patent protection, complicated by a dearth of major new drugs coming on the market. Merck and Schering-Plough, along with most of their rivals, are currently eliminating thousands of jobs and restructuring operations to further cuts costs. "There'll be no immediate changes" to staffing levels, Merck spokeswoman Amy Rose told The Associated Press. "Eventually, we anticipate an approximate 15 percent reduction in the combined company's headcount," implying nearly 16,000 fewer jobs. Merck Chairman and CEO Richard Clark told The Associated Press "this is a uniquely complementary match." He said the combined company will be "well-positioned for sustainable growth through scientific innovation" and have a strong, diversified product portfolio. "We'll double Merck medicines in (late-stage development) to 18," he added, and get Schering-Plough products that, unlike many of Merck's and their competitors' products, won't face generic competition for several years. Schering-Plough CEO Fred Hassan said in an interview that those drugs include Nasonex, Pegintron for hepatitis, cancer drug Temodar, the Nuvaring contraceptive and the two cholesterol drugs, all of which have patent protection until 2014 or later. The two companies had a combined $47 billion in revenue in 2008, nearly as much at the largest drugmaker, Pfizer Inc., which posted $48.42 billion. Pfizer is in the midst of acquiring Wyeth, which would add more than $20 billion to its annual revenue. Merck has about 55,200 employees and Schering-Plough, which grew significantly with its November 2007 acquisition of Dutch biopharmaceutical company Organon BioSciences NV, has about 50,800 employees. Schering-Plough's shareholders will get $10.50 in cash and 0.5767 Merck shares for each Schering-Plough share they own. That's a 34 percent premium to Schering-Plough's closing stock price on Friday. Stock would cover 56 percent of the deal's funding, with the other 44 percent in cash: $9.8 billion in existing cash balances and $8.5 billion in financing committed by JPMorgan Chase & Co., the companies said. The two New Jersey pharmaceutical companies said that Clark will lead the combined company, which will be a dominant player in treatment areas including cholesterol, respiratory, infectious disease and women's drugs, as well as vaccines. Schering sells the biotech arthritis drug Remicade outside the U.S. and also has some rights to another one in late-stage development, golimumab, under a partnership with New Jersey neighbor Johnson & Johnson, which makes Remicade. Stock analysts have long been pressuring Clark to do a major deal to address drops in revenue, as blockbusters including Fosamax and Zocor for high cholesterol have seen generic competition hammer sales in the past 2 1/2 years. Until January, Clark consistently said Merck preferred to stick with its strategy of buying small companies and acquiring rights to individual experimental drugs. On Monday, he said that Schering-Plough is "a perfect fit at this time." The transaction is to be structured as a reverse merger. As a result, Schering-Plough will be the surviving corporation but will be take the name Merck. The new company will be based at Merck's sprawling headquarters in Whitehouse Station, New Jersey, but said that the "substantial majority" of employees of Kenilworth, New Jersey-based Schering-Plough will remain with the combined company. The deal is being structured as a reverse merger in an attempt to avoid triggering change-of-control provisions in Schering-Plough's partnership with Johnson & Johnson for two biologic drugs for rheumatoid arthritis, the blockbuster Remicade and golimumab, which is in late-stage testing. Merck executives said they believe that with Schering-Plough as the surviving company, under its partnership with New Jersey neighbor J&J, the change-in-control provisions should not be triggered. Merck's sales fell 3 percent in the fourth quarter, at $6 billion, while Schering-Plough's rose 17 percent to $4.35 billion, mainly because of Organon's products. The companies said this will improve their finances, giving them annual cost savings of about $3.5 billion each year after 2011, and will boost earnings per share in the first full year after the deal closes.