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Merck planning more manufacturing cutbacks?

Published on 11/02/13 at 02:12pm
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Merck & Co has said it intends to make additional reductions to its manufacturing network, although the pace of restructuring will be slower than in the period following its takeover of Schering-Plough in 2009.

Merck's chief financial officer Peter Kellogg said on the firm's latest results call that the group operated 93 facilities around the world when it completed the merger across its pharmaceuticals, veterinary and consumer health businesses.

By the end of 2012 the company had reduced its manufacturing network to 75 sites - with recent closures including its Cherokee Pharmaceuticals unit in Riverside, Philadelphia - but additional cuts will take place in the coming two to three years.

Other divestments - either by sale or closure - in the last few years include facilities in Italy, Portugal, Mexico, Argentina, Brazil, Singapore and the US, while the company has also invested in new capacity in Singapore, Durham in North Carolina and in Ireland, amongst others.

The latest divestment to be announced (just last week) is the sale of Merck's last remaining active pharmaceutical ingredient (API) facility in Oss, the Netherlands, to South African generic drugmaker Aspen Pharmacare, although finished dosage form and biologics production at the site will be retained. 

The Oss facility operated by Merck Sharpe & Dohme Netherlands manufactures around 55 APIs for the group's products, which according to the preliminary terms of the deal will be made under license by Aspen for the foreseeable future.

"You can see that we’ve obviously made a fair bit of progress on the network rationalisation, and we’re working on plans to further reduce the size of our footprint," Kellogg said.

"But those plans will take some time to implement", he added, noting that from the outset the company had planned for a five to six-year programme to strip out redundancy and downsize manufacturing and other operational assets such as IT systems.

"We think our network consolidation effort will continue into the 2016 programme at this point," said Kellogg.

Phil Taylor

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