Merck shutting Montreal R&D plant

[jesseps]

Nearly 200 jobs are on the line after drugmaker Merck & Co. (MRK-N35.860.431.21%) said Thursday it will close its Canadian research facility in Montreal as part of a global restructuring.

 

The Merck Frosst Centre for Therapeutic Research, located in a sprawling campus in the city's west end, will be phased out by the end of the year.

 

An undisclosed number of the 180 people employed at the centre will be offered new positions within Merck's global research network.

 

The centre is one of eight manufacturing plants and eight research sites that will be closed.

 

The moves, which include consolidating some offices, are part of ongoing consolidation following Merck's acquisition of Schering-Plough Corp. last November.

 

That deal made Merck the world's second-biggest drugmaker but the company said it would eliminate about 15 per cent of their combined workforces, or roughly 16,000 jobs.

 

Those cuts are intended to save the Whitehouse Station, N.J., company about US$3.5 billion a year, starting in 2012. Merck said Thursday that the restructuring plans announced so far will bring savings of about $2.7 billion to $3.1 billion in 2012, most of its target.

 

Despite the closure, Merck said it intends to invest $100 million in research and development in Quebec over the next five years.

 

And the company plans to expand its packaging capabilities after investing $32 million last year on the facility. Nearly 350 employees work at the Pointe-Claire facility, which manufactures and packages consumer, pharmaceutical and animal health products.

 

Merck said the consolidation is part of its strategy to diversify, focus on patient needs and invest in biologic drugs, emerging markets and other key areas for future growth.

 

“Today's announcement is another important step as we successfully integrate out global operations on schedule and move forward with Merck's strategic priorities,” chief executive Richard Clark said in a statement.

 

Merck said that the cumulative cost for the initial phases of restructuring from the merger will range from $3.5 billion to $4.3 billion, before taxes. It expects to take a charge for some of that cost in the second quarter.

 

Merck is scheduled to report its second-quarter results on July 30.

 

Over the next two years, the company will phase out operations at eight research sites, including one outside Cambridge, Mass.. Aside from the Montreal site, three of the research facilities being closed are in the Netherlands and three others are in Europe.

 

Beginning in the second half of this year, Merck will phase out operations at eight manufacturing plants, transferring production to other factories. One of the affected locations is in Miami Lakes, Fla., a plant the company intends to sell. The other factories to be closed or sold include two in Europe, two in Mexico, two in South America and one in Singapore.

 

(Courtesy of The Globe and Mail)

 

WOW :eek:

[Habfanman]

This is what happens when you rely on branch plants!

[Habsfan]

Ouch, this ain't good!

[jesseps]

Losing one of the most prestigious research centres is a psychological blow to the province's biotech sector, which seems to be rounding the corner from the most recent global recession, later than most sectors, industry insiders say.

 

On Thursday, Merck and Co. announced it was closing its Merck Frosst Centre for Therapeutic Research, which has produced some of the most successful drugs for the company, including Singulair and the ill-fated Vioxx from the sprawling Kirkland plant. About 180 researchers will be affected. Most will lose their jobs, but some will be relocated to other research facilities in the U.S.

 

"It sends an unfortunate message when something like this happens," said Mario Lebrun, general manager of BioQuébec. "Because it doesn't reflect the reality of what the government has done recently to show that this is really a vibrant industry."

 

The government announced a new Biotech strategy last fall, and recently came up with a strategy to target innovation. The government has also set up seed funds and venture funds to help finance new and emerging companies. But despite all these notions, Merck's message is one of cost cutting in the wake of its recent $41 billion purchase of Schering Plough. The company spent $93 million in research last year, and more than 80 per cent of that was spent on the Kirkland research facility. The company will now be spending just $100 million over five years in research in Quebec - a significant decrease.

 

Russell Williams., the president of Canada's Research-Based Pharmaceutical Companies (Rx&D) - which represents the major brand name drug companies - said the Merck move is consistent with a general trend in the industry to outsource its research.

 

"The model is changing," Williams said. "As you look at research, it's becoming a lot more global and fluid."

 

He added, however, that Quebec has done a lot to support the biotech sector, and he's encouraged that this is just a rough patch for the province.

 

"It's a long-term battle. There are periods that are more difficult than others, and this is clearly a period in which the industry is being challenged, but this is a time when you can build on those strategies so that Quebec can compete and maintain (its stature)," Williams said.

 

(Courtesy of The Montreal Gazette)

[jesseps]

Industry Minister Tony Clement said yesterday the closing of the Merck Frosst Centre for Therapeutic Research in Kirkland is a "blow" to the whole biotech industry.

 

Merck & Co. announced the closing of its research lab last Thursday. Along with 180 jobs that will be lost or relocated, the decision marked the end of drug development in Canada for the pharmaceutical giant.

 

"I'll be honest with you, Merck's decision was a hit to us, a blow," Clement said. "I talked to Merck last May and encouraged them to make another decision. I knew they were looking at their operations worldwide and I wanted Montreal to continue. It was not to be."

 

Clement made the comments on a visit to the Genome Quebec Innovation Centre at McGill University.

 

He acknowledged that several pharmaceutical giants are changing their business models to invest in biotech firms developing drugs at a more mature stage of development rather than trying to develop products in house. For that reason, Clement said he was pleased the government of Canada increased its $75-million contribution to Genome Canada. However, he would not say if that contribution would be recurring.

 

"For the government of Canada, and the government of Quebec, public support for research, development and commercialization has never been stronger. We've got to find successful ways to build new businesses and also link to current businesses," Clement said.

 

"We continue to engage with established businesses, like AstraZeneca, and with new and emerging businesses to say that Canada is the best place to invest. Our tax structure is the best in the highly industrialized world, and the kind of support you'll get from public funding is second to none in the G7."

 

(Courtesy of The Montreal Gazette)