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Merck To Close Plant In South Korea As Part Of Global Supply Strategy

- Updated June 24, 2014

SHANGHAI – Merck will close down its plant in South Korea, the U.S.-based drug maker said Nov. 3. The shut down of the manufacturing facility in Siheung, Gyeonggi-do, will mean initial lay offs for 20 of 40 South Korean workers in the production department at the plant. “Our Korean manufacturing facility will cease production and packaging late in the second quarter of 2009,” Hong Kong-based Merck Sharp & Dohme spokesman Vince Docherty told PharmAsia News. Merck operates outside the U.S. as Merck Sharp & Dohme. “This decision, which is part of our global supply strategy, will neither affect our local business operations nor impact our long-term commitment to Korea,” Docherty said. “We will continue to provide our innovative medicines and vaccines to Korean people to meet their unmet needs.” “We will also continue to partner with the doctors, payers, health regulators and scientists of Korea,” he added. The plant manufactures and packages a very small number of MSD’s older products, which are for use and distribution solely within Korea, Docherty said. “We will continue to supply these medicines from other sites in our network to meet the needs of Korean patients,” Docherty said, adding that there would be no impact to the company’s broader Asia Pacific and global supply chain. “Asia Pacific and Korea will deliver significant growth for both MSD and the pharmaceutical industry as a whole in the coming years,” he added. “Our clear objective is to be the industry leader both in Korea and the Asia Pacific by putting patients first.” Asia partnerships are critical to big pharma’s drying pipelines, Merck exec Greg Wiederrecht recently told Bio Korea attendees (PharmAsia News, Oct. 20, 2008). In order to reduce its cost structure and increase efficiency, Merck announced in October that it planned to cut 7,200 jobs, or 13 percent of its work force by the end of 2011. The company also recently reported its third-quarter earnings showed profit declining by 28 percent because of sluggish sales and restructuring charges. Merck execs told the Oct. 22 call that it would streamline its operations by maximizing its use of outside technology resources and centralizing common sales and marketing activities. Merck’s manufacturing division will further focus its capabilities on core products and will outsource non-core manufacturing. Following the trend of many multinational companies, it is reorganizing its research operations to support therapeutic areas that will feed into one of four locations. Japanese Merck subsidiary Banyu said Oct. 23 it would close its research laboratory in Tsukuba City, northeast of Tokyo, by the end of 2009, leaving only a fraction of foreign drug makers with basic research activities in Japan. Merck said it would also close its Seattle and Rome basic research facilities as part of its global research overhaul (PharmAsia News, Oct. 29, 2008). “The restructuring program is much more strategic in nature, it is more process in nature versus just a reaction that we’ve had a concern in 2008, therefore we have to reduce costs by $2 billion,” Merck CEO Richard Clark told the earnings call. “It’s driven from a business model change that we know we have to be responsible from an innovation standpoint in these new business models because if you don’t change these business models, we are not going to survive as an industry, let alone a company.” “At the same time, we will be adding head count in some of the emerging markets because we see the growth opportunities there, and this frees up resources to invest behind our key growth drivers,” Merck Executive VP, President of Global Human Health Kenneth Frazier added.

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