Shire unloads plant to Merck as it goes on a manufacturing diet after buyout splurge

Merck & Co. is buying a former Baxalta plant from Shire that Merck will use to make animal vaccines.

Shire has found a buyer for a former Baxter vaccine plant in Europe as it continues its manufacturing consolidation after completing two big buyouts last year.

Merck & Co. said today that it is buying the plant in Krems an der Donau, Austria, and will immediately begin renovating the 340,000-square-foot facility, which it will use for animal vaccine production. Merck, whose animal health business was up 6% to $950 million in the second quarter, expects to be able to start production in 2022. Terms of the deal were not disclosed.

Merck spokeswoman Pamela Eisele said the company estimates the site will eventually employ several hundred people and that it will begin posting available jobs immediately.

RELATED: In 10 years of M&A, which were stars and which were duds? We want you to decide

Shire got the facility in its $32 billion buyout of Baxalta, which it bought last year after Baxter spun off the drug business. The plant was closed at the end of October as part of Shire’s postmerger plan to cut about $700 million out of the combined operations over three years.

"At that time, many employees were offered roles elsewhere within Shire," spokeswoman Katie Joyce said today in an email. "Almost half of the employees accepted while others left the organization. Shire is pleased that the site will be brought back online by MSD and that additional employment opportunities will be created in the region."

According to a sales notice posted (PDF) by PharmaBiosource, which handled the property, the plant was built in 2000, primarily for vaccine production, and was used as storage for another vaccine plant in Austria. Baxter sold its vaccine business to Pfizer in 2014 for $635 million.

RELATED: Forget $500M in postmerger cost cuts. Shire now sees far more savings, and beats on Q2 besides

Shire undertook a manufacturing network review of the 17 manufacturing sites it ended up with after completing the Baxalta deal, as well as the $5.9 buyout of Massachusetts-based rare-disease competitor Dyax Corp.


CEO Flemming Ornskov discussed those plans during an earnings call last year, announcing that the company would close a plasma fractionating plant in Los Angeles, California, as part of the effort.

“I heard that people were very worried when we did the deal about, wow, ‘Can Shire really manage such a complex manufacturing organization with 17 manufacturing sites in seven countries?’” Flemming told analysts then.

“Well, not only can we do that, we're on track to starting a new manufacturing site in Ireland which we're very excited about. … We're in the process of closing the first building in Los Angeles. … So I think on manufacturing synergies, I feel really good.”

RELATED: Shire building $400M biologics plant, adding 400 jobs in Ireland

Last month, Shire said it would consolidate U.S. biomanufacturing into its Lexington, Massachusetts, site.