Merck's manufacturing network continues to take a beating as the drugmaker acts on its $2.5 billion cost-cutting manifesto which is slated to claim 8,500 positions worldwide in the face of patent losses and revenue shortfalls. Next up, two facilities in Puerto Rico.
Production at the active pharmaceutical ingredient plant in Barceloneta is slated to end by late next year. Merck ($MRK), known as MSD outside of the U.S. and Canada, will move the formulation and packaging done at the facility to a contractor, the company said. It also intends to move formulation operations at its plant in Arecibo to its Las Piedras facility, and all of that work will go to a contractor by the end of 2016.
The company said the center of its Puerto Rico operations will now lie with its facility in Las Piedras, one of only two Merck operations "dedicated to the development and launch of new products." It pointed out that it has invested about $100 million at the Las Piedras facility in recent years. It declined to tell the Associated Press how many of its 1,000 employees in Puerto Rico would lose their jobs because of the revamping.
The New Jersey-based company said the moves were needed to remake its cost structure "in response to business challenges and the changing external environment." Those challenges include the company's inability to replace sales lost to generics. Just one example is Singulair, once Merck's best-selling drug, which saw sales plummet by 90% immediately upon patent expiration last year. The allergy drug brought in $618 million for the first half of this year, down from $2.8 billion for the same period of 2012.
The restructuring, a 20% job-jacking move and its fourth makeover since 2008, last month claimed about 500 jobs at its West Point, PA, facility. The extensive operation employs most of the 12,000 employees Merck has in the state. The company has also closed a plant in Kenilworth, NJ, and laid off 113 workers there. But the cuts are not confined to manufacturing and have also been claiming jobs in R&D and other areas. CEO Kenneth Frazier has also indicated it might spin off its consumer health and animal health operations.
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