Merck leans on suppliers, partners to expand reach

Merck ($MRK) is grappling with manufacturing, packaging and cold chain realities as it expands into emerging countries. One tactic it's using is enlisting equipment suppliers able to help the drugmaker meet emerging market challenges, which become all the more acute when solutions must be fit for infrastructure-poor operation at the same time executives are fixated on cost control.

On the manufacturing side, drugs developed for the U.S. market must often be reformulated for other markets and require new packaging, according to Ron Yakubison, director for packaging operations support at Merck, in Healthcare Packaging.  In addition, small runs and varying lot sizes across world regions have become more common: A 30-minute run might be all that's needed in one country versus 3.5 hours in another, while the standing U.S. run might be 8 hours.

On the packaging side, Merck has legacy equipment scattered around the world, not all of which is capable of delivering products that meet emerging regulatory requirements, according to the report. For Yakubison, the challenge is finding packaging machinery suppliers willing and able to help him ensure that packaging capabilities adhere to the varied requirements of individual countries.

Yakubison spoke at the recent PMMI annual meeting earlier this month. Separately, but in roughly the same timeframe, Merck stated its growth ambitions during a business briefing. "There can be no mistaking that Merck is [executing on its growth plans]," said CEO Kenneth Frazier (photo), in a statement.

Among elements of his strategy: Building capabilities and executing partnerships around the world, especially in emerging markets. Merck has signed more than 30 agreements this year, Frazier notes in the statement, with "a broad array of partners, many of which strengthen the company's presence in emerging markets."

Another element: "Excel in managing costs to invest in smart growth opportunities," the statement said.

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