Merck joins Bahrain venture

Western drugmakers are looking to the Persian Gulf, Middle East and Africa for the growth they aren't finding in their usual stomping grounds. And they are sometimes turning to partnerships to get plants built in those parts of the world. Now Merck ($MRK) is partnering to build an insulin plant in Bahrain.

According to the Trade Arabia News Service, Merck, along with Gulf Biotech Co. and some other investors, will build a $93 million insulin plant on the island nation. Gulf Biotech is backed by Saudi-owned Al Roaya Gulf Group Holdings, and its chairman is Saudi Prince Sultan bin Fahd bin Abdulaziz. Merck did not respond to an email for comment about the venture.

Gulf Biotech CEO Dr. Riyadh Al Ashban told the news service the alliance expects construction to begin soon on the 16,000-square-meter plant and that they expect it to be operating by the middle of 2015. At peak production, it will have the capacity to produce 42 million units of insulin, which they intend to make to FDA and EU specifications.

"We expect to create around 250 jobs for Bahrainis and Saudis," Al Ashban said.

The news of the Bahrain venture broke at the same time that Merck said it would be laying off 8,500 workers by the end of 2015 in an effort to slash $2.5 billion in costs. That is on top of earlier cuts of 7,500 the company had announced. Bloomberg points out that, among other strains, Merck's top-producing diabetes drugs are under increasing competitive pressures.

Other companies are also looking to the region for growth. In March, Pfizer ($PFE) said it had started construction of a 32,000-square-meter facility in Rabigh on the western coast of Saudi Arabia. That plant will manufacture a variety of Pfizer's drugs. It is also expected to be operational by 2015.

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