Merck KGaA targets China with a planned €40M allergy plant

Merck KGaA last year closed manufacturing facilities as part of a major restructuring to cut costs. This year it is planning to build them to serve areas that it has decided have the greatest potential as well as expected growth in emerging markets.

Germany-based Merck today said its Allergopharma unit will build a new €40 million ($55 million) plant in Reinbek near Hamburg to make allergy meds for conditions like hay fever or allergic asthma as it expands into markets like China. The 6,000-square-meter (64,600-square-foot) facility, which is being built at the current Allergopharma complex, is slated to be complete in 2016.

"With this investment, which is the largest in the history of Allergopharma, Merck is setting an important milestone to expand the allergy business internationally and to secure the future of the Reinbek site," said Allergopharma CEO Uta Kemmerich-Keil.

Merck, Allergopharma's largest shareholder during its 40-year history, took full ownership a year ago. The company said in September it was focusing on expanding its allergy drug business, as well as emerging markets and biosimilars, and promoted pharma chief Stefan Oschmann to a new job managing those areas as well as prescription and consumer drugs. It says the allergy drug market is growing between 5% and 10% a year because there are more people developing allergies and more people taking medications to fight them. Growth is particularly strong in emerging markets. Allergopharma primarily manufactures hypoallergenic, high-dose products (allergoids) that are taken preseasonally or perennially.

The is the second new plant the company has announced in the past month. In November, the drugmaker said that its Merck Serono unit would build an €80 million ($107.67 million) plant in Shanghai to produce the diabetes drugs Glucophage, Concor and Euthyrox. It will also make drugs for heart and thyroid conditions. That facility will be about 40,000 square meters (431,000 square feet) and have room for a 20,000-square-meter expansion. Construction there is slated to begin in 2014 and to be completed in 2016, with commercial production expected to come on in 2017. The company says it will be Merck Serono's second largest pharmaceutical manufacturing site in the world. Merck Serono is also the unit around which it is building its biosimilars business. 

This is a reversal from last year, when Merck moved to cut costs in the face of patent losses and started in on a 10% shrinkage of its workforce. The restructuring did not fall too heavily on its manufacturing division, but two plants and 140 employees were whacked in Germany.

- here's the announcement