Merck confirms plan to close sites in US, Brazil and Japan

Merck trims network to realise Sigma-Aldrich production synergies

By Dan Stanton

- Last updated on GMT

Image: iStock/Olivier Le Moal
Image: iStock/Olivier Le Moal
Germany’s Merck has earmarked four facilities for closure and says it is evaluating others, following its acquisition last year of Sigma-Aldrich.

In March, Merck told stakeholders it expected to achieve cost synergies of around €90m ($100m) in 2016, following the completion of its $17bn acquisition of life science and biotechnology firm Sigma-Aldrich last November​.

Speaking on a call last week to discuss Q2 2016 results, Udit Batra, CEO of Merck Life Science said the “synergy execution is very much on track,” ​citing four planned site closures as evidence.

According to Merck spokeswoman Neetha Mahadevan, the sites earmarked for closure are: a manufacturing and distribution site in Rio de Janeiro, Brazil;  a custom peptide and DNA oligos manufacturing site in Ishikari, Japan; and two sites in the US – Haywood, California and St. Charles, Missouri.

St. Charles is legacy [EMD] Millipore, as well as Hayward. Rio de Janeiro and Ishikari are legacy Sigma-Aldrich sites,”​ she told Biopharma-Reporter.

“We are also transferring capabilities of some of these sites. For example, St. Charles is being transferred to St. Louis and production in Hayward, California is being transferred to Cork [Ireland] and Seattle [US].”

Site evaluations

During the conference call, Batra said the pace of the closures have been “a little bit ahead of plan,”​ but said the firm has been evaluating other sites and so far only around “50% of the headcount measures have already taken place” ​in realising the full synergies of the Sigma-Aldrich deal.

For the second quarter 2016, Merck KGaA reported revenues of €1.4bn ($1.6bn) across its life science division, which includes tools and products focused on serving the the biomanufacturing industry.

Sigma-Aldrich contributed nearly €600m in sales to the quarter, but organically the division grew 8% year-over-year, with Batra attributing continuing solid demand for cell culture media and single-use systems as the main drivers.

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