Merck & Co/MSD has set another part of its ongoing cost-cutting drive in motion, announcing the closure of a plant in France that will result in 207 job losses across manufacturing and R&D.
In the cross-hairs is MSD’s Centre de Mirabel site in Riom, which specialises in the manufacture and packaging of sterile drugs like injectable antibiotic Zerbaxa (ceftolozane/tazobactam) and ophthalmic medicines, as well as housing an R&D team focused on toxicology.
All told, the move will result in the loss of 106 manufacturing jobs and 101 researchers from a total headcount of 584 at the site, according to a report in local newspaper La Montagne, which says that trade unions are already mobilising and considering a challenge of the decision.
MSD said the volume of work coming through the toxicology unit meant it wasn’t working at full capacity, while the production facility has also been under-utilised in recent years.
The future of the R&D facility has been in question for some time. Back in 2015, MSD said it was in discussions with an unnamed contract research organisation (CRO) about a possible sale that never came through, and this week it reiterated its hope that it might be able to find a buyer.
At the time, it said the bulk of its toxicology work was being carried out at a facility in the US, and there has been a continual decline in the volume of studies carried out internally as it outsourced more of this work to CROs.
MSD has been gradually reducing its presence in France in recent years, selling its Oise production facility to Amphastar in 2014 and another plant in Saint-Germain-Laprade to Fareva in 2015, as well as shutting down another unit at Hérouville-Saint-Clair that same year.
The company said in May that it plans to close a number of plants and reduce its headcount as part of a cost-cutting drive over the next several years, which will lead to charges of $800m to $1.2bn by the end of 2023.
In an SEC filing, it said the cuts are focused on ‘further optimising the company’s manufacturing and supply network, as well as reducing its global real estate footprint’. It has previously implemented cost-reduction drives in 2010 and 2013.
MSD’s business has been transformed by the ongoing sales growth of immuno-oncology blockbuster Keytruda (pembrolizumab) at a time when other mature products are in decline.
Its recent investments in manufacturing reflect that shift, and have been pitched at improving capacity for Keytruda and other growth products like human papillomavirus (HPV) vaccine Gardasil 9, which has been affected by capacity constraints.
The company is planning a $1bn expansion to its manufacturing facility in Elkton, Virginia, over the next three years that will add approximately 100 new jobs and increase Gardasil 9 production.