Bayer, Merck Announced to Close Two Factories

Opting to close old plants due to turbulence in the generic drug business, manufacturing restructuring, or making the most of company resources.

On March 25, two Indian pharmaceutical giants, Aurobindo and Merck & Co. announced that they would close their factories in the United States. Pharmaceutical companies may choose to close old factories due to turbulent generic drug business, manufacturing restructuring or making full use of company resources.

Indian generics giant Aurobindo will close its New Jersey-based Aurolife production plant next month, where it will lay off 99 jobs on April 26. Aurobindo did not provide a reason for closing the plant or comment on potential solutions for employees facing layoffs.

Aurobindo is the second largest pharmaceutical company in India, with 25 production plants around the world and annual sales of US$2.6 billion, of which the US and European markets account for 70%. Aurolife Pharma is its US subsidiary. But just in 2019 and 2020, Aurobindo received two FDA warning letters one after another.

At the time, the FDA issued a warning letter over a series of problems at the New Jersey plant, including water leakage and impurity issues related to the drug substance for generic antipsychotic drugs. The problems are extensive and serious, and the FDA recommends that companies hire outside experts to address them.

According to STAT's comments, the closures could also be caused by turmoil in the generics business, with some established drugmakers pulling out of the market in specific product areas due to low profit margins or production issues.

Merck also announced plans to close its Pennsylvania factory in 2024. The plant manufactures non-sterile imipenem and cilastatin for the antibiotics Primaxin/Tienam and Recarbrio, and ertapenem sodium for Invanz. Merck said it will continue to make Primaxin/Tienam and Recarbrio using its existing API manufacturing network after the plant is closed.

The company said the decision to close the plant will eventually affect about 300 full-time jobs, with job cuts to be phased in "over a number of years" and no closure-related layoffs are expected in 2022.

Merck has been closing old factories and production facilities to fund new biologics production. One of its factories in Ireland was expected to be closed, but it was rescued in 2018 by the drugmaker's hit drug Keytruda. Merck said it will build a new biologics plant at its Swords facility near Dublin to manufacture its immuno-oncology treatments.

In 2019, Merck announced it would spend $1.2 billion on a manufacturing restructuring that will continue through 2023. When completed in 2023, the restructuring should require between $800 million and $1.2 billion. Merck is conducting research around Keytruda and other blockbuster new drugs for cancer, as well as drugs for hospital-acquired pneumonia and new antibacterial drugs.

Viatris West Virginia Plant

In August 2021, Viatris, the world's second largest generic drug company in the United States, closed its factory in West Virginia, the United States, laid off 1,400 employees, and moved production to India. The local council, unions and multiple patient associations have been opposed to the closure of the factory.

Viatris, formerly known as Mylan, was the second-largest generic drug company in the United States. In recent years, through a series of corporate mergers and acquisitions, including mergers and acquisitions of Indian pharmaceutical companies, it has jumped to the first in the United States and the second in the world, second only to Israel's Teva.

In June 2021, Bayer announced that it would close its "Innovation Center" in Mission Bay in downtown San Francisco, USA.

In a statement, Bayer said, "In order to fully utilize the company's resources and strive to harness the potential of internal and external innovation on a global scale, Bayer has decided to integrate research and innovation activities in the Boston, Massachusetts area of the United States. To this end, Bayer The North American West Open Innovation Center at MissionBay will be closed.”

Before closing the plant, Bayer used CoLaborator to actively recruit related companies, ranging from startups to established companies, whose R&D platforms, drug targets or drug candidates may be in Bayer's developmental interests.

According to Bayer, when the news of the closure was announced, Bayer had less than 20 employees left at MissionBayCoLaborator, and all employees were advised to apply for transfer to other positions within Bayer. The decision to close MissionBay comes as the company aims to focus its U.S. development operations on Berkeley and its research focus on Boston. The Berkeley facility is the global manufacturing hub for Bayer's hemophilia A products, with more products likely to be covered in the future.