Merck cuts activities in France

Germany's Merck KGaA has trimmed down its operations in France with the closure of a site at Lacassagne focusing on preclinical R&D and production. R&D at the site is due to be terminated in 2004, while production will cease in 2006.

The company said the move had been brought about because of last month's disappointments in its R&D program, which saw the firm rein in its diabetes research to concentrate on oncology. Merck had to discontinue development of three early-stage diabetes drugs this year, dropped an antidepressant partnered with GlaxoSmithKline and reported disappointing Phase III results with its Theratope cancer vaccine partnered with Canada's Biomira.

Closing Lacassagne will affect around 320 employees, split 50:50 between R&D and production. It is not clear how much opportunity there will be for staff to move to other sites; preclinical R&D will now be conducted at Merck's site in Chilly-Mazarin near Paris.

Meanwhile, the company said it will continue to operate its manufacturing at Semoy and "wants to keep France as the second-most important European production site for ethical pharmaceuticals in the Merck Group." The primary problem with the Lacassagne production facility is that its location, in a residential area, means that it cannot be upgraded, according to the firm.​

Merck said that the closures would likely result in extraordinary costs but that provisions for these had already been made, as detailed in a statement it issued in May. This indicated that the company had set aside €100-€200 million in order to cope with any liabilities arising from an ongoing lawsuit alleging flawed price reporting in connection with the Medicaid health benefits program funded by the US federal government and the states.