Is Merck Planning A "Silent Exit" From Hep B Vaccines Market?

Given that Merck stopped manufacturing its Hep B (not Hep C) Recombivax HB^® vaccine over a year and a half ago, and is now talking about allocating that production away from West Point, PA (a union facility) to Durham, NC (a non-union facility), could it be that New Merck actually intends to surrender this market space to GSK? [As a side issue, is Merck permitted to do so, under the recently-ratified USW Local No. 10-86 three year collective bargaining agreement? I dunno.]

Stranger events have transpired in the past -- see this, from a Canadian medical journal, yesterday -- do go read it all:

. . . .The shortage began in January 2009, when Merck. . . announced that equipment upgrades at its vaccine plant in West Point, Pennsylvania, would disrupt production of the adult version of its hepatitis B vaccine (Recombivax HB^®). The vaccine will likely remain unavailable for the near future.

"We do not anticipate availability of the adult formulation of our Hepatitis B vaccine for the rest of 2010 and will provide an update on availability of the adult formulation when more information is available," Jennifer Allen Woodruff, a spokeswoman for Merck, writes in an email. "Over the last couple of years, supply disruptions have occurred due to unexpected manufacturing issues that prompted modification to some of our processes and equipment. As a result, some of our vaccines have been in backorder and other vaccines have been unavailable for order for some time. . . ."

Merck is addressing its production issues in several ways: by investing in manufacturing capabilities to increase capacity and create redundancy; by building new vaccine-production facilities in Durham, North Carolina. . . and by modernizing equipment and processes at its West Point facility.

"Of course, these changes take time because of the complexity of the vaccine manufacturing process and because some require regulatory approvals moving forward," writes Woodruff.

In the mean time, GlaxoSmithKline (GSK) has been attempting to address the shortage by ramping up production of its adult hepatitis B vaccine (Adult Engerix-B^®). . . .

Fascinating. I'll keep a tab on this, but as a very mature vaccine, it is likely that the margins on these Merck Hep B vaccines are pretty thin -- especially when sold into Canada (and other single-government-payer dominated economies).