Thursday, April 18, 2013

Merck Opens Manufacturing Facility In Hangzhou -- Latest Part of $1.5 Billion Five-Year Commitment "On The Ground" In China

While Whitehouse Station didn't do all the math for readers of the press release, the 72,000 square meter Hangzhou facility it just opened is about. . . 775,000 square feet. More than 3/4ths of a million square feet. That's large. To get that huge footprint of a built-to-suit facility, for around $125 million, is a very good deal. [Proof of the labor and materials differentials inside China, compared to the West.]

Even more important, though is the takeaway that Mr. Frazier realizes only those who truly put down roots in China, and invest in its infrastructure, will win -- in the longer haul. China remains essentially a state payor system. Providing local opportunity to bring human capital along, and let the domestic China economy expand with the rising health care expenditures there -- makes emminent good sense.

Indeed, the Chinese state-actors are quite adept at gently, subtly keeping multinationals "off the field, locally" if they think all they need do is drop ship high margin, foreign made drug product into China. That sort of a high-handed approach would get most multinational pharmas nowhere -- fast. So it is good to see Merck sees this the right way. Here is one of my earlier backgrounders, on it all.

From Merck's press release of Monday, then -- sorry I didn't get to this sooner -- been busy, off the grid:

". . . .The new facility in HEDA joins an integrated, interdependent network of 72 Merck facilities that supply medicines and vaccines to more than 140 countries,” said Mr. Deese. “The HEDA facility is one of the most advanced and largest packaging facilities in China and the region.”

The new facility is 75,000 square meters and is capable of holding up to 16 high speed lines to package pharmaceutical tablets and sterile Merck medicines that are used to manage diabetes, cardiovascular, infectious, respiratory and bone diseases. Packaging capacity is currently estimated at more than 300 million packages annually. Products used in Merck’s clinical studies and in its commercial activities to support future new product launches also will be packaged at the new HEDA plant.

The new facility is fully compliant with the rigorous quality, environmental, safety and compliance standards that all Merck manufacturing facilities worldwide meet. The HEDA facility received a current Good Manufacturing Practices (cGMP) certification in January 2013. Protecting the environment was also a critical consideration in the facility’s construction – special air, waste and water management procedures and systems were built into the facility. . . .

As ever -- we will keep an eye on this -- the soon-to-be largest health care market in the world.

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