Bayer Global R&D Realignment Will Consolidate Research Into Three Sites
This article was originally published in The Pink Sheet Daily
Executive Summary
Following the acquisition of Schering AG, the move will result in the elimination of 600 positions in the U.S. and $210 mil. in annual savings.
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Fueled by Bayer's acquisition of Schering AG, the German drug maker plans to consolidate its global pharmaceutical research and development organization into three sites, two in Germany (Berlin and Wuppertal) and one in the U.S. (Berkeley, Calif.). "The changes in research and development will leverage the combined assets of Schering and Bayer to maximize both the output and effectiveness of our global drug discovery and development programs," Bayer announced Nov. 9. The company also announced that its U.S. pharmaceuticals headquarters will be located in New Jersey, including Berlex' base in Wayne and Bayer's in Montvale. As a result of the consolidation, Bayer expects to reduce R&D costs by more than $210 mil. per year by the end of 2008, following a one-time cost of approximately $350 mil. Bayer plans to eliminate approximately 600 positions in the U.S., primarily in research, in the near-term, with another 200 U.S. positions likely to be cut "over time." The company acquired Schering AG in June in a transaction valued at €16.3 bil. ($19.5 bil.), outbidding rival Merck KgaA (1 (Also see "Merck KgaA Steps Aside For Bayer/Schering Merger To Move Forward" - Pink Sheet, 14 Jun, 2006.)). Under the new plan, the Berkeley research center will be Bayer's global center for protein-based biologics drug discovery and development. The site will continue to house the Kogenate biological manufacturing facility and serve as the home of Bayer's global hematology/cardiology business unit. "Located in the heart of the world's most active biotech corridor, we expect this facility to become our research center of excellence and anchor for continuing work in hematology as well as immunology/inflammation," Bayer said. The Berlin research group will be responsible for diagnostic imaging, oncology and gynecology/andrology research. The company is aiming to create a "global center of excellence for oncology research" in Berlin. The Wuppertal arm will oversee cardiology research. As a result of the reorganization, U.S. research operations in West Haven, Conn. and Richmond, Calif., including the biological development group located in Richmond, will close. Remaining departments and functions in West Haven will be relocated to New Jersey. The firm's Leukine manufacturing plant in Washington state will continue to operate. Wayne and Montville, N.J. will be Bayer's headquarters for U.S. pharmaceutical commercial operations, global oncology and specialized therapeutics business units, as well as U.S.-based drug development and support functions, Bayer reported. "These changes will unlock opportunity for new drive and focus in the U.S.," Bayer said. The company expects the research consolidation to be completed by the end of the first half of 2007. -Jessica Merrill ([email protected]) |