Irish workforce is paying a heavy price for global challenges facing pharma sector

MSD’s troubles are fairly well known: a misfiring pipeline and continuing pressure to rationalise an organisation bloated by the merger of two major pharmaceutical businesses in 2009.

They are problems for which the group's Irish workforce is paying a heavy price. The closure of MSD's Swords plant in north Dublin, announced yesterday with the loss of 570 jobs, comes just months after MSD pulled the plug on its Rathdrum operation in Wicklow with the loss of the 280 jobs remaining there after several years of rationalisation.

Between them, the two plants account for over a quarter of the 2,300 people MSD employs in Ireland.

IDA Ireland was quick to note yesterday that job numbers have been very stable in the pharma sector in Ireland in recent years, despite the headlines on job losses.

'Fresh investment'
"The pharmaceutical sector faces several global challenges, including overcapacity," chief executive Barry O'Leary said, before adding that "significant fresh investment in the sector is under way and several other pharmaceutical projects are currently in play and being pursued aggressively by Ireland".

But it is notable that the other major job losses in the pharma sector in recent years have been at Pfizer as it "rightsizes" itself following its own 2009 megamerger with Wyeth.

On the flip side, as the IDA says, there have been some notable job gains in newer biopharmaceutical and generics businesses.

Yesterday, MSD (formerly Merck Sharp & Dohme and known in the US as Merck) said the "proposal" to close Swords "is an outcome of MSD's ongoing review of its worldwide manufacturing capacity that has resulted in sites being sold, closed or consolidated in all regions of the world".

This review has in fact been ongoing since the 2009 merger, giving an insight into just how difficult that process has been. The $41 billion merger of Merck and Schering Plough created one of the largest pharma companies in the world, with a network of 95 manufacturing sites worldwide. Chief financial officer Peter Kellogg said at the outset that rationalisation would be required and noted earlier this year that over 20 sites had been closed since.

“I think that it is very clear that we are going to continue to do that [rationalise],” he said at the time and a company spokeswoman has since confirmed that the company has targeted further closures to bring the global manufacturing site network down to 58.

Clinical trials
And while some sites were clearly going to face closure anyway, a succession of setbacks in clinical trials by Merck/MSD on a series of drug candidates has clearly not helped. Forbes noted earlier this year that, while Merck had launched more medicines that any other company over the past 60 years, it ranked only fifth in new approvals over the past decade.

Failure to replenish the pipeline only adds to pressure for cost containment.

In much the same way that older Pfizer plants have been the target for most cutbacks in Ireland to date, MSD has seen the axe fall predominantly on the Schering Plough side which, unfortunately, accounted for the bulk of the combined group’s presence in Ireland.

The job cuts at Swords will not begin to take effect until the second half of next year, with the plant remaining open until 2017, according to the company. That gives the IDA time to offset this setback. But, in the bigger picture, it seems clear that the type of operation deemed viable to big pharma in Ireland will continue to evolve.