Merck KGaA Targets Chinese Market, Builds New Shanghai Manufacturing Facility

Merck KGaA announced in a press release that it is strengthening its commitment to the Chinese market as part of its overall strategy to target emerging markets.

The company plans to build a new pharmaceutical manufacturing plant in Nantong, to join its other sites that manufacture drugs, including Erbitux and Gonal-f.

Karl-Ludwig Kley, Chairman of the Executive Board of Merck, said, “China is of strategic importance to us. Together with government officials, customers, partners and our highly motivated local colleagues, we will explore ways to further address critical health care needs of the Chinese population.”

Nantong Site Construction

Merck intends to break ground on the new manufacturing plant in August. The new manufacturing plant will be the company’s second-largest pharmaceutical manufacturing facility worldwide.

The € 80 million (650 million Yuan) plant will be built in the Economical Technological Development Area (NETDA) in the Greater Shanghai region (Yangtze River Delta area). The facility will focus on production and packaging of Glucophage, Concor, and Euthyrox in 2017. Merck will also focus on medications approved by China’s Essential Drug List (EDL).

Merck’s Chinese Strategy

Merck plans to offer biopharmaceutical research services with expanded offerings at the Biopharmaceutical Technical and Training Centre in Zhangjiang Hi-Tech Park, Shanghai, providing support, training, and validation services. In Beijing, Merck operates a research center for biomarker research. The company also invests in relationships with hospitals and academic institutions. In November 2013, the company announced an extension of its development and commercialization agreement with BeiGene, a clinical-stage company.

Emerging Markets

Merck’s push to develop its presence in China is part of its broad strategy to invest in emerging markets. The Bangkok Post reports that Merck is considering Thailand for manufacturing drugs in order to cut production costs and participate in the Asean Economic Community (AEC). With expected implementation in 2015, the AEC’s goal is a single market and production base, a competitive and equitable economic region, and a region fully integrated into the global economy.

Merck’s strategy is tempered by the issues affecting emerging economies. For instance, in Thailand, due to political conflict, the economy is slowing down. However, the government is paying for more pharmaceuticals for its citizens and sales of generics, specialty cancer and diabetes drugs, and meds for reproduction are selling well.