22 November 2004 00:01 [Source: ICB Americas]
Schering AG is cutting its contract manufacturing activities at its main site at Bergkamen, Germany, in line with a strategy of reducing the company’s production of pharmaceutical chemicals for third parties.
The company has hinted that it may eventually pull out of contract manufacturing of intermediates and active ingredients. Last year it had pharmaceutical chemical sales of around €120 million ($155 million).
“No decision has yet been taken to move out of contract manufacturing of chemicals,” says a Schering official. “The market is very competitive because of the increase in output by Asian producers.”
Around 700 jobs are being eliminated at Bergkamen, where the company makes active ingredients for its own hormone replacement therapy (HRT) drugs and for those of outside customers.
Schering’s sales of HRT products have been hit by concerns about the safety of the long-term use of hormone replacement therapy.
“We will probably not be able to avoid terminations of employment for operational reasons [at Bergkamen] because we have to counteract receding demand [for HRT drugs] and increased cost pressures in the area of active substance production for third parties,” says Joerg Spierkerkoetter, Schering board member responsible for finance and personnel.
The cuts at Bergkamen are part of a total reduction of 2,000 jobs worldwide with the aim of achieving an operating margin of 18 percent by 2006.
The company’s production of intermediates and active ingredients is centered at Bergkamen and three smaller facilities in Germany, Spain and Finland. The company is also reducing its dosage form plants in both Europe and the Americas.
“Our objective is to reduce the amount of idle plants so that our manufacturing capacity is used as much as possible for making our own products,” says the official.
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