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Future global R&D for Bayer Schering defined

Published on 17/11/06 at 02:55pm

Following the merger deal between German pharma companies Bayer and Schering earlier this year, the new corporation has unveiled radical changes to its 70 R&D sites in Germany and the US.

Research programmes are to be consolidated into three major R&D sites: Berlin and Wuppertal in Germany and Berkeley in California, which will initially mean the loss of around 600 research jobs in the US. Bayer says it is anticipated that a further 200 US-based positions will be eliminated by the overall reorganisation.

Bayer estimates that these measures will reduce overall R&D costs by more than $200 million per year by the end of 2008. It also expects cash savings totalling €700 million from the year 2009.

No clear statement has been made as to how many jobs may be lost from the German Schering sites. Bayer said: "It is not yet possible to issue concrete statements on headcounts and schedules."

The Berlin research group will take leadership for diagnostic imaging, oncology and gynaecology/andrology research, while Wuppertal will be the core site for the company's cardiology research.

Berkeley will remain the global R&D centre for protein-based biologics drug discovery and will continue to be home to the state-of-the-art Kogenate biological manufacturing industry.

In addition, the Californian site will also remain the headquarters for the global haematology/cardiology business unit. Leukine, a growth factor for white blood cells, will continue to be manufactured in Washington State's Puget Sound region.

The consolidation means that the Bayer Healthcare's US research site in West Haven, Connecticut, along with that of Berlex Inc (a US subsidiary of Schering) will close. Bayer Pharma will relocate its remaining departments in West Haven to New Jersey.

Arthur Higgins, chairman of the board of Bayer Healthcare and chairman of the board of management of the future Bayer Schering Pharma AG, said: "The changes in R&D will leverage the combined assets of Schering and Bayer to maximise both the output and effectiveness of our global drug discovery and development programmes."

He added: "They also give us the flexibility to substantially lower our ongoing infrastructure costs."

Bayer and Schering announced their merger in March this year, following a hostile takeover bid of Schering from another German firm, Merck, in a move to create a new German super pharma company. However, Bayer stepped in with a superior offer.

In 2005, Bayer enjoyed a sales growth of 27%, largely thanks to the acquisition of Roche's OTC business.

Germany's pharma industry is the oldest in the world, but has so far failed to keep pace with its foreign competitors, either through growth or mergers and acquisitions.

The world's top three pharmaceutical companies all have strong links to national identities - Pfizer's heritage is American, GlaxoSmithKline is British (in tax terms) and Sanofi-Aventis is predominantly French.

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