Quebec Merck closure could mean ‘brain drain’

Quebec risks a small brain drain after pharmaceutical giant Merck & Co. decided to end decades of in-house research in Canada by closing its Montreal research lab and lays off most of its nearly 200 employees.

The Merck Frosst Centre for Therapeutic Research in Kirkland, west of Montreal, will be phased out by the end of the year as part of a global restructuring that will affect roughly 16,000 jobs worldwide.

Between 10 and 50 of the 180 people employed at the Montreal research centre will be offered new positions at Merck's research labs in New Jersey or Pennsylvania.

"The majority of employees will have to unfortunately leave the company," spokesman Vincent Lamoureux said.

"Today's decision must not negate the important scientific contributions realized by our researchers, but it's a minority of them that will unfortunately be offered positions inside the company's research network."

Company to invest in R&D in Quebec

Despite the closure, Merck said it intends to invest $100 million in research and development in Quebec over the next five years. The money will be spent with external partners, including universities, biotech companies, clinical research in hospitals and private clinical research.

Merck also plans to expand its Montreal packaging capabilities after investing $32 million last year in the plant. Nearly 350 employees work at the separate plant in Pointe-Claire, which makes consumer, pharmaceutical and animal health products.

'People were trying to keep their hope up but we all thought there was a high risk that this would be happening.' —Dr. Michel Bouvier,  University of Montreal Institute for Research in Immunology and Cancer

Once the research centre is closed, Merck will employ about 1,620 people in Canada, including more than 1,100 in Quebec. Some 140 marketing and sales people were laid off earlier this year with the integration of the company's  pharmaceutical operations.

The Montreal lab is one of eight manufacturing plants and eight research sites that will be closed.

Merck Frosst Canada spent $93 million last year at the Montreal research centre, making it one of Canada's 20 largest corporate R&D spenders.

The centre doubled the number of research and development staff over the last decade to nearly 300. But about 100 jobs were lost and not replaced when the lab shifted its focus in 2009 from inflammatory ailments to infectious diseases.

Not tied to Quebec policies

Quebec Premier Jean Charest said the job losses were an unfortunate result of a global corporate restructuring.

"When there are reorganizations it happens that we lose jobs, but generally we are winners in this industry," he told reporters.

Economic Development Minister Clément Gignac said top Merck management convinced him Thursday that the decision wasn't related to unhappiness with the province's economic policies or pharmaceutical strategy.

'I'm disappointed but I'm not too scared about the fact that we will suddenly see brain drain in Quebec.' — Clément Gignac, economic development  minister

While Quebec can't escape the global impact of restructuring by the pharmaceutical industry, the province has done well compared with other jurisdictions, he said.

"I'm disappointed but I'm not too scared about the fact that we will suddenly see brain drain in Quebec," Gignac said in an interview.

Dr. Michel Bouvier, deputy director of the University of Montreal's Institute for Research in Immunology and Cancer, said some highly skilled researchers will flee the province, but many francophones will remain and seek jobs with other companies or in academia.

"There will be a brain drain but it will probably not be a major brain drain," he said.

Bouvier said it was a sad day for Montreal, Quebec and Canada and for biomedicial research, but not a total surprise.

"We were expecting that for the last six months. People were trying to keep their hope up but we all thought there was a high risk that this would be happening."

In addition to pressures resulting from Merck's $49.6 billion US merger last November with Schering-Plough Corp., the pharmaceutical industry has been moving away from basic innovative research to later stage drug development.

Bouvier said the government needs to leverage Merck's $100 million commitment through matching funds to ensure Montreal remains a leader in innovative drug discoveries.

The merger with Schering-Plough made Merck the world's second-biggest drugmaker but the company said it would eliminate about 15 per cent of the two companies' combined workforces.

Those cuts are intended to save the New Jersey-headquartered company about $3.5 billion US a year, starting in 2012. Merck said Thursday that the restructuring plans announced so far will bring savings of about $2.7 billion to $3.1 billion in 2012.