Merck & Co. To Move Global HQ; Names Organon as New Spin-off

Merck & Co. plans to consolidate its New Jersey campuses into a single New Jersey headquarters location in Rahway by the end of 2023. Additionally, the company announced Organon & Co. as the name of the pending spin-off of its women’s health, legacy products, and biosimilars businesses, which the company says is on track to be completed by the end of the first half in 2021. The company made the announcements in its first-quarter 2020 results issued on April 28, 2020.

Returning to Rahway as new global headquarters

The move to consolidate its headquarter operations in Rahway is part of an overall restructuring initiative that the company had announced in 2019. In early 2019, Merck approved a new global restructuring program as part of a worldwide initiative focused on further optimizing the company’s manufacturing and supply network as well as reducing its global real estate footprint with a goal of completing associated actions by the end of 2023.

Merck & Co. is currently headquartered in Kenilworth, New Jersey at the former site of Schering-Plough, which Merck acquired in 2009 for approximately $41 billion. Merck & Co. relocated its global headquarters from Whitehouse Station, New Jersey to Kenilworth in 2015. Prior to that, the company had been globally headquartered in Whitehouse Station beginning in 1992 and prior to that, was globally headquartered in Rahway, New Jersey, which is now one of the company’s principal US research sites.

In addition to Rahway, the company’s principal US research facilities are located in the following: Kenilworth, New Jersey; West Point, Pennsylvania; Palo Alto, California; Boston, Massachusetts; South San Francisco, California and Elkhorn, Nebraska (Animal Health). Principal research facilities outside the US are located in the UK, Switzerland, and China. The company also maintains operational or divisional headquarters in Kenilworth, New Jersey, Madison, New Jersey and Upper Gwynedd, Pennsylvania, according to the company’s annual filing with the US Securities and Exchange Commission.

Merck’s manufacturing operations are headquartered in Whitehouse Station, New Jersey. The company also has production facilities for human health products at nine locations in the US and Puerto Rico, as of December 31, 2019. Outside the US, through subsidiaries, the company owns or has an interest in manufacturing plants or other properties in Japan, Singapore, South Africa, and other countries in Western Europe, Central and South America, and Asia.

As of December 31, 2019, the company had approximately 71,000 employees worldwide, with approximately 26,000 employed in the US, including Puerto Rico.

Organon to be name of new Merck spin-off company

In a separate development, Merck & Co. announced that Organon & Co. will be the name of the new company to be created through the intended spin-off of Merck’s women’s health, legacy brands, and biosimilars businesses. Merck announced the spin-off earlier this year (February 2020). The company says it is on track for completion of the spin-off in the first half of 2021.

When announcing the spin-off in February (February 2020), the company said the move would reduce Merck’s Human Health manufacturing footprint by approximately 25% and the number of Human Health products it manufactures and markets by approximately 50%. The move would represent projected revenues of $6.5 billion for Merck in 2020 and enable Merck to achieve in excess of $1.5 billion in operating efficiencies by 2024.

While spinning off its women’s health, legacy brands, and biosimilars businesses, Merck & Co. is retaining what it characterizes as its “growth pillars” in oncology, vaccines, hospital products, and animal health and will continue to invest in research and development across all areas of science. Merck’s key products include: Keytruda (pembrolizumab), an immuno-oncology drug; Lynparza (olaparib), an anticancer drug;  Lenvima (lenvatinib mesylate), an anticancer drug; Gardasil (human papillomavirus vaccine, recombinant), a vaccine against cervical and other cancers; Bridion (sugammadex), a relaxant binding agent; Zerbaxa (ceftolozane and tazobactam), an antibiotic; and Bravecto (fluralaner), an animal health product; as well as its diabetes products and other key products.

Organon, the spin-off, will focus on the area of women’s health, led by the company’s Nexplanon (etonogestrel implant) franchise and its contraceptive and fertility businesses. It will also consist of Merck’s biosimilar business, for which it is partnered with Samsung Bioepis, and its current portfolio. This includes: Renflexis (infliximab-abda), a biosimilar of Johnson & Johnson’s Remicade, an anti-inflammatory drug in multiple indications; Brenzys (etanercept), a biosimilar of Amgen’s Enbrel, an anti-inflammatory drug; and Ontruzant (trastuzumab-dttb), an oncology drug and a biosimilar of Roche’s Herceptin. Organon will also have a large portfolio of established brands consisting of dermatology, pain, respiratory, and select cardiovascular products, including the anti-cholesterol drugs, Zetia (ezetimibe) and Vytorin (ezetimibe/simvastatin) as well as the rest of Merck’s Diversified Brands.

At the time of the announced spin-off in February (February 2020), it was estimated that the new company would have a global footprint with approximately 75% of sales generated from ex-US markets and approximately 10,000 to 11,000 employees.

Source: Merck & Co.

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