Merck to cease production at Puerto Rico plant

SAN JUAN, Puerto Rico (AP) Merck announced Friday that it would cease active ingredient production at one of its plants in Puerto Rico in a blow to a city once considered a pharmaceutical hub.

The company said production at a plant in the north coastal city of Barceloneta will end by late 2014 as part of a global restructuring. Merck said formulation and packaging operations at that plant will continue under a third-party contract.

The company also will consolidate formulation operations at its plant in Arecibo with another plant in the eastern city of Las Piedras, with those operations being transferred to a third party by the end of 2016.

Cesar Simich, Merck's managing director for Puerto Rico and the Caribbean, told The Associated Press in a phone interview that it was too early to say how many people would lose their jobs as a result of the restructuring.

Simich noted the company has invested more than $100 million in recent years in its plant in Las Piedras, which is one of only two Merck facilities worldwide dedicated to developing and launching new products. He said updated manufacturing technologies will help the plant launch three new products.

"The company still has a presence in Puerto Rico," he said. "We've been here for 65 years."

Merck currently operates three plants on the island and employs more than 1,000 workers.

Antonio Medina, a former Merck official and executive director of Puerto Rico's Industrial Development Company, said in a phone interview that he believes the investment at the Las Piedras plant will help boost Puerto Rico's economy.

"This is part of the evolution of the pharmaceutical world," he said of the upcoming layoffs and restructuring.

Back in 2009, Merck had announced a $65 million expansion and the construction of a new plant in Barceloneta that would employ more than 200 people. Since then, the island's pharmaceutical industry has declined.

Honorio Saavedra, executive assistant of Barceloneta's mayor, said the city has tried to diversify its economy to deal with the downturn.

"This will have some impact," he said. "Those employees will now depend on the government."