Merck Serono announces final efficiency program for Switzerland

Merck KGaAMerck announced today the outcome of the Swiss consultation process and the final plan for restructuring the operations of its Merck Serono division in Switzerland. This includes the closure of the Geneva and Coinsins sites. The initial proposal was presented by the Merck Serono division to employees on April 24, 2012, providing Swiss-based employees the opportunity to provide alternative proposals in order to avoid the job cuts envisaged in the plan, to reduce their number, or to minimize their impact, in accordance with Swiss law.

The final measures presented today are the result of the analysis by the company of all proposals received from employees and numerous discussions with employee representatives including the trade union Unia, during and after the consultation period.

While several aspects of the proposals received from employees relating to the social plan have been incorporated by the division, Merck Serono could not retain the proposals advocating maintenance of its activities in Geneva. After a thorough review of these proposals, the division has determined that these proposals are not viable or practicable given the need to eliminate existing duplications of functions to ensure the long-term competitiveness of the business as announced on February 24, 2012 by Merck. Merck Serono has determined that this can only be achieved through the consolidation of headquarter activities and European R&D activities at the Group's headquarter in Darmstadt, Germany.

"The restructuring of Merck Serono's activities in Switzerland is part of an extensive program concerning all regions and all businesses of the Merck Group, necessitated by the unprecedented market shifts and the competitive environment facing the Group," said Stefan Oschmann, Executive Board Member of Merck and head of the Merck Serono division. "This restructuring process involves tough measures, but these are essential to safeguard the future of Merck Serono. We remain committed to supporting our employees during this difficult transition period."

During the consultation period, extending from April 25, 2012 to June 4, 2012, employees submitted numerous proposals. Concerning the Geneva site, the majority of these proposals focused on three major themes: the maintenance of all or some of Merck Serono’s activities in Geneva, the development of a biotech cluster in Geneva, and the measures proposed in the context of the social plan. With regard to the Aubonne, Coinsins and Corsier-sur-Vevey sites, the proposals advocated in particular a one-year moratorium on job cuts, favoring normal fluctuations, part-time employment and the replacement of temporary staff by permanent employees.

"The management team and experts in the businesses have reviewed all proposals and we were able to take into account some of the proposals received, notably those concerning the social plan. Employees who proposed ideas for developing service companies targeting the biopharmaceutical industry are encouraged to apply for support from the fund of up to € 30 million that has been established by Merck Serono. We have already received many proposals and several are at an advanced stage of discussion," said François Naef, Chairman of the Board of Merck Serono S.A. "We continue to aggressively pursue discussions with potential partners, the authorities and other companies and organizations active in the Lake Geneva area to identify as rapidly as possible job opportunities for affected employees."

The program designed to facilitate the creation of start-ups, initiated on April 24, 2012, comprises various forms of support, including capital investment, granting of intellectual property licenses and/or cession of material assets, according to the needs of the project envisaged. Merck Serono has committed to dedicate up to € 30 million for this purpose. Several projects are currently under evaluation and employees can continue to submit projects up to September 30, 2012.

Merck Serono has taken into account several proposals to improve the already very competitive measures originally envisaged in the draft social plan. For example, the minimum age for early retirement eligibility has been lowered from 58 to 56 years and employees who resign before the expected end of their contract will retain the right to part of their severance payment under certain conditions.

Merck Serono will consolidate all headquarter functions on a Merck Serono campus in Darmstadt, Germany, where the Merck Group has been located for nearly 350 years and has its global headquarter. It will also focus its R&D resources in three hubs located in Europe (Darmstadt), the USA (Boston) and Asia (Beijing). Out of the 1,250 positions currently located in Geneva, approximately 750 will be transferred to other sites (including 130 to the Canton of Vaud) and around 500 will be reduced to eliminate duplications and create a leaner, more agile organization. Approximately 80 positions will be made redundant in the sites located in the Canton of Vaud (Aubonne, Coinsins and Corsier-sur-Vevey). The manufacturing operations currently based in Coinsins will be relocated to Aubonne.

Employees will be informed about their personal situation by the end of July 2012. It is expected that the majority of transfers and reductions will be completed in the second half of 2012. Closure of the Geneva site is planned in mid-2013, and that of the Coinsins site in 2014.

For those employees that will accept transfer offers with Merck Serono to a site outside of Switzerland, the division will be offering comprehensive and attractive relocation benefits to help them and their families settle rapidly in their new location.

Despite these efficiency measures, Merck Serono will maintain a substantial and strategic presence in Switzerland. Its biotech production sites located in Aubonne and Corsier-sur-Vevey will continue to manufacture its leading medicines for the entire world. In addition, Merck Serono’s new unit dedicated to biosimilars, a novel activity crucial for the future, will also be based in the Canton of Vaud. Finally, the commercial operations based in Zug will continue to serve physicians and patients in Switzerland. Overall, Merck Serono will continue to employ close to 1,000 people in Switzerland.

Merck Serono will continue to focus on meeting the needs of patients, doctors, the authorities, and other stakeholders throughout this transition period.

Merck is a global pharmaceutical and chemical company with total revenues of € 10.3 billion in 2011, a history that began in 1668, and a future shaped by more than 40,000 employees in 67 countries. Its success is characterized by innovations from entrepreneurial employees. Merck's operating activities come under the umbrella of Merck KGaA, in which the Merck family holds an approximately 70% interest and free shareholders own the remaining approximately 30%. In 1917 the U.S. subsidiary Merck & Co. was expropriated and has been an independent company ever since.