Novartis continues to expand in emerging markets. In June 2011, Novartis began construction on a new $140-million manufacturing
plant for pharmaceuticals and generic drugs in St. Petersburg, Russia. The plant is expected to produce approximately 1.5
billion units per year (oral solid dosage forms). In China, in 2007, Novartis opened a start-up facility for a new R&D center
in Shanghai, China, and broke ground in 2008 on Phase 1 of a new facility that was originally to be home to approximately
400 R&D scientists and approximately 400 other pharmaceuticals division personnel. In 2009, it expanded the scope of the site
with plans to invest $1 billion during the next five years to increase the size of its operations in Shanghai. Based on a
re-evaluation of the site conducted in 2010, the current Phase 1 has been extended by two buildings. The cross-divisional
Shanghai campus will house 800 offices and 400 laboratory workplaces.
Table I: Top 50 pharmaceutical companies (Rankings 1–25).
In October 2010, Novartis announced plans to invest $600 million during the next five years to build new laboratory and office
space for research activities in Cambridge, Massachusetts. In 2011, the company finalized design plans for the new buildings,
received necessary zoning changes from the city of Cambridge, and began preparing the site for construction. In late 2010,
Novartis began a construction project on the campus of Novartis in East Hanover, New Jersey, which will continue through 2013.
The company expects that through 2013, it will spend more than $545 million to complete the construction and consolidate operations
Table II: Top 50 pharmaceutical companies (Rankings 26–50).
In other recent investments, in June 2008, Novartis broke ground on a new $330-million rabies and tick-borne encephalitis
manufacturing facility in Marburg, Germany. Construction is complete, and the facility is in the process of executing the
necessary validation activities. Regulatory approvals for products are planned for 2012 and 2013. In November 2009, Novartis
opened a new cell culture-based influenza vaccine manufacturing site in Holly Springs, North Carolina. As of December 31,
2011, the total amount spent on the project was $463 million, net of grants reimbursed by the US government. The total investment
in this new facility is expected to be at least $900 million, partly supported by grants from the US government and prior
investments in influenza cell- culture technologies at the Novartis vaccines site in Marburg, Germany. Novartis also began
a project for a new $305-million vaccine-manufacturing facility in Recife, Brazil, with technical start-up of the facility
planned for 2015. In 2011, Novartis' eye-care business, Alcon, completed the construction of a new $134-million manufacturing
and R&D plant in Singapore; the plant is scheduled to produce saleable product after regulatory approval in 2012.
Novartis said it is making progress for resolving quality-control issues at its consumer healthcare operations in Lincoln,
Nebraska, and at three facilities of Sandoz. In December 2011, Novartis suspended production at is Lincoln manufacturing site
in conjunction with a voluntary recall of all lots of select, bottle-packaged configurations of certain over-the-counter products.
In December 2011, FDA cited quality-control issues at three Sandoz manufacturing facilities in Broomfield, Colorado; Wilson,
North Carolina; and Boucherville, Canada. In an Apr. 24, 2012, first-quarter earnings release, Novartis said that it is making
progress in remediating the quality issues at the Lincoln site and the three Sandoz production sites.
Merck & Co. continues to move forward with restructuring. In February 2010, subsequent to the Merck and Schering-Plough merger,
Merck began a global restructuring program in conjunction with the integration of the two companies. In July 2011, the Merck
announced the latest phase of the restructuring program, which included a further reduction of its workforce of 12–13% company
worldwide. A majority of the workforce reductions in this phase relate to manufacturing (including animal health), administrative,
and headquarters organizations. Previously announced workforce reductions of of 17% in the earlier phases of the program primarily
reflected the elimination of positions in sales, administrative and headquarters organizations, as well as from the sale or
closure of certain manufacturing and R&D sites and the consolidation of office facilities.