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EMF Studies

01 May 2012

News from Geneva: Massive Lay-Offs: Merck-Serono

Merck Serono staff participating in May 1st demonstration
On 24 April 2012, the biggest collective lay-off in the history of the canton of Geneva occurred involving all 1,250 employees of the biotechnology company Merck-Serono:  500 posts to be eliminated, 620 relocated to Darmstadt, Boston or Beijing at local salary conditions, and 130 moved to Aubonne in canton Vaud.  Behind these lay-offs lies a story of enormous sums of money reported by local newspapers, with little mention of the human costs of losing a job or relocating. 

The President of Merck-Serono’s Administrative Council, François Naef, who was also the President of the Geneva Chamber of Commerce and Industry until his very recent resignation, explained, “If we wish to remain capable of attaining our objectives and continue to invest massively in research and development (which costs some 10 billion Swiss francs – US$11 billion – over 10 years) one of the main branches has to go.” Yet, the company recently raised its dividends by 20% for shareholders and in 2011, realized a net profit of 750 million Swiss francs (US$825 million), down 2% from 2010.  Merck, the German parent company, earned a total of 10.3 billion Euros (US$13.6 billion) in 2011.

Merck, which develops medicines for diabetics and for treatment of certain cancers, acquired Serono for 16 billion Swiss francs, to set up the biotechnology branch, Merck-Serono in Geneva.  This was a risky project because the purchase price was based on the production of two medicines, one of which was Rebif, used to treat multiple sclerosis which earned 1.55 billion Swiss francs in 2011 for the company.  New molecules, however, had to be designed which cost some one billion Swiss francs per year in research and development over at least 10 years.

The closing down of the company will be a great financial loss to Geneva:  some 30 million Swiss francs per year in tax revenues from employees who earn an average annual salary of 150,000 Swiss francs (US$165,000).  Restaurants and cafés located near the company will see less business.

What about the loss in human terms?  It is estimated that of the 750 jobs to be relocated, only about 20 to 25% of the staff holding these posts will accept a transfer.  The young administrative councilor of the city of Geneva, Sandrine Salerno, commented, “These white-collar workers can easily find another job”.  She has been severely criticized for her callous remark.

The person who sold Serono to Merck in 2006, Ernesto Bertarelli, was rated by Forbes in 2011 as the 81st wealthiest person in the world with a family fortune of US$10.6 billion.  In 1974, Ernesto’s father, Fabio, acquired the largest share of the company’s capital held by the Vatican Bank.  Fabio Bertarelli created a branch of Serono in Boston in 1971 and in 1977, moved the parent company from Rome to Geneva after fears that the militant Red Brigades might threaten or even kidnap his family.  In addition to Rebif and medicines targeting growth and metabolism disorders, Serono played a pioneering role in the 1960’s in infertility treatments, derived from the urine of menopausal nuns, and participated in the conception of the first test-tube baby. The company became the world’s third leading biotechnology company, representing success in the world of industry, science and sports (Ernesto Bertarelli’s Alinghi team won the America's Cup yachting race in 2002.)  In 2006, Merck purchased Serono for 16 billion Swiss francs.  

Pharmaceutical companies today are confronted with serious problems:  the production of more and more generic medicines by emerging countries such as India which compete with patented medicines that had been earning large sums of money for these companies;  the phenomenal cost of developing new molecules;  pressure to lower the price of medicines in order to control the rising costs of healthcare.

On 30 April, a union, Unia, met with management who have finally agreed to set up a consultative procedure.  The Merck Serono staff have established an action committee and will begin negotiations with management.  The 62 cleaners at the company have also organized regarding their professional future. Meanwhile, members of the Geneva Government are actively seeking solutions for the affected employees.  The Mayor and the head of the Government have made a formal request to meet with the bosses at Merck Headquarters in Darmstadt.  Government proposals include  requesting the company to reimburse the sum obtained through fiscal advantages over the past five years.

The Merck Serono staff, who were at first not used to mobilizing for their rights, as was the case with the staff of Novartis, are now organizing.  Late in 2011, the threatened Novartis personnel were victorious in having most of their demands accepted by management after suggesting ways to improve production and making some concessions, thereby saving their jobs.

by Meris Michaels
(Ref:  "Genève perd 1250 emplois et sa "perle" de la biotech", "Serono déserte les terrains maudits de Sécheron", "'On s'attendait à des envois, pas à la fermeture'", "La chute de Merck Serono cache une forêt de start-up", published in the Tribune de Genève, 24 April 2012 and "Employés et politiciens organisent la résistance, Tribune de Genève, 1er mai 2012.)

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