Germany’s Schering AG has said it will divest its chemical manufacturing activities in Mexico as part of an ongoing programme to cut costs, streamline its operations and improve its operating margins.

Central to this long-term programme, called the FOCUS Initiative, is a reduction in production sites worldwide from 12 to 12 [[28/06/05d]]. The Mexican facility, based in Orizaba, will not be closed, according to Schering, and production will continue until the divestment take place, likely in 2008.

Orizaba employs 250 people and specialises in the production of parenteral dosage units, including prefilled syringes and small-volume ampoules.

Dr Karin Dorrepaal, responsible for production at Schering, said: “We have to increase the efficiency and flexibility of our chemical production worldwide.” The company also said it will review chemical production activities at its site in Bergkamen, Germany.

This follows a reduction in R&D expenditure from 19.1% of sales in 2004 to 18.7% this year, helped by the closedown of process development at the firm's Mobara facility in Japan, a reduction in research and process development at Turku, Finland, and the termination of neurology research in Berlin. R&D spend is expected to shrink further to 18 per cent of sales in 2006.

The money saved from this effort will be invested in the acquisition of new products and potentially even entire businesses to bolster Schering's product portfolio in its core areas of hormonal therapies, cancer drugs, imaging agents and specialised medicines.

FOCUS has already seen the firm divest its dermatology and Jenapharm therapeutics businesses and pull out of R&D in the areas of central nervous system (CNS) and cardiovascular drugs [[15/06/04c]].