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The Merck Frosst building in Kirkland, Quebec.Christinne Muschi

In a severe blow to Canada's scientific research community, Merck & Co. Inc. is closing its research and development facility in Montreal and moving those operations to the United States

Merck said Thursday that the Merck Frosst Centre for Therapeutic Research in the city's west end - one of Canada's oldest and biggest corporate R&D labs - will close up shop later this year. It is one of eight research labs the U.S.-based company will close by the end of 2010.

Merck trumpeted the shutdown of the labs in Canada, the Netherlands, Denmark, Germany, Scotland and the U.S. - along with eight manufacturing plants around the world - as a key cost saving measure that follows its merger last year with another pharmaceutical giant, Schering-Plough Corp. The company said it will reduce the combined work force by 15 per cent and generate $3.5-billion (U.S.) in annual savings by 2012.

About 180 lab staff, who do fundamental chemical and biological research that can result in new drugs, will be let go at the Montreal lab, with a handful offered positions at other Merck labs in the U.S. that will pick up the slack.

"It is indeed a black day for research in pharmaceuticals in Canada, and research in general," said Robert Young, a professor at Simon Fraser University in Vancouver who worked at Merck until 2006.

Not only are many top jobs being lost, but the country will also lose the lab's key leadership role in supporting scientific research throughout Canada, said Mr. Young, who is president-elect of the Canadian Society for Pharmaceutical Sciences, an association of academic and industry workers in drug discovery and development.

Merck's Montreal lab traces its roots back more than a century to 1899 when Charles E. Frosst began making remedies such as cough syrups. The current research lab established in the 1960s helped developed several innovative therapeutic treatments, such as an oral asthma medication and another for the treatment of arthritis.

Mr. Young said he was puzzled that the Montreal lab was chosen as one of those to be shuttered. "[It]was one of the most, if not the most, successful and productive sites within Merck, and on that basis it really baffles me."

While the company will no longer do basic research in Canada, it said it will maintain a large manufacturing facility in Quebec and continue to do clinical research - testing drugs that have already been developed. It will also contract out about $100-million (Canadian) in R&D lab work over five years to Quebec-based companies and academic institutions.

That promise has tempered the concern of some in the research community.

"It is certainly hard to hear that Merck's Montreal site was affected by the global closures" because it was one of the company's most productive sites, said Natalie Dakers, chief executive officer at the Centre for Drug Research and Development in Vancouver, an organization that helps turn academic discoveries into commercial drugs. However, she sees a "positive message" in Merck's commitment to collaborate with outside researchers. "That can benefit many communities, including those in Quebec and in other places across the country."

Generic drug manufactures, which have been highly critical of the patent protections granted to brand-name drug developers like Merck, said yesterday that the closure of the R&D facility underlines the failure of government patent policies that were supposed to increase research.

Instead, research performed by the brand-name companies has actually been declining, said Jim Keon, president of the Canadian Generic Pharmaceutical Association. The departure of Merck "is a really pointed example of that," he said.

Figures released recently by the Patented Medicine Prices Review Board show the proportion of revenue that drug companies spend on research has been in general decline for more than a decade. It is now far below the 10 per cent level promised when the brand-name companies first got their patent protection tightened in the 1980s.

Russell Williams, president of Rx&D, the national association of brand-name companies, said in a statement that the closure of Merck's research lab "shows that global competition to attract and keep pharmaceutical research and development has never been so fierce as the business models are changing on an international level.