Merck purchases goods and services from thousands of suppliers around the world. We also work with numerous licensees worldwide to market and distribute our products.
About 1,000 suppliers make up approximately 85 percent of the company’s annual spending on goods and services worldwide. Some of these are external manufacturing companies that make key ingredients or components for our products, manufacture finished products for us, package our products, or transport our medicines. Others are suppliers that provide general business goods and services such as marketing and research support, business travel, building management, or office equipment and supplies.
Merck’s policy is to prequalify suppliers prior to entering a new business relationship. Merck's core expectations for labor, human rights, environment, health and safety, as well as ethical business practices are communicated during the selection process. The company also audits select suppliers based on risk. Where audits identify gaps or deficiencies, we collaborate closely to ensure that concerns are addressed in a responsible and compliant manner.
A new Business Partner Code of Conduct developed in 2011, will be rolled out in coming months to further communicate our expectations. The Code is based on our own code of conduct, Our Values and Standards, as well as The Pharmaceutical Supply Chain Initiative’s (PSCI) Pharmaceutical Industry Principles and the 10 Principles of the United Nations Global Compact.
Managing External Manufacturers
Merck’s global supply strategy leverages both our internal manufacturing capabilities and those of external manufacturing companies that provide specialized skills, expertise and various types of manufacturing services. The factors Merck uses to decide whether to source internally or externally include capacity, technical capabilities, core competencies, company priorities and cost.
Merck maintains strict quality standards no matter where our products are manufactured in the world. Once we have made a decision to engage an external manufacturer, that manufacturer is required to comply with Merck’s business requirements set forth in the contract regardless of geography.
Prospective external manufacturers of active pharmaceutical ingredients and finished products are screened for safety, environmental and human rights issues, in addition to quality, supply and technical competence requirements and other compliance issues. The environmental, health and safety screening includes a survey covering such topics as compliance, fatalities, major incidents and labor practices.
Based upon the screening results and the activities being undertaken by the supplier, certain external manufacturers are subject to a more detailed on-site assessment conducted by a multidisciplinary team, which may include quality, safety, environmental, technical and procurement representatives. External manufacturers contracted by Merck are re-assessed using a risk-based approach; higher-risk external manufacturers are subject to more frequent on-site assessments.
Merck continues to support the Pharmaceutical Industry Principles for Responsible Supply Chain Management Initiative (PSCI). The PSCI principles outline industry expectations for external manufacturers and licensees with regard to labor, health, safety, environment, ethics and management systems. The external manufacturers with which Merck contracts are expected to understand and comply with these principles.
Merck also works with the industry trade organization, Pharmaceutical Research and Manufacturers of America (PhRMA), and policy leaders to address product supply chain issues. We support legislation that will help provide key protections needed to increase consumer confidence that the medicines they use are safe and effective.
To learn more about our external manufacturer’s selection process and compliance with product quality and product safety standards, click here.
Ensuring Privacy of Personal Information
Many Merck suppliers, such as contract research organizations, market research agencies, systems developers and other service providers, process personal information for, or on behalf of, Merck. We require these suppliers to provide appropriate privacy protection for personal information that they handle for, or on behalf of, Merck, in accordance with our privacy policies and applicable privacy laws, regulations and guidelines.