DEPARTMENT OF COMMERCE
Foreign-Trade Zone 185--Culpeper, Virginia; Application for Subzone; Merck
Co. Pharmaceutical Plant, Elkton, Virginia
Thursday, December 23, 1993
An application has been submitted to the Foreign-Trade Zones Board (the
Board) by the Culpeper County Chamber of Commerce, grantee of FTZ 185,
requesting special-purpose subzone status for the pharmaceutical
manufacturing facility of Merck & Co., Inc., (Merck) in Elkton, Virginia,
adjacent to the Front Royal Customs port of entry area. The application was
submitted pursuant to the provisions of the Foreign-Trade Zones Act, as
amended (19 U.S.C. 81a- 81u), and the regulations of the Board (15 CFR part
400). It was formally filed on December 14, 1993.
Merck is one of the world's largest pharmaceutical manufacturers with
nearly $9 billion in total sales in 1991. Its primary product lines
include: patented prescription and over-the-counter pharmaceutical
products, veterinary pharmaceuticals and agricultural and specialty
chemicals. This proposal is part of an overall company cost reduction
effort (Subzone status is being requested for seven other Merck
Merck's Elkton plant (1,330 acres, 624,221 sq. ft., 82 bldgs.) is located
on Route 340S, in Elkton (Rockingham County), Virginia, some 20 miles east
of Harrisonburg. The facility (780 employees) is used to produce a range of
patented prescription products, including "Primaxin", a broad spectrum
antibiotic, "Mefoxin", an antibiotic for lower abdominal pain, and "Pepcid"
ulcer treatment. The plant also produces certain veterinary products sold
by the company's AgVet Division. The company may produce pharmaceutical
intermediates and/or raw materials at the plant in the future. Finished
products are shipped to Merck's West Point, Pennsylvania, facility (FTZ
application pending, FTZ Doc. 29-93, 58 FR 38749, 7/20/93) for U.S.
distribution or export. Some 50 percent of production is exported.
Currently, foreign-sourced materials account for 2 to 12 percent of the
finished product value and include the following specific ingredients:
Acetoxy azetidinone, HP-20 resin dianon, SP-07 (brominated polysytrine
resin), D- carboxamide, TAC (thienylacetyl chloride), P-TSC
(Paratoluene-sulfonchloride), and famotidine. The company also may purchase
from abroad items in the following general product categories: gums,
starches, waxes, vegetable extracts, mineral oils, phosphoric acid,
hydroxides, hydrazine and hydroxylamine, chlorides, phosphates, carbonates,
hydrocarbons, alcohols, phenols, ethers, epoxides, acetals, aldehydes,
ketone function compounds, mono- and polycarboxylic acids, phosphoric
esters, amine-, carboxymide, nitrile- and oxygen-function compounds,
heterocyclic compounds, sulfonamides, vitamins, hormones, sugars,
antibiotics, gelatins, enzymes, color lakes, soaps and detergents,
medicaments, and pharmaceutical products. The company may also source from
abroad insecticides, rodenticides, fungicides and herbicides for the
production of agricultural/veterinary products.
Zone procedures would exempt Merck from Customs duty payments on foreign
materials used in production for export. On domestic sales, the company
would be able to choose the duty rates that apply to the finished products
(duty-free to 23.5%, most falling in the 3.0%-6.3% range). The duty rates
on foreign- sourced items range from duty-free to 23.5 percent, with most
falling in the 3.9%-7.9% range. The application indicates that the savings
from zone procedures will help improve the firm's international
In accordance with the Board's regulations, a member of the FTZ Staff has
been designated examiner to investigate the application and report to the
Public comment is invited from interested parties. Submissions (original
and 3 copies) shall be addressed to the Board's Executive Secretary at the
address below. The closing period for their receipt is February 22, 1994.
Rebuttal comments in response to material submitted during the foregoing
period may be submitted during the subsequent 15-day period (to
March 8, 1994).
A copy of the application and accompanying exhibits will be available for
public inspection at each of the following locations:
Culpeper County Chamber of Commerce,
133 West Davis Drive,
Culpeper, Virginia 22701.
Office of the Executive Secretary,
Foreign-Trade Zones Board,
U.S. Department of Commerce, Room 3716,
14th & Pennsylvania Avenue, NW.,
Washington, DC 20230.
Dated: December 17, 1993.
John J. DaPonte, Jr.,
(FR Doc. 93-31385 Filed 12-22-93; 8:45 am)