Wednesday, April 09, 2008

Why is Wyeth bucking the trend of manufacturing leaving Singapore?

Wyeth will spend $96 million to expand a factory in Singapore for producing infant formula and milk powder, completing a $500 million capital improvement program in Asia.

The expansion will increase capacity at Madison, New Jersey-based Wyeth's Singapore plant by 50 percent, the company said in a statement distributed by PRNewswire. The factory will make the Progress and Promise brands of infant formula and milk products for sale in Singapore and the Asia-Pacific region, where sales climbed 20 percent last year, said Tom Mulqueen, vice president of global operations for Wyeth's nutrition unit.

“The demand is being driven by the economic emergence of developing nations that we're dealing with,” Mulqueen said by phone. Sales in China climbed 38 percent last year, he said.

The sale of fake milk formula in some of China's poor areas, combined with the increasing affluence of the world's most populous nation, has contributed to a surge in China's milk formula market, which may almost double in the five years through 2009, according to a report published by Euromonitor International in 2005.

Wyeth is also spending $280 million building a factory in China to make its infant formula, milk powder and nutritional products, it said in a March 10 statement. It's spending about $120 million more on a factory in the Philippines, Mulqueen said.

Mulqueen said he expects to increase staff at the Singapore plant by about 40 percent, adding about 100 more employees. The factory will start full commercial production by November next year, he said.

Sales outside the US and UK, including Asia, increased to $9.68 billion last year, representing 43 percent of Wyeth's revenue.

With a US recession looming, will Asia sales help Wyeth to pull through?