The move comes two years after firm shuttered its Montreal research facility.

Merck & Co. will announce on Monday that it is joining its Canadian subsidiary with Lumira Capital, Teralys Capital, and other partners to establish a multimillion-dollar R&D fund that they hope will help draw startup biopharma companies to the province, the Canadian Press (CP) reported. The decision comes two years after Merck shut down what was the largest research facility in Canada.

Merck Canada and its partners will launch the fund in the tens of millions of dollars. The provincial government is not providing immediate funding, Sam Hamad, Quebec’s minister of economic development minister, innovation, and export, told the CP.

Lumira typically invests $5 million to $10 million in later-stage biopharmaceutical companies; one of its former portfolio companies, Pharmasset, was acquired in November for $11 billion by Gilead Sciences. Teralys aims to raise $825 million for investment in tech-focused venture capital and growth-oriented funds and was established with $250 million from public pension fund manager La Caisse de dépôt et placement du Québec, $250 million from the Solidarity Fund QFL,and $200 million from the Quebec government’s Investissement Canada, with plans to raise $125 million from institutional and private investors.

The announcement is being billed by Merck as “a major investment in Québec research and innovation.” Merck Canada has promised to invest $100 million through 2015 in biopharma R&D collaborations with startups, universities, hospitals, and other partners in Quebec. The company made that commitment in 2010, when it shut down its Merck Frosst Centre for Therapeutic Research in the Montreal suburb of Kirkland, laying off most of its staff of 180. The Frosst Centre was closed as part of a global restructuring during which about 12,500 positions were eliminated, coming about a year after Merck’s $49.6 billion merger with Schering-Plough.

In July, Merck & Co. announced plans to trim its workforce by another 12% to 13% by 2015 in order to attain $1.5 billion in cost savings. At the time of the announcement, Merck employed 91,000 employees, so the number of jobs slated for elimination would range from 10,920 to 11,830.

Merck is among several big pharma companies that are shrinking Canadian operations as part of global cutbacks tied to the “patent cliff” for aging blockbuster drugs. In February, AstraZeneca announced the shutdown of a Quebec R&D facility, eliminating 132 jobs. A month earlier, Johnson & Johnson idled 126 workers at a Montreal research center, and Sanofi laid off 100 employees at its R&D center in Laval, bringing its Canadian workforce to 1,700.

Despite the shutdown of the Frosst Centre, Merck still employs more than 1,400 people across Canada, and has maintained in Quebec a large manufacturing plant producing the over-the-counter Claritin and Aerius cold remedies; as well as its Pointe Claire manufacturing facility, where it employs 264 people and completed a C$33.2 million ($33.16 million) modernization in October.

The Pointe Claire project included construction of a new 56,500 square foot warehouse, which then allowed the former warehouse to be refitted for extra manufacturing and packaging lines. Seven liquid, ointment, and cream filling lines along with new equipment were installed, enabling production of 14 new products totaling 8 million units annually.

The Merck-Lumira- Teralys fund is the second announced in a week that combines pharma giants with venture funds. On Wednesday, GlaxoSmithKline and Johnson & Johnson joined with Index Ventures to announce a €150 million (about $200 million) fund to assist early-stage companies. The fund will get $100 million from Index and $50 million each from GSK and J&J.

To read the story from Canadian Press, click here.

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