Merck Sharp & Dohme (MSD) Manufacturing Insurance (UK): A Practical Guide to Protecting High-Val

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Merck Sharp & Dohme (MSD) Manufacturing Insurance (UK): A Practical Guide to Protecting High-Val

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Merck Sharp & Dohme (MSD) Manufacturing Insurance (UK): A Practical Guide to Protecting High-Value Pharma Operations
Pharmaceutical manufacturing is one of the most risk-dense industries in the UK. Facilities are capital intensive, processes are tightly controlled, and the consequences of disruption can be severe—financially, operationally and reputationally. For a global manufacturer like Merck Sharp & Dohme (MSD), the risk picture typically includes high-value buildings and specialist plant, temperature-controlled storage, validated cleanrooms, complex supply chains, strict quality systems, and heightened regulatory scrutiny.
This guide explains how UK-focused insurance programmes are commonly structured for MSD-style pharmaceutical manufacturing operations. It covers the core lines of cover—property, business interruption, product liability, recall, clinical trials, cyber, environmental, D&O and supply chain—plus the practical details insurers look for when underwriting risks governed by MHRA expectations, GMP requirements, UKCA/CE obligations and HSE duties.
Important note: This is general information, not legal advice. Insurance wording and regulatory obligations vary by site, product type and contractual arrangements. A specialist broker can help you align cover to your actual risk profile and quality system.
  1. Why pharma manufacturing insurance is different
Insurance for pharmaceutical manufacturing isn’t just “property plus liability”. It’s about protecting a regulated production system where quality, traceability and continuity matter as much as the physical assets. A single incident can trigger multiple loss pathways at once:
  • Physical damage to buildings, cleanrooms, utilities or specialist equipment
  • Process interruption due to contamination, validation failure, utilities outage or supplier disruption
  • Stock loss from temperature excursions, power failure, or quarantine decisions
  • Regulatory action (e.g., MHRA investigation, batch hold, suspension of manufacturing authorisation)
  • Third-party claims from alleged product defects, labelling errors, or adverse events
  • Reputational harm and downstream contractual penalties
Because of this, insurers will underwrite not only your physical risk controls (fire protection, security, resilience) but also your quality system maturity: deviation management, change control, validation, supplier qualification, and recall readiness.
  1. Regulatory context in the UK: what insurers expect you to have nailed
UK pharma manufacturing is shaped by a combination of regulatory frameworks and standards. Insurers don’t “audit” like a regulator, but they do expect evidence that your compliance and risk management are real and operational.
  • MHRA oversight: The Medicines and Healthcare products Regulatory Agency regulates medicines and medical devices in the UK. MHRA expectations around quality systems, inspections, and reporting can directly influence loss severity and business interruption duration.
  • GMP (Good Manufacturing Practice): GMP is central to medicines manufacturing. Insurers often ask about cleanroom classification, environmental monitoring, validation, batch release controls, and how you manage deviations and CAPA.
  • UKCA/CE marking (where relevant): If your operation touches combination products, device components, or medical devices, UKCA marking (and CE marking for certain markets) can be relevant. Product compliance and post-market surveillance can impact liability and recall exposures.
  • HSE duties: The Health and Safety Executive enforces workplace health and safety. Chemical handling, pressure systems, DSEAR/ATEX considerations, contractor control, and maintenance regimes can all affect property and liability risk.
In plain terms: insurers want to see that your operation is engineered for prevention, and that you can respond quickly when something goes wrong—without improvising under pressure.
  1. Property insurance: protecting high-value sites, plant and stock
Property insurance is the backbone of most manufacturing programmes. For MSD-style pharma sites, the challenge is that “replacement cost” isn’t just bricks and mortar—it’s specialist infrastructure and long lead-time equipment.
What property insurance typically covers:
  • Buildings including cleanroom structures and controlled environments
  • Plant and machinery (process equipment, packaging lines, HVAC, boilers, compressors)
  • Utilities and critical infrastructure (power distribution, chilled water, steam, purified water systems)
  • Stock including raw materials, WIP and finished goods (often with special attention to temperature control)
  • Additional costs such as debris removal, professional fees, and (sometimes) expediting expenses
Key pharma-specific property considerations:
  • Cleanroom and validation impact: A relatively small fire, water leak or smoke event can create a large loss if it triggers contamination concerns, revalidation, or extended downtime.
  • Utilities resilience: Single points of failure in power, HVAC, compressed air, steam or chilled water can stop production even without physical damage.
  • Temperature-controlled storage: Cold chain exposures (fridges, freezers, LN2 systems) can create high-value stock losses from short-duration outages.
  • Fire protection and compartmentation: Sprinklers, detection, fire doors, and separation of high-hazard processes can materially affect premiums and capacity.
  • Security and access control: Pharmaceuticals are attractive targets. Insurers will look at perimeter security, CCTV, access logs and response protocols.
Common pitfalls to avoid:
  • Understated sums insured for specialist plant, cleanroom rebuild, and professional fees
  • Not modelling long lead times for critical equipment (which impacts business interruption)
  • Stock values not aligned to peak seasonal or campaign production
  1. Business interruption (BI): where pharma losses often become “big”
Business interruption insurance covers loss of gross profit (or revenue/earnings, depending on wording) following insured physical damage. In pharma, BI is often more financially significant than the property damage itself because restart is rarely immediate.
What BI should reflect in a pharma setting:
  • Indemnity period realism: not only repair time, but decontamination, revalidation, requalification, regulatory engagement, and ramp-up to steady-state output
  • Increased cost of working: overtime, temporary facilities, alternative manufacturing, expedited freight, and specialist contractors
  • Dependencies: if your site supplies other group entities or key customers, BI should reflect contractual exposures and service level obligations
Extensions worth discussing with your broker:
  • Utilities and services interruption: can be critical where grid failure or supplier outage halts production (wording varies)
  • Denial of access / non-damage BI: sometimes relevant for incidents affecting site access (cover varies widely)
  • Supplier/customer extensions (contingent BI): if a key API supplier, packaging supplier, or logistics hub goes down
BI is also where insurers will scrutinise your business continuity plan: alternate suppliers, safety stock strategy, validated contingency routes, and how quickly you can switch production or packaging.
  1. Product liability: claims, defence costs and global distribution
Product liability is essential for any manufacturer placing products into the market. For pharma, the stakes are high: allegations can involve bodily injury, regulatory scrutiny, and complex causation arguments.
What product liability typically covers:
  • Third-party injury or property damage allegedly caused by your product
  • Legal defence costs (often a major driver of loss)
  • Worldwide territory may be needed depending on distribution and contracts (subject to insurer appetite and wording)
Pharma underwriting hot buttons:
  • Quality system robustness: deviation/CAPA, batch release, stability programmes, complaint handling
  • Labelling and packaging controls: mix-ups, mislabelling and IFU errors can drive claims and recall events
  • Contract manufacturing exposures: clarity on responsibilities between MAH, CMO, packager, and logistics providers
  • Clinical vs commercial split: insurers may treat clinical trial liability differently from commercial product liability
  1. Product recall and contamination: the difference between “liability” and “cost”
Many businesses assume product liability will pay for recall costs. Often, it won’t—at least not in the way you expect. Recall insurance is designed to cover the first-party costs of pulling product, managing the event, and protecting the brand.
Recall costs that may be covered (wording dependent):
  • Notification and communications (customers, regulators, distributors)
  • Product retrieval, transport and disposal including secure destruction
  • Replacement or remediation costs (where insurable and defined)
  • Consultants such as crisis management, PR, and specialist technical advisors
  • Business interruption linked to recall/contamination triggers (if included)
Triggers and definitions matter. Recall policies can be triggered by actual contamination, suspected contamination, mislabelling, or regulatory action—depending on wording. Stress-test scenarios like:
  • Out-of-spec results leading to batch quarantine and market action
  • Packaging line error leading to incorrect patient information
  • Temperature excursion in transit affecting product stability
  • Supplier quality failure impacting API integrity
  1. Clinical trials liability: protecting R&D activities
If your UK operations are involved in clinical trials—whether as sponsor, manufacturer of investigational medicinal products (IMPs), or through supply—clinical trials liability is a specialist area.
Typical considerations:
  • Scope: UK-only vs multinational trials, and whether cover extends to investigators, sites, and vendors
  • Manufacturing of IMPs: quality controls, chain of custody, and documentation
  • Informed consent and protocols: governance and consistency
Even if trials are managed elsewhere in the group, UK sites can still be implicated through manufacturing, packaging, labelling, storage, or distribution of trial materials.
  1. Cyber insurance: when manufacturing and quality systems go digital
Pharma manufacturing is increasingly reliant on digital systems: ERP, LIMS, MES, SCADA, building management systems, and electronic quality management systems. A cyber incident can stop production, compromise data integrity, or trigger regulatory concerns around traceability.
Cyber losses that matter in pharma:
  • Business interruption from ransomware or system outage
  • Incident response costs including forensics, legal, and restoration
  • Data issues (personal data, confidential information, IP)
  • Operational technology (OT) impacts affecting plant control systems
What insurers will ask about:
  • Network segmentation between IT and OT environments
  • Backups (offline/immutable), recovery testing, and patch management
  • Access control, MFA, privileged account management
  • Supplier access and third-party risk management
  1. Environmental impairment liability: chemicals, waste and accidental pollution
Pharma manufacturing can involve solvents, reagents, effluent, and controlled waste streams. Environmental impairment liability (EIL) can cover third-party claims and clean-up costs arising from pollution events, subject to policy terms.
Typical exposures:
  • Spills during chemical storage or transfer
  • Firewater run-off contamination
  • Waste handling and contractor management issues
  • Legacy contamination concerns (site history dependent)
Insurers will look at bunding, drainage mapping, interceptors, emergency response procedures, and contractor controls—plus how you comply with relevant environmental permits and HSE expectations around hazardous substances.
  1. Directors & Officers (D&O): governance risk in a regulated industry
D&O insurance protects directors and officers against claims alleging wrongful acts in the management of the company. In regulated manufacturing, governance scrutiny can increase after incidents, recalls, compliance failures, or major cyber events.
Why D&O matters for pharma manufacturing:
  • Regulatory and compliance oversight: allegations may relate to governance, reporting, or controls
  • Employment practices: senior management decisions can lead to disputes
  • Stakeholder claims: depending on corporate structure, claims can arise from investors, partners, or other stakeholders
  1. Supply chain and logistics: contingent exposures you can’t ignore
Even the best-run manufacturing site can be brought to a halt by a supplier failure, transport disruption, or a single missing component. For MSD-style operations, supply chain risk can be amplified by:
  • Single-source APIs or specialist excipients
  • Long lead-time packaging components
  • Cold chain logistics and validated lanes
  • Geopolitical disruption and port/haulage constraints
  • Quality issues at supplier sites triggering quarantine or requalification
Insurance tools that can help:
  • Contingent business interruption: BI triggered by insured damage at named suppliers/customers (subject to structure)
  • Marine cargo / stock in transit: important for temperature-controlled shipments and high-value goods
  • Trade disruption / specialist supply chain covers: sometimes available for non-damage triggers, but typically bespoke
Operational controls insurers like to see:
  • Supplier qualification and ongoing audits (risk-based)
  • Dual sourcing where feasible, or validated alternates
  • Safety stock strategy aligned to criticality and lead times
  • Clear temperature excursion handling and decision trees
  1. A practical checklist: what to prepare before you renew or go to market
  • Asset schedule: buildings, plant, and critical equipment values at replacement cost
  • Stock values: average and peak, including cold storage concentrations
  • BI worksheet: gross profit/earnings, dependencies, and a justified indemnity period
  • Site plans: showing fire compartments, hazardous areas, utilities, and drainage
  • Quality overview: GMP status, inspection outcomes (high level), deviation/CAPA metrics (summary), recall plan maturity
  • Cyber overview: key systems (ERP/LIMS/MES/SCADA/BMS), backup strategy, MFA coverage, recent testing, and incident response contacts
  • Utilities resilience summary: single-line diagrams (where available), generator/UPS scope, test frequency, fuel resilience, and critical spares strategy
  • Maintenance and engineering controls: PPM approach, contractor controls, hot works permits, and inspection regimes for pressure systems/lifting equipment
  • Fire risk management: sprinkler coverage, detection types, compartmentation, fire stopping, storage arrangements, and impairment management (how you manage sprinkler shutdowns)
  • Contamination controls: cleanroom classification, environmental monitoring, gowning/material flows, pest control, and how you respond to excursions
  • Cold chain controls: mapping of temperature-controlled areas, alarm/monitoring, response times, backup power coverage, and excursion decision trees
  • Supplier dependency map: top critical suppliers (API, excipients, packaging, sterilisation, logistics), lead times, dual-source status, and contingency options
  • Recall and crisis plan: roles/responsibilities, regulator notification approach, mock recall frequency, and access to external advisors (PR, legal, technical)
  • Contractual review: key customer/supplier contracts highlighting indemnities, liability caps, insurance requirements, and any “hold harmless” clauses
  • Claims/loss history: clear summary of incidents, lessons learned, and improvements made
If you can package the above into a concise renewal submission, you’ll typically see a smoother underwriting process, fewer last-minute questions, and a better chance of securing broad cover with practical terms.
  1. Common coverage gaps (and how to avoid them)
  • BI indemnity period too short: pharma restart can include decontamination, revalidation, and ramp-up. Under-insuring time is a common and expensive mistake.
  • Stock and WIP undervalued: peak campaign production and cold storage concentrations can exceed “average” values quickly.
  • Recall assumptions: product liability often won’t pay first-party recall costs. If recall exposure is real, treat it as its own line of cover.
  • Supplier risk ignored: a single-source API or packaging supplier can create a loss without any damage at your own site.
  • Cyber not aligned to operations: policies vary on OT impacts and BI triggers. Make sure the wording matches how your plant actually runs.
  • Environmental exposures overlooked: firewater run-off, chemical storage, and waste handling can create clean-up liabilities that standard policies may not address well.
  1. FAQs: MSD-style pharmaceutical manufacturing insurance (UK)
Is this insurance only for “big pharma” companies like MSD? No. The same risk categories apply to many UK pharmaceutical and life sciences manufacturers: contract manufacturers (CMOs), packagers, sterile operations, API producers, and device-adjacent manufacturers. The programme is scaled to your turnover, asset values, product profile, and supply chain.
Do we need separate cover for MHRA regulatory action? Insurance won’t replace regulatory compliance, and it generally won’t insure fines or penalties. However, the knock-on effects of an incident that leads to MHRA engagement—such as extended downtime and business interruption—can be addressed through properly structured property/BI, recall/contamination, and specialist extensions. The key is aligning triggers and definitions to realistic scenarios.
What’s the difference between product liability and product recall insurance? Product liability is primarily about third-party claims (injury/property damage) and legal defence. Product recall is typically about first-party costs: retrieving product, notifying customers, disposal, crisis management, and sometimes recall-related business interruption—subject to wording.
We’re a UK site in a global group—do we still need UK-specific cover? Often yes. Even where a global master programme exists, UK sites can have local policy requirements, local claims handling needs, and UK-specific regulatory and contractual exposures. Many groups use a combination of master and local policies to ensure compliance and smooth claims payment.
How do insurers assess GMP and quality systems without doing a full audit? They look for evidence that your controls are real and embedded: how you manage deviations and CAPA, change control discipline, validation approach, environmental monitoring, supplier qualification, and recall readiness. Engineering surveys may also focus on contamination controls, utilities resilience, and fire protection—because these directly affect loss frequency and severity.
Does business interruption cover losses from a power cut? Standard BI usually requires insured physical damage. Some policies can include utilities/service interruption extensions, but triggers and waiting periods vary. For pharma sites where utilities are critical, it’s worth reviewing this carefully—especially for cold chain and cleanroom operations.
Can we insure losses caused by contamination with no physical damage? Sometimes, but it’s highly wording-dependent. Certain contamination/recall products can respond to defined contamination events, and some property/BI programmes can be enhanced with specialist extensions. This is where a broker can help you stress-test scenarios and negotiate appropriate triggers.
Do we need clinical trials liability if we only manufacture or package IMPs? Potentially. If your site’s activities connect to trials—manufacture, packaging, labelling, storage, or distribution of investigational products—there may be exposures that sit outside standard product liability. The right solution depends on your role (sponsor vs manufacturer), geographies, and contractual responsibilities.
What limits are “normal” for pharma manufacturing? There isn’t a one-size-fits-all answer. Limits are driven by asset values, maximum foreseeable loss, distribution footprint, contractual requirements, and risk appetite. A good starting point is modelling: worst-case property loss, realistic BI duration, peak stock concentrations, and recall scenario costs.
How can we reduce premiums without creating dangerous gaps? Focus on risk quality and clarity: accurate sums insured, realistic BI periods, strong engineering controls (fire protection, utilities resilience), and a clean underwriting submission. Where appropriate, consider structured deductibles/retentions and targeted sub-limits—rather than removing key covers entirely.
Talk to a UK specialist broker about MSD-style manufacturing insurance
Pharmaceutical manufacturing insurance isn’t just about buying a policy—it’s about building a programme that matches how your site actually operates: validated environments, long lead-time equipment, cold chain dependencies, supplier criticality, and the reality that recovery can take months, not weeks.
If you want a second set of eyes on your current programme—or you’re planning a renewal, acquisition, site expansion, or new product line—we can help you:
  • Identify coverage gaps across property, BI, liability, recall/contamination, cyber, environmental and D&O
  • Set realistic sums insured and indemnity periods based on your process and lead times
  • Present your risk to insurers in a way that reflects your GMP maturity and engineering controls
  • Negotiate practical terms that won’t surprise you at claim time
Ready to sense-check your cover? Speak to a UK commercial insurance broker who understands regulated manufacturing. Share your current schedule and a high-level overview of your site (assets, products, dependencies), and we’ll come back with a clear, practical recommendation.
Call: 0330 127 2333 Website: https://www.insure24.co.uk/

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