India’s largest drug maker Sun Pharmaceutical Industries Ltd will shut down some of its manufacturing plants in India as well as overseas as the company will continue trimming its large manufacturing base as part of cost optimisation. The decision, which will help the company cutting the entire operating costs of these facilities, is also part of the business integration plan that is in progress at the company, especially after the merger of Ranbaxy Laboratories that it bought in 2014.
Though the move will see several layoffs at the shop floor level at all these locations both in India and several other countries, the exact number of jobs that will be affected is not known. The plan to shut down manufacturing facilities is in addition to the company’s strategy to divest non-core units across its markets, said a person close to the development.
Sun Pharma has already divested three of its manufacturing units in the US in the last few months.
“The company’s preferred option is to divest non-core manufacturing units, so that the employment at these sites would remain unaffected as it would be run by the new owner. But, it may not work always. So, in such cases, it has no option but to shut down,” confirmed a senior executive from Sun Pharma.
While the company is still struggling with some of the Ranbaxy units due to serious regulatory compliance issues raised by US FDA sometime ago, the plants that it wants to shut down as part the rationalisation would be mostly from its own side, said the person quoted above.
Sun Pharma had earlier indicated that based on the optimum level of manufacturing infrastructure, for current and future business requirement, it will look at rationalizing manufacturing footprint. The Indian generic drug maker, which currently operates in several markets including India, US, Europe and many other emerging markets, had owned some 30 manufacturing units and at least 30,000 employees when it formally merged the troubled Ranbaxy Lab within it in March 2015.
It sold one of its manufacturing units in the US to Nostrum Laboratories Inc for an undisclosed sum in 2015 as part of this manufacturing rationalisation. Following this, the company also sold two of its production units -- located at Philadelphia and Aurora along with 15 related pharmaceutical products to Frontida BioPharm Inc in June.
The Dilip Shangvi-promoted drug maker has some of its key manufacturing plants in India under the US FDA scanner as the regulator had raised compliance issues. These affected manufacturing sites-- located at Halol and Karkhadi in Gujarat, are originally belonged to Sun Pharma. While, the other units located at Dewas in Madhya Pradesh, Poanta Sahib in Himachal Pradesh and Mohali in Punjab were inherited through the Ranbaxy acquisition.
While the Halol manufacturing unit, which is critical to Sun Pharma’s overall sales and revenue, is currently awaiting a re-inspection by the US regulator, the other units are still under remediation process and the issues would continue impacting the sales for more time.