Novartis AG’s Sandoz Shuttered Three Plants, Lays Off 720

Novartis AG’s Sandoz Shuttered 3 Plants, Lays Off 720
July 24, 2015
By Mark Terry, BioSpace.com Breaking News Staff

Sandoz, Inc., the generic pharmaceuticals division of Swiss-based Novartis AG , announced yesterday that it will close three manufacturing facilities, two in Germany and one in India.

The two facilities in Germany are in Gerlingen and Frankfurt. The India site is near Mumbai. They are planned for closure by the end of 2016.

The facility in Gerlingen makes generic oral solids, including ibuprofen, cetirizine, amlodipine and omerprazole. Frankfurt’s location manufactures cephalosporin antibiotics. The Turbhe site near Mumbai manufactures active pharmaceutical ingredients (API) for the company’s antibiotics business.

The Gerlingen production will be shifted to Sandoz’s sites in Strykow, Poland and Barleben, Germany. The cephalosporin work in Frankfurt will move to the antibiotics manufacturing plant in Austrlia. The Turbhe API products will shift to other locations in India.

The company indicates that about 600 jobs will be cut at the German sites, “however we are keeping a strong presence in Germany — and India, with jobs also being created elsewhere.” The Indian site will lose about 170 workers.

Sandoz is currently wrapped up in a lawsuit with Amgen . In 2014, Sandoz filed a Biologics License Application (BLA) related to the Biologics Price Competition and Innovation Act’s abbreviated pathway. The application is for a biosimilar version of Amgen’s NEUPOGEN (filgrastrim). According to Patent Docs, “despite availing itself of this pathway for FDA approval, Sandoz refused to participate in the patent resolution component (the disclosure and information exchange provisions, also known affectionately as the ‘patent dance’), alleging that it was not a mandatory component. Amgen disagreed, but was disadvantaged without access to Sandoz’s application and manufacturer information as contemplated by the BPCIA.”

Neupogen is used to treat side effects for chemotherapy. It stimulates the body’s production of white blood cells. Biosimilars are drugs that are similar to known drugs, or similar enough to be interchangeable.

The layoff news comes in light of Novartissecond quarter financial report on July 21. Sales dropped by 5 percent to $12.7 billion. Sandoz reported net sales of $2.3 billion in the second quarter. The company’s U.S. performance was particularly strong with a 23 percent increase driven by the launch of Glatopa, the first generic version of Copaxone.

Copaxone, manufactured by Teva Pharmaceutical Industries Ltd. , is a treatment for relapsing forms of multiple sclerosis.

The report stated, “Sandoz continued to strengthen its leading position in differentiated generics, with global sales of biopharmaceuticals (which include biosimilars, biopharmaceutical contract manufacturing and Glatopa) up 57 percent (cc) to USD 222 million in the second quarter, driven in part by shipping of initial trade inventories of Glatopa in June.”

During a Tuesday conference call Novartis spokeswoman Elizabeth Power said, “Due to extreme cost pressure in the generics market, this packaging plant can no longer be operated cost-efficiently and is no longer competitive.” She referred to the Gerlingen, Germany site. The Frankfurt site is being clobbered by prices on APIs because competitors from Asia have flooded the market with excess capacity.

“A difficult decision we have to make,” said Richard Francis, Division Head of Sandoz in the call, “but one that we believe that’s right for the business moving forward to ensure that we’re competitive and continue to drive profitability in this very competitive segment.”

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