October 29, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Orlando, Fla.-based Nephron Pharmaceuticals Corp. announced today that it was laying off 180 people, according to the company’s chief executive officer, Lou Kennedy, despite the company’s state notification indicating 400 were to be cut.
Approximately 400 people work on generic respiratory medications at the company’s 250,000-square-foot manufacturing, distribution and packaging facility in Orlando. The company plans to maintain its headquarters in Orlando, although it recently opened a new manufacturing plant in Columbia, S.C. That facility, which cost $313 million, was chosen in October 2011 and was approved earlier this month by the U.S. Food and Drug Administration (FDA) for operations.
At the time, the state of Florida offered the company a $33 million tax incentive to build the facility in central Florida. The new facility was expected to impact the Orlando area with a one-time $652 million benefit, with an additional $49.5 million in annual wages. South Carolina’s tax package had the potential of $352.3 million in savings, mostly from tax exemptions from property taxes for 30 years.
Another factor, apparently, has to do with how states tax the actual equipment in the facility, rather than just the building and company. In Florida, the equipment inside the facility is taxed the same way the real estate is. South Carolina, as well as other states, including Texas, cap the amount of equipment and personal property that can be taxed, or often exemptions.
Nephron also received less expensive liability and business interruption insurance rates with facilities in multiple locations. It was also pointed out that Lou Kennedy, and her husband, are University of South Carolina alumni and had donated $30 million to the school’s Kennedy Pharmacy Innovation Center. There were, as Brooke Bonnett, Orlando’s economic development director commented to BizJournals at the time, “emotional ties to South Carolina.”
The state’s layoff notification said the company was “downsizing its Orlando manufacturing facility and transferring a majority of its production operations to its facility in West Columbia, S.C. Nephron … anticipates that a majority of its workforce at the Orlando manufacturing facility will be laid off.”
Reportedly, Nephron is hiring as many as 700 people at the South Carolina facility.
“We will have a core staff here (in Orlando) and continue to run respiratory products and look for any other special products suited to the facility here,” Kennedy said to NPR station WUSF. “It’s just we’re scaling down in Florida.”
She goes on to say, “The fact that we have more automation in South Carolina than Florida helps with the cost of goods. As you know, our products sell from six-and-a-half centers to a dollar, so our margins are razor thin.”
Nephron focuses on manufacturing generic respiratory drugs and contract manufacturing. It is also the only manufacturer of Racemic Epinephrine.
In 2012, Kennedy indicated she had plans for a 66-acre pharmaceutical park in Orlando, which would offer the company’s laboratories and manufacturing facilities to vaccine companies or smaller pharma startups. The 66 acres were acquired by Kennedy Campus LLC, a holding company of the company’s founder, William Kennedy. It was bought in 2010 for $4 million.
