ICIG acquiring Novartis intermediates plant that was set to fold

Novartis ($NVS) put a Sandoz intermediates plant in Germany on the chopping block last year, saying that Asian competition had eviscerated the market for its products. But the Swiss drugmaker has found a company willing to take the plant and saving the 270 jobs that would have been lost.

Luxembourg-based International Chemical Investors Group (ICIG) said on Wednesday that it is acquiring from Novartis the Sandoz Industrial Products facility in Frankfurt-Höchst. The plant, which manufactures enzyme-based fermentation products and intermediates that are primarily used in antibiotics, will fold into ICIG's CordenPharma business. Terms of the deal, which is slated to close April 1, were kept under wraps.

ICIG said the facility will not only give a boost to its pharma operations but also provide some heft to its WeylChem Group fine chemicals business. "The new site will expand CordenPharma's operations, growing its enzymes-based manufacturing portfolio and dedicated antibiotics technology platform and will add state-of-the-art capabilities in microbial fermentation and enzymatic reactions to WeylChem's extensive non-GMP production capabilities as well," Achim Riemann, ICIG managing director, said in a statement.

With this addition, Riemann said, CordenPharma Group will become one of the key global suppliers of 7-ACA but also will use it for its own antibiotics production at its Latina operation in Italy.

The Frankfurt-Höchst plant was one of three that Sandoz targeted for closure last year. The $41 million plant opened in 2000 with a peak capacity of about 400 tons a year at a time when demand for its 7-ACA product was growing rapidly. But the market has changed dramatically in recent years, according to Sandoz, which said that prices on the cephalosporin active pharmaceutical ingredients (APIs) and intermediates made in Frankfurt had collapsed as Asian competitors dumped excess capacity on the market. 270 employees work at the facility, a Sandoz spokesman said in an email today.

Last year, Sandoz also slated a packaging plant in Gerlingen, Germany, for closure by the end of 2016, saying the work would move to other facilities in Europe that could absorb it. The company said those two closures would lead to the loss of about 600 jobs. The drugmaker took $180 million in charges at the time to cover the costs of shutting the two sites.

A Sandoz plant in India that makes APIs and antibiotics is also set to be whacked by the end of 2016. The plant in Turbhe, Maharashtra, had about 170 workers at the time of the announcement.

Novartis CEO Joe Jimenez has radically streamlined the Swiss drugmaker in the past several years with its asset swaps with GlaxoSmithKline ($GSK) and sale of its animal health business to Eli Lilly ($LLY), moves valued at about $25 billion. Last month Jimenez said the changes will continue and as part of that the drugmaker will organize its manufacturing facilities into one overarching operation in expectation of saving some serious money by 2020.

- here's the announcement

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