Last year, Boehringer Ingelheim indicated that cost pressures were making it reevaluate how much API capacity it needed. It said it needed to close a unit at its API plant in Petersburg, VA. The German company no sooner got that done than announced that it would close the rest of the operation by next year, costing about 240 positions.
"The pharmaceutical industry is going through dramatic changes and manufacturing needs are being impacted by that change," Manfred Psiorz, president and CEO of Boehringer Ingelheim Chemicals, said.
Spokesman Brian Ellis explained that closure of the first facility was completed last month and 58 people were let go. Another phase will close in December, affecting from 80 to 100 more employees. When production ceases around July of 2014, another 80 to 100 will be let go. The entire operation will be closed by the end of next year, when those who are left to see that process through will lose their jobs. The company said it is providing outplacement services and will try to help employees find jobs.
The complex makes nevirapine, telmisartan and dabigatran starting materials and intermediates for the company's blockbuster blood thinner, Pradaxa. Nevirapine is used for treating HIV infections, and telmisartan is for treating high blood pressure. But the plant is old, and Boehringer Ingelheim has four other newer chemical facilities in Europe. "This is the only one in the U.S. With too much capacity, it doesn't make good business sense to keep it open," spokeswoman Jaime Belitz said last year when the company first fingered the Petersburg facility.
This week, the company reported a 3.1% increase in sales to about €7.1 billion ($9.5 billion) for the first half of 2013, but Chairman Andreas Barner said that cost pressures on drugs worldwide presented challenges: "The global market in prescription medicines--the most relevant to Boehringer Ingelheim--has almost stagnated in the first quarter." Boehringer Ingelheim is privately held and so only reports top-line numbers.
The company tried but was unable to find a buyer for the plant. "This was a very difficult decision and one that we did not make until we had explored all of our options," Psiorz said in a statement. "This is a top tier manufacturing plant. We will do all that we can to help the city find an appropriate use for this location."
- here's the press release
- see the earnings report