Boehringer Ingelheim this week reported a slightly improved revenue picture, but not without addressing the pricing challenges it faces globally. As if to emphasize those difficulties, the company followed up two days later by saying it would close a Virginia plant and lay off 240 people next year
The writing has been on the wall for the Petersburg, VA, API plant since last year when Boehringer said it was evaluating the need for all of its capacity. It closed one unit there last month, whacking nearly 60 jobs, and then Thursday said the entire plant would have to go. "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.
Psiorz said 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."
The layoffs will happen in phases, and the company is providing outplacement services for its displaced workers. Spokesman Brian Ellis explained that the first cuts will come in December, affecting between 80 and 100 employees. When production ceases around July of 2014, another 80-100 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 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 week, the company reported a 3.1% increase in sales to about €7.1 billion ($9.5 billion) for the first half of 2013. The key drivers were Pradaxa, its Type 2 diabetes treatment Trajenta and Spiriva, a treatment for chronic obstructive pulmonary disease (COPD). Spiriva turned in the biggest sales, growing 3.9% to €1.8 billion ($2.4 billion), the company said. Boehringer Ingelheim is privately held and so only reports top-line numbers. Chairman Andreas Barner explained that the gains are not coming easily in a tough pharma pricing environment. "The global market in prescription medicines--the most relevant to Boehringer Ingelheim--has almost stagnated in the first quarter."
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