Lilly will close Puerto Rico plant, affecting 100 workers

It has been a tale of two cities when it comes to Eli Lilly's ($LLY) operations in Puerto Rico. Its plant in Carolina has been slotted for $240 million in investments in the last year, benefiting from its buildup in insulin products, and its plant in Guayama is getting axed, a victim of patent losses.

The drugmaker said today it will close the Guayama plant by the end of next year. It said the 100 employees will be offered jobs at its Carolina plant, which Caribbean Business says is about 50 miles away. The company currently has three plants and 1,600 employees in Puerto Rico. The company will take a $170 million charge to cover the costs of shuttering the Carolina facility, which it will put up for sale.

"The utilization of the site has been impacted by patent expirations on the medicines produced there," Paul Ahern, Lilly senior vice president, said in a statement. "The decision to conclude operations at Guayama is based upon the evolution of the company's pipeline, which includes a growing insulin and biologics portfolio, coupled with a less capacity-intensive small molecule portfolio."

Lilly's patent loss woes have been very evident this year. Its revenue fell 17% to $4.9 billion in the second quarter, and its profits were off 39% after losing protection for its antidepressant Cymbalta, which once brought in nearly $5 billion in sales annually, and osteoporosis drug Evista, previously a $1-billion-a-year hit. At the same time, it reported that its fast-acting insulin product Humalog was up 11% to $700.1 million, beating analyst estimates of $682.7 million.

Also big on the insulin end of the business was the EU approval and tentative U.S. approval of a biosimilar that Lilly and partner Boehringer Ingelheim have developed of Sanofi's ($SNY) global best-selling insulin drug, Lantus.

As it has prepared to derive more revenue from its insulin products, Lilly has been beefing up insulin production at a number of plants, including the Carolina facility in Puerto Rico. The facility in November 2013 was tagged with receiving a $200 million investment to increase its insulin API capacity and then in July another $40 million for some oral solid dosage work.

- read the announcement
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