Dr. Reddy's unloads antibiotics plant to Abu Dhabi-based Neopharma

India's Dr. Reddy's Laboratories has sold an antibiotics manufacturing plant in Bristol, Tennessee, to Neopharma for an undisclosed amount. The plant, which has about 40 employees, is the first in the U.S. for the UAE-based Neopharma. (Dr. Reddy's Laboratories)

India’s Dr. Reddy’s, which is trying to slim down as regulatory issues have whittled away its revenues, is selling its U.S. antibiotics plant to UAE drugmaker Neopharma.

The drugmaker Monday said it had concluded a deal with Abu Dhabi-based Neopharma for the antibiotics plant and assets in Bristol, Tennessee. It is Neopharma’s first plant in the U.S

“This sale is in line with our stated priority to streamline and optimize our global cost structures and help us focus on other business priorities to drive growth,” COO Erez Israeli said in a statement. “We are pleased that the agreement may provide continued employment opportunities for many of the experienced employees at the site.”

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An attorney for Neopharma, which has been expanding recently, told the Bristol Herald Courier the company plans to increase the number of employees to about 50 from the current 40 by the end of next year. It has a plan to enlarge the plant and potentially have 100 workers there. The drugmaker is getting some tax abatements from the city.

The manufacturing plant and associated facilities, which Dr. Reddy’s bought from GlaxoSmithKline in 2010, primarily makes amoxicillin-based products, including augmentin, which is of particular interest to Neopharma. Dr. Reddy’s said the 390,000-square-foot facility is dedicated to secondary oral-solid dose penicillin manufacturing and packaging and includes processing, packaging, development, printing, and warehouse spaces.

A separate 24,000-square-foot plastics-processing facility in Bristol is also included in the transaction. Terms were not disclosed.  

Dr. Reddy’s, which has annual revenues of about $2.1 billion in its 2017-2018 fiscal year, has been dealing with regulatory issues tied to its manufacturing for several years. The FDA issued a scathing warning letter in late 2015 that covered the three facilities, two API operations and a formulation facility where the company makes oncology drugs. Particularly annoying to the FDA was the discovery of a secret testing lab that one plant used for years to test batches, which allowed it to hide failed test results.