Suffering from several “previously unanticipated headwinds,” Endo is embarking on a plan to speed up restructuring efforts that will hit two of its manufacturing plants hard. The new strategy, which executives said they’re starting “shortly,” will impact 740 jobs.
Endo plans to close a site in Charlotte, NC, and reduce its employee base in Huntsville, AL, as it battles pressure from “new competitive entrants; … greater than expected price erosion across the generics sector; and delays on regulatory actions related to certain Endo products,” CEO Rajiv De Silva said in a statement.
On Thursday, those pressures forced Endo to lower its revenue and EPS expectations for the year, moves that sent investors running for the doors and the company’s shares down almost 40% the same day. CNBC said it was Endo’s third-worst single-day performance in the company’s history.
In response to the market challenges, the management team has drafted an “accelerated restructuring” that’s expected to save $60 million in 2017. Both sites affected in the move were former Qualitest sites, Endo senior director of corporate affairs Heather Zoumas Lubeski said in an emailed statement. The Charlotte operation, which is being closed, has 390 employees. The much larger Huntsville operation, which will lose about 350 jobs, currently has 1,248 employees. "The Company will be providing resources to help employees manage through this transition," Zoumas Lubeski said.
According to Endo’s website, Qualitest sites in Huntsville boast more than 320,000 square feet for manufacturing tablets and capsules and 180,000 square feet for producing liquids. Charlotte is an 88,000-square-foot plant for tablets and capsules. More than 60 products will be discontinued with the move, execs said.
The announcement comes as Endo works to incorporate its $8 billion Par Pharmaceutical buy completed last September.
On Thursday’s conference call, Par Pharma CEO Paul Campanelli said Qualitest is a “mature portfolio that is susceptible to competition,” so the plan will move “the strategy from that high-volume throughput that historically had successes on economies of scale, to the more Par legacy success model of high-value products.”
“We're making some very, very difficult decisions impacting some very talented people in our Charlotte and in our Huntsville facility,” Campanelli said on the call. “That's been very difficult for all of us.”
The decision to downsize comes after Endo said in 2013 that it would pump $100 million into Qualitest manufacturing. At that time, it was branded meds that were suffering from generic competition, and so the company decided back then to commit resources for its generics operation. The $100 million was for the most part slated for Huntsville to improve efficiency and capacity.
Based in Dublin, Endo employed about 6,200 people worldwide as of February. A 740 job-chopping based on that figure would be about 12% of its workforce.
Endo investing $100M in Qualitest manufacturing