Generics squeeze forces Novartis Colorado plant to close, imperiling 450 jobs

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Novartis' generics unit Sandoz has felt the heat of industrywide pricing pressure just as it gears up to launch a series of biosimilar drugs in the next few years.

Some drugmakers are responding to industrywide generics pricing pressure by bulking up via M&A, but not Novartis.

The Swiss company's Sandoz unit plans to scale back or nix production of some generic drugs, and as a result, it’ll close a 450-employee plant in Broomfield, Colorado, a Novartis spokesman said. The plant will shutter over the next two years, and Novartis will consolidate the production of drug ingredients at a plant in Wilson, North Carolina.

"Novartis is currently experiencing above-average pricing pressure in our U.S. portfolio. With several products no longer competitive in saturated markets, we have made the decision to discontinue or divest these limited growth products to optimize our product portfolio," the spokesman said via email.

RELATED: Teva manufacturing to be savaged as drugmaker lays off 7,000, closes 15 plants to cut costs

As buyers have consolidated in recent years, they’ve put a price squeeze on copycat drugmakers, spurring double-digit price declines across the industry. And Sandoz isn’t the only company whose manufacturing has taken a hit as a result. In August, Teva—the world’s generics leader—said it would close a whopping 15 plants over the next two years to cut costs.

But that’s not to say Novartis is making cuts across the board. On the contrary, it’s funneled investment and jobs into its manufacturing ops in biologics, an area it’s tabbed for growth.

RELATED: Novartis adds to biologics manufacturing in midst of global job cutting

Back in May, the company said it would add 40 or so jobs to a production site in Morris Plains, New Jersey. That facility focuses on the processes needed to produce Novartis’ CAR-T immuno-oncology treatment, the $475,000 Kymriah, which won FDA approval in late August. And the week before the Morris Plains announcement, the drugmaker said it would add about 350 jobs in Switzerland, mostly in “innovative biologics manufacturing” and development.

Meanwhile, other drugmakers have dealt with the hit to traditional, small-molecule generics by bolstering their portfolios—an option Novartis reportedly looked at last November as it weighed a rumored $8 billion deal for Amneal. That drugmaker instead went to California’s Impax Labs in a pickup unveiled on Tuesday.