Roche sets clock ticking for Brazil plant and 640 workers

With Brazil’s economy in tatters and the costs of manufacturing rising, Roche will slowly pull production out of the country, a decision that will cost hundreds of workers their jobs.

The Swiss drugmaker says it will close its production plant in Rio de Janeiro over the next four to five years, at which point it intends to try to sell the site with no production commitments. The plant has about 440 Roche employees and 200 contractors onsite where it makes drugs for the local market and Europe.

“In light of the evolving product portfolio and future lower production volumes, Roche took the difficult decision to plan the phase-out of operations at the manufacturing site in Rio de Janeiro…,” a spokesman said in an email today.

The company, of course, will continue to sell its medicines in the country and Roche Farma Brazil, with about 800 workers, will continue to operate its locations in Sao Paulo and Goiás.  

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Roche sales in Brazil, in fact, were up 9% in 2018 to about CHF 958 million ($963 million), but the company said in its annual report that most of that growth was from cancer drugs Perjeta, Rituxan and arthritis drug Actemra. The rise of the Swiss franc against Brazil's currency real depressed the company’s earnings.

The Brazilian economy has been deteriorating for about five years. The recession has depressed buying power and a weak currency has inflated the costs of raw materials for manufacturing.

It is quite a reversal for a country that a short while back was one of the emerging markets that just about every drugmaker wanted to tap. No more. Pfizer extricated itself from a generics joint venture that it jumped on when Brazil’s economy was still on the rise but which never turned into a money maker for the drug giant.

Pfizer in 2010 paid about $240 million for a 40% share of generics maker Laboratório Teuto Brasileiro. In 2017 it sold its interest back to the founding family for 1 real––the equivalent of about 30 cents.