Sun targets Ranbaxy plant in Ireland as it prepares to trim manufacturing network

Sun Pharmaceutical Managing Director Dilip Shanghvi

When Sun Pharmaceutical closed its $4 billion deal to buy Ranbaxy Laboratories this year, Managing Director Dilip Shanghvi said priority number one was to get four Ranbaxy plants banned by the FDA back into good graces of the agency. He didn't say what was in store for the rest of the merged company's manufacturing network, but it turns out the plans include closing a number of facilities, including a former Ranbaxy plant in Ireland with 100 employees.

Workers were called into a meeting last week and told the plant was among those the company was looking to sell or close. A spokesman for the company told the Tipperary Star that a final decision on the plant's fate would be made early next year.

In an email Wednesday, a Sun spokesman said: "In March this year, Sun Pharma successfully completed the merger of Ranbaxy. This has provided an opportunity to optimize overall manufacturing network in terms of capacity, costs and efficiencies. As a result of this, decisions are being made to either close or divest some of its manufacturing facilities. Currently, the Ireland facility has been identified for divestment."

The announcement comes just weeks after Sun reported that combining the two companies was proving costly and that its earnings in the last quarter had been depressed by "one-time and exceptional charges" that hit 685 crore ($105.8 million). They included costs for "impairment of fixed assets and goodwill and other related costs and have arisen on account of integration and optimization measures."

The drugmaker also reported sales in the U.S. were off 4% to $488 million, "impacted primarily due to competitive pressure on some products and temporary supply constraints arising from remediation efforts at the Halol facility." The Halol facility in Gujarat, India is a Sun plant that FDA inspectors inspected last year, citing it with a number of observations in a Form 483. It has been tied to a number of recalls in the last year over issues of poor dissolution of meds, including one last week.

The cost of fixing that plant is on top of the money it is plowing into four former Ranbaxy plants that have been banned from shipping to the U.S. for years, plants that are now eating up resources in remediation without adding to the top line.

It is not just production workers, however, who are on the company's cost cutting list. It has reportedly let go about 150 or so top executives as it melds the two operations.

- read the Tipperary Star story