Sun closing New Jersey plant, laying off nearly 100, to cut costs in 'competitive' U.S. market

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India's Sun Pharma is consolidating operations of two plants in the U.S. to cut costs. (Pixabay)

With competition in the U.S. generics market mashing down margins, some drugmakers have been selling or closing plants to cut costs. India's Sun Pharma has joined that trend and will close a plant in New Jersey, costing nearly 100 workers their jobs. 

Sun says it will consolidate manufacturing operations at a plant in Cranbury, New Jersey, into its Ohm Laboratories plant in New Brunswick, New Jersey, next year. The 275,000-square-foot facility in Cranbury, which manufactures controlled substances, is about 15 miles south of New Brunswick. According to a WARN notice filed with the state, the consolidation will cost 96 jobs.

RELATED: Sun looks to unload Ohm Labs New Jersey plants in manufacturing consolidation

“Sun Pharma is consolidating its manufacturing operations at New Brunswick and Cranbury into one location, New Brunswick,” a company spokesperson said in an emailed statement. “As part of this process, the operations at Cranbury, including inventory, products, manufacturing and lab equipment, are being transferred to New Brunswick. The restructuring is aimed at optimizing our manufacturing operations and improving cost efficiencies in the increasingly competitive U.S. market.”

It was rumored last year that Sun had the New Jersey plants on the block for about $100 million. Sun has been slimming down its manufacturing operations for several years. In 2016, it sold plants in Aurora, Illinois, and Philadelphia to CDMO Frontida BioPharm. Before that, it struck a deal to sell a formulation plant in Bryan, Ohio, to Nostrum Laboratories, and announced the closure of a plant in Tipperary, Ireland.  

The deal comes as generic drug margins in the U.S. have been mashed by competition, leading Teva, Novartis and others looking to unload plants and portfolios. In September, Novartis unloaded about 300 Sandoz products and several development projects in its Sandoz U.S. generic oral solids and dermatology business to Aurobindo for $900 million upfront and up to $100 million in performance payments.

As part of the deal, Aurobindo also gets Sandoz’s dermatology development center, as well as manufacturing facilities in Wilson, North Carolina, and Hicksville and Melville, New York, which Aurobindo said are “highly complementary” to its existing production footprint.