Actavis is selling a China plant as it unloads manufacturing capacity globally

Zhejiang Chiral Medicine Chemicals plant--Courtesy of Zhejiang

Generic drug maker Actavis ($ACT) is unloading some of its manufacturing assets as it digests the big chunk of business it bit off with its Warner Chilcott merger last year. It has reached a deal to unload its piece of a manufacturing plant in China after last week deciding to sell 7 money-losing API plants in Europe.

The Dublin-based drugmaker said Monday that it would sell its interest in Actavis (Foshan) Pharmaceuticals Co., to Zhejiang Chiral Medicine Chemicals for an undisclosed sum. The Foshan venture has a plant in Foshan, China, that produces antibiotics as well as digestive and cardiovascular drugs. Actavis CEO Paul Bisaro said this month that he thinks China is just too risky and that he wants to focus on markets with more growth potential.

Actavis Pharma President Sigurdur Oli Olafsson said in a statement that the company's "operations in Foshan were limited in scope" and will be put to better use by Chiral, which can add manufacturing and marketing capabilities. Chiral has a 15,000-square-meter (161,000-square-foot) manufacturing facility in the Zhejiang Nanyang Economic Development Zone that specializes in generic active pharmaceutical ingredients (APIs) and intermediates. It has about 200 employees and focuses on China but is approved to ship some products to the U.S. and other Western markets. It has been looking to expand.

Just last week Actavis agreed to sell API plants in France, Italy, Spain, Portugal, Belgium, Germany and the Netherlands to Aurobindo for about $41 million. Part of the agreement is for the Indian drugmaker to provide Actavis with APIs. Actavis closed on its $8.5 billion merger with Warner Chilcott on Oct. 1, and in his signature fashion, Bisaro has been cutting people and plants to squeeze costs. In November, about 350 U.S. reps were let go as part of the cost squeezing.

But while it is getting out of manufacturing in China, others are getting in. Johnson & Johnson's ($JNJ) Janssen unit and Merck KGaA both announced plans in November to build facilities there. Janssen will start construction this year on a 267,000-square-meter plant in Xi'an to replace an existing plant there built in 1985, investing between $200 million and $300 million. Merck will spend about €80 million ($107.67 million) to build a 40,000-square-meter plant in Shanghai that will focus on production of diabetes drugs.

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