Lilly, Dobfar nailed with $450M fine, judge orders Brazilian plant closed

Eli Lilly in 2003 sold an antibiotics manufacturing plant in Cosmopolis, Brazil, to Italy's ACS Dobfar. But the fact that it has been more than a decade since Eli Lilly ($LLY) owned the facility has not kept the company from being ordered to pay $450 million to cover medical costs of dozens of plant employees for health problems they said came from exposure to hazardous materials.

Judge Antonia Rita Bonardo of the Labor Court in Sao Paulo levied the penalties against both Lilly and Dobfar, according to Reuters, and also ordered the plant closed for a year because of the contamination. Reuters reports that 77 of 80 former workers who were tested when the Brazilian case was first filed in 2008 showed evidence of exposure.

Lilly said in a statement Friday that it will appeal the ruling because it never used the alleged contaminants--benzene and heavy metals--in its manufacturing processes at the facility. It also said, "the published ruling is based on inaccurate scientific claims, as well as mathematical errors."

Lilly manufactured human and animal antibiotics as well agricultural chemicals at the plant in Cosmopolis, which it owned from 1977 to 2003, Lilly spokeswoman Amy Sousa said in an email. When Lilly identified groundwater contamination of tebuthiuron, an agricultural chemical, and cumene, an organic solvent used in manufacturing, within the property line, Sousa said the company voluntarily reported the contamination to the environmental agency of Brazil, CETESB.

But workers at the facility were never exposed to the the contaminated groundwater, Sousa said. "The groundwater was never used for drinking or industrial purposes." CETESB approved the company's "multi-million dollar remediation plan for underground contamination on the site and Lilly is near to hitting cleanup standards, Sousa said.

A similar case filed in the U.S. in 2009 accused Lilly, Dow Agrosciences, Dow Chemical, Shell, American Cyanamid and BASF of incinerating and dumping hazardous materials in the area. The U.S. suit, which was filed on behalf of about 40 former employees, was dismissed in 2010, according to Law360.

Next to China, Brazil is among Lilly's top emerging markets. It is one of what Lilly calls its "Five Focus" markets that also include Korea, Turkey, Russia and Mexico. The company has been investing in its operations there and recently said it would spend about about 15 million real ($6.4 million) over two years to upgrade a packaging plant in Sao Paulo.

- here's the Lilly announcement
- read the Reuters story