AstraZeneca to shell out £12M in severance dispute with workers at former England plant

When AstraZeneca sold its Avlon, England plant to CDMO Avara in 2016, it was touted as a lifeline for the drugmaker’s 210 on-site employees who faced termination.

Three years later, with the plant back on life support, AstraZeneca will have to pony up after those former employees said the British drugmaker didn’t meet its contractual obligations.

AstraZeneca will earmark £12 million to settle workers’ claims that the company refused to pay severance despite an agreement to honor “enhanced redundancy rights” if the plant closed within three-and-a-half years of the initial sale, according to the Financial Times. AstraZeneca said employees had been guaranteed severance pay in the event of a closure but that the drugmaker was not liable to cover that expense, FT said.

AstraZeneca decided to set aside the funds after the bid deadline for the plant passed last week and redundancy costs for former employees had not materialized, according to company spokeswoman Michele Meixell.

"AstraZeneca remained closely involved in helping secure a future for the Avlon site following the sale to Avara, which was made in good faith in 2016," Meixell said in a statement. "We have been engaged with the receivers since the company fell into administration."

The skirmish between the Avlon workers and AstraZeneca follows Norman, Oklahoma-based Avara’s decision to put the troubled plant under bankruptcy earlier this year. In February, Avara, which manufactures on contract for AstraZeneca, said the loss of a major customer put the plant’s operations under strain, threatening the jobs of 270 employees on site.

RELATED: Former AstraZeneca UK plant back up for sale, putting 270 jobs at risk

Avara purchased the plant from AstraZeneca for £1 in late 2016 after the site had threatened to close for at least three years. Back in 2014, AZ said it would close the plant by 2017 after generics for the high-cholesterol drug Crestor and bipolar treatment Seroquel, whose APIs were manufactured there, had erased sales.

The move was part of AstraZeneca’s $1.1 billion cost-cutting effort to remake its manufacturing network.  At the time, the Avlon site was Avara’s fifth global location as the then-upstart CDMO aggressively expanded overseas.

RELATED: AstraZeneca to cut nearly 100 jobs at U.K. site as efficiencies 'hammer' workers

AstraZeneca’s plant mishap in Avlon was not the last time the company has had to make difficult decisions with its manufacturing operations in the U.K.

In March of this year, the drugmaker sliced 94 jobs at its Macclesfield, U.K. plant just two years after it launched a multimillion-dollar upgrade at the site. A local union called the move a “hammer blow” to U.K. manufacturing despite the company retaining most of the plant’s 1,800 employees.

RELATED: AstraZeneca lays off 210 workers in Colorado as it closes 2 ex-Amgen plants

AstraZeneca painted the move as a positive, saying the $50 million packaging update investment had increased efficiency and saved money at the plant.

AstraZeneca has also been pinching staff at its manufacturing plants abroad, including in the U.S., where the drugmaker unveiled plans early this year to shutter two plants in Boulder and Longmont, Colorado. The plan laid off 210 workers stationed there in order to streamline the company’s biologics supply chain and consolidate the biologics manufacturing network at a large-scale facility in Frederick, Maryland.