Roughly an eon ago in the pharma industry (read: 20 years), Sandoz carved out a sizable generics foothold through dual mergers with Germany’s Hexal and U.S.-based Eon Labs. Now, the Swiss manufacturing giant is mothballing one of the latter company’s main facilities.
Due to a permanent “closure” of Eon Labs’ production facility in Wilson, North Carolina, Sandoz will lay off 213 employees effective Oct. 4, according to new Worker Adjustment and Retraining Notification act alert issued by the state.
A Sandoz spokesperson confirmed the layoffs and site closure via email. The shuttering is the result of continued price erosion across the generic drug industry, the spokesperson explained.
“Within this context, and to remain cost-competitive, it is important to use our sites to full production capacity,” she said. “In the case of the Wilson site, we have been trying for a while to bring in more volume but despite all our efforts, no other options have materialized.”
The Eon Labs site in Wilson forms part of the Sandoz Technical Operations network and specializes in the production of oral solid dosage products that are shipped out primarily across the U.S. and Canada, the spokesperson said.
Affected employees are set to receive severance packages plus support such as outplacement services and training assistance, she added.
Pricing woes in the oral solids business date back to at least 2017, when former Novartis CEO Joseph Jimenez said the market for generic pills had gotten so bad in the U.S. that the company was considering selling off that arm of its business there. Novartis eventually opted for a much larger, global split from the generics and biosimilar field with its Sandoz spinoff last year.
Though Eon Labs may not be the biggest name on the generics scene, the company has played a key role in Sandoz’s ascent over the past two decades.
Over two months in the summer of 2005, Sandoz’s then-owner Novartis acquired both Hexal and Eon Labs, which it subsequently merged with its burgeoning generics arm Sandoz.
“With the combined strength of the three companies—Sandoz’ global presence and expertise in anti-infectives, Hexal’s leadership in Germany and solid record of successful product development, and Eon Labs’ leading position in the U.S. for ‘difficult-to-make’ generics—we are well positioned for sustained growth,” Sandoz’s then-CEO Andreas Rummelt said in a 2005 statement.
Sandoz still counted Eon Labs among its Rolodex of subsidiaries in a listing prospectus issued last August. Sandoz formally split off from Novartis as a standalone company in October. Novartis had first unveiled plans to separate from Sandoz back in August 2022.
While the valuation of Sandoz’s solo debut proved slightly underwhelming, the self-styled generics and biosimilars powerhouse has continued to strike deals and lay the groundwork for production expansions in recent months, especially overseas.
In December, Sandoz broke ground at a $400 million biosimilar manufacturing plant in Slovenia, which is slated to make active ingredients for the company’s rheumatology, oncology and immunology biosimilars. Sandoz has said it expects the plant to become Europe’s “most efficient” production site for active pharmaceutical ingredients for biologics and biosimilars.
Meanwhile, just last month, Sandoz paid Coherus BioSciences $170 million to take control of the California-based drugmaker’s lucrative Lucentis biosimilar Cimerli. Cimerli won the FDA’s blessing in August 2022 as the lone interchangeable biosimilar to Roche’s Lucentis.