When Boehringer Ingelheim began closing its Ben Venue site, it justified the decision by describing a grim future for the plant, with operating losses of $700 million forecast over the next 5 years. Now it hopes someone can look past the losses and troubled quality control record to see a business worth buying.
The plant might prove a tough sell. Boehringer has already spent $350 million to upgrade the facility in Bedford, OH, but thinks more still is needed to overcome systemic manufacturing problems. Just how much needs spending is unclear, but the experience of other companies shows fixing regulatory snafus at sterile injectable production plants is a long, time-consuming process. Hospira ($HSP) has spent more than $375 million and several years upgrading its Rocky Mount site, and it still isn't completely finished.
For Boehringer, the time and money needed to rehabilitate its sterile injectable production facility are too great. But with the market for generic injectables poised for double-digit growth as leading biologics come off patent--and established players facing their own production problems--the facility could be attractive to someone. Reuters reports the German drugmaker has hired Bank of America Merrill Lynch to "educate potential buyers" about the business and its potential.
As it stands, Ben Venue will stop production at the end of the year. Some staff will stay on to handle "wind-down activities," but ultimately the shuttering will leave 1,100 people unemployed. The move is expected to cause some disruptions to supply. Johnson & Johnson ($JNJ) is still sourcing cancer drug Doxil from the Bedford facility and working on contingency plans for when the site closes. A Sanofi ($SNY) animal health drug is also in short supply because of disruption at Ben Venue.