Four Roche plants go up for sale in move to more high-potency, targeted drugs

Roche's Daniel O'Day

Roche ($RHHBY) will close four plants around the world and lay off 1,200 people as it moves to new technology for manufacturing small molecule drugs. It says it will build a late-stage technical development and launch facility in Switzerland for targeted, high-potency drugs.

The drugmaker last week said it will close plants in Florence, SC, in the U.S., as well as plants in Clarecastle, Ireland; Leganes, Spain; and Segrate, Italy, each with about 300 employees. The drugmaker hopes to sell the facilities in an effort to spare employees' jobs, but it said the "transition" will start next year and play out by 2021. The Swiss drugmaker expects restructuring costs to reach $1.6 billion with about $600 million of that paid out in cash.

"With these changes we are responding to the evolution of our small molecule portfolio towards specialized medicines produced in lower volumes," Daniel O'Day, COO of the pharma division of the business said in a statement. "We are aware of the impact this decision has on our colleagues, and we will do our utmost to support them during this transition."

The drugmaker said it intends to start talks with employee representatives in each country and notify employees as quickly as possible about what to expect at each of the four plants.

The new plant will be built in the next 4 to 6 years at the company's massive site in Kaiseraugst near its Basel, Switzerland. With about 10,400 employees, the Basel/Kaiseraugst site one of Roche's largest centers of production. Roche spokesperson Dr. Ulrike Engels-Lange said in an email that Roche will invest about CHF300 million ($300 million) on the "flexible" manufacturing facility which will be designed to develop and manufacture targeted, high-potency drugs based on small molecules.

But the new plant is not expected to come with any new positions for the company, Engels-Lange said. "One of the reasons we chose Kaiseraugst as the location for the new late stage technical development and launch facility is that we can transfer the available, skilled employees to there from Basel."

The company pointed to a pipeline of new molecular entities as the reason for the moves. But much of what is in Roche's pipeline these days are specialized large-molecule drugs and so the drugmaker is also investing significantly in expanding its biologics manufacturing, announcing $2 billion in projects in the last few years. In 2013 it said it would invest almost $900 million to build a new facility in Switzerland and expand plants in the U.S. and Germany, adding nearly 500 jobs in the process.

- here's the release (PDF)

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