|Hospira CEO F. Michael Ball|
Hospira ($HSP) is making cuts to its manufacturing network. The Lake Forest, IL-based drugmaker plans to close its facility in Clayton, NC, in June at a cost of up to 250 jobs and $15 million in severance payments and other employee-related costs.
Clayton has fared better than some of Hospira's other plants from a quality perspective--it overcame the technical barriers to reintroducing THAM and the FDA made no observations in a 2013 inspection--but the economics no longer make sense for the company. Hospira manufactures four products at the facility. Having forecast future demand for the products, analyzed the Clayton plant and assessed available capacity at other facilities, Hospira has decided to exit the site.
Production of the four drugs will now be discontinued or transferred to other facilities, either within Hospira's network or at third parties. Hospira expects the action to result in pretax charges of $45 million, one-third of which relates to payments for severance, retention and other employee-related costs. Hospira employs 250 people at the site, some of whom may find new roles within the company. Help is available for workers interested in transferring to other sites.
The decision to close the site ends Hospira's 10-year relationship with the location. Hospira bought the 100,000-square-foot Clayton facility from Fresenius Kabi in 2004 and quickly spent $15 million to expand the operation. However, in 2010 the FDA included Clayton in a warning letter, and subsequent production issues affected Hospira's contract manufacturing clients and its in-house products.