Lilly closing a Puerto Rico plant next year but investing in another

Puerto Rico, which has seen a number of plant closings recently, is facing another. Eli Lilly ($LLY) said it will close a facility in Guayama next year and put it up for sale.

"The utilization of the site has been impacted by patent expirations on the medicines produced there," Paul Ahern, Lilly senior vice president, said in a statement. "The decision to conclude operations at Guayama is based upon the evolution of the company's pipeline, which includes a growing insulin and biologics portfolio, coupled with a less capacity-intensive small molecule portfolio."

Lilly said the plant in Guayama will end production by the end of next year, and the company will take a $170 million charge to cover the costs of closing the facility. Lilly will offer the 100 employees who work at the plant jobs at a facility in Carolina which the company is expanding. That plant is about 50 miles away, according to Caribbean Business

As it has prepped to derive more revenue from its insulin products, Lilly has been beefing up insulin production at a number of plants, including the Carolina facility in Puerto Rico. The facility was targeted in November 2013 for a $200 million investment to increase its insulin API capacity and then in July another $40 million for some oral solid dosage work. The company has about 1,600 workers in Puerto Rico.

Once a magnet for drugmakers because of tax advantages that have since lapsed, Puerto Rico's pharma industry is now going through the ups and downs of the rest of the industry. Abbott Laboratories ($ABT) is planning to close a drug manufacturing plant in Barceloneta in mid-2015, and last year Merck ($MRK) slated it own plant in the area for closure by late this year. It said it would move the formulation and packaging done at the facility to a contractor.

But some other drugmakers are expanding. Mexico-based Neolpharma has invested about $12 million on upgrades to a plant in bought from Pfizer in 2012. Actavis ($ACT) said this year it would spend about $48 million to revitalize facilities on the island that it acquired in its $8.5 billion takeover of Warner Chilcott. The investment will create 300 jobs over the next three years, at the end of which Actavis will have added a solid dosage manufacturing and packaging facility at its Manatí site and expanded its hormone plant at Fajardo.

- read the Lilly announcement
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