Lonza's biologics plant in Hopkinton, MA, has been a headache for the Swiss contract manufacturer and its customers. The company has struggled to get it up to FDA expectations, creating supply issues for clients, and Lonza will try a new tactic. It will phase the plant out as part of several steps it is taking to reduce costs in its drug manufacturing unit, slashing 250 jobs.
The chemical and contract manufacturing company said today that it will concentrate its biologics work at its plant in Visp, "where we have successfully operated small and large-scale assets for that technology for many years." The company also closed a plant in Ireland in the first quarter and intends to close up a plant in St. Beauzire, France, in the fourth quarter.
The company has taken a CHF 69 million ($73.9 million) charge to cover the costs of the plant reductions but said it expected to save CHF 100 million ($107.1 million) through 2016 from the moves. It did not say how long it would take to phase out the U.S. plant. The company expects with the reductions and other steps to see earnings rise 10% in 2013.
Lonza CEO Richard Ridinger in January warned that he intended to adjust the company's "manufacturing footprint" but did not give any hint that the move might mean the eventual closure of the U.S. biologics plant. That facility has had issues since at least 2011, when it received an FDA warning letter, focused on failed batches of an API manufactured for Ontak, a cancer drug from Japanese drugmaker Eisai. But it is French drugmaker Ipsen ($IPN) that has reported supply issues tied to the plant. In April, it said that interruptions of its orphan drug Increlex appear inevitable because of ongoing issues there, suggesting that Lonza still has not overcome quality concerns at the plant.
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