For the second time in recent days, Big Pharma has served up bad news for India's pharma manufacturing industry. Pfizer ($PFE) will close a plant there later this year. The announcement comes less than a week after Novartis ($NVS) announced that its Sandoz generics unit would close a plant in India at the end of 2016.
Pfizer broke the bad news in a filing on Wednesday with the Bombay Stock Exchange. It intends to close its plant at Navi Mumbai by September 16, 2015. It said it reached its decision after assessing the long-term viability of the facility and its ability to achieve the needed production. "There has practically been no production activity at this plant since 2013, and the closure will not impact the supply of any of the Company's medicines to patients," the filing says.
A Pfizer spokesperson could not be reached, but LiveMint reported that about 130 of the 212 workers at the 55-year-old facility took a voluntary retirement offer from Pfizer last year. The remaining 80 have been paid despite a lack of work and will receive required compensation when they finally are let go.
But even as it closes a decades-old plant there, it will soon tap Hospira's much newer and larger manufacturing operations when it closes its $15 billion deal later this year to buy Hospira ($HSP). That includes a 1.1-million-square-foot, $450 million manufacturing plant in Visakhapatnam that recently began commercial production after finally overcoming some FDA concerns about its operations. The facility is expected to significantly reduce Hospira's production costs.
Lake Forest, IL-based Hospira has other facilities in India as well. It bought sterile injectable capacity from Orchid Chemicals & Pharmaceuticals in 2010 for about $200 million and then turned around three years later and bought some API manufacturing and R&D operations from Orchid for $400 million.
But the Pfizer decision deals a blow to India's pharma sector just after Novartis announced that its Sandoz generics unit will close a plant in Turbhe, Maharashtra, at the end of 2016 and lay off its 170 employees. The site manufactures APIs and antibiotics. Sandoz said in a statement last week that it was transferring the work to other sites in the country. It has manufacturing facilities in Kalwe and Mahad.