Taro expands Canada plant with help from Ontario

Taro plant in Brampton, Ontario--Courtesy of Sun Pharma

Taro Pharmaceutical Industries, the Israel-based drugmaker that Sun Pharmaceutical badly wanted to swallow, is expanding its production with new operations in Canada. Not only will it get more capacity but it is also picking up some subsidies from the government to help cover the costs.

The drugmaker said Tuesday that it will spend $247 million to add both manufacturing and R&D equipment at its plant in Brampton, Ontario. That outlay will result in the potential to expand production capacity by 50%, the drugmaker said, and possibly double to 40 the number of products that the plant can get to the market. It said the integration of R&D into the plant's manufacturing operations is an efficiency move that will help it compete.

The new operations will also require more people; the drugmaker said it would add up to 140 jobs. In return, the province will pony up $7 million toward $93 million worth of projects. "The government's support provides a great opportunity for the community and for our company," Daryl LeSueur, head of operations for Taro, said in a statement. "This will help us further increase our manufacturing capacity to supply our customers, and also anchor the facility in Ontario rather than elsewhere in the world."

Taro, which reported a 15% bump in revenues in its last quarter to $213.6 million, is 60% owned by India's Sun Pharma. Sun waged a long-running effort to get complete control of the U.S.-focused drugmaker, as a way to expand its own U.S. reach. In 2012, Sun offered $685 million for the remaining piece of Taro, but shareholders thought it underpriced the company and so walked away from the deal.

Sun has a much bigger deal on its plate now with its $3.2 billion deal to buy Indian compatriot Ranbaxy Laboratories. Assuming it can get Ranbaxy's long-running regulatory mess patched up with the FDA, Sun has the potential through Ranbaxy to get a much larger piece of the U.S. market than owning all of Taro would have offered.

- here's the announcement