Drugmaker Sun Pharma is closing its production facility in Detroit as part of efforts to consolidate its manufacturing facilities in the US.
Sun has seven plants in the US. The Detroit facility is part of its wholly-owned US subsidiary, Caraco Pharmaceutical Laboratories, which has 235 employees. About 120 of them will be affected by the decision to shut down, a Sun spokesperson said.
The facility had been under the US Food and Drug Administration’s (USFDA) scanner, but turned the corner in 2012, said a company official.
“The decision to close down the Detroit facility is driven by business considerations. Our capacity in the US is considerably large and it has become essential to consolidate our manufacturing in line with market requirements,” Sun said.
The shutdown is not connected with Sun’s $4-billion proposal last month to acquire Ranbaxy, a source said. That buyout proposal has since hit a legal hurdle, with the Andhra Pradesh High Court seeking an investigation into the transaction details and allegations of insider trading.
Employee compensation On Friday, Sun said, it had notified the Workforce Development Agency for the State of Michigan about its decision to cease manufacturing operations and close the Detroit facility. The company added, it had provided the requisite advance written notice to the employee union and affected employees about the closure.
The company says it has ensured that the affected employees will get a compensation that is more than their regular entitlement under the severance package. They will also receive other support services, including out-placement assistance, Sun said. The rest of the employees are continuing through mutually consented arrangements, it added. Sun added that it has taken measures to ensure continuity in the sale of products manufactured at this facility. Steps have been taken to avoid a market shortage, Sun said, adding that the development would have “negligible impact” on its consolidated revenues this financial year (2014-15).
Ranbaxy recall Meanwhile, Ranbaxy has initiated a recall of about 30,000 blister packs of anti-allergy drug Loratadine and Pseudoephedrine Sulfate extended-release tablets in the US, for an “unacceptable level of blister defects”.
With the Sun-Ranbaxy deal still to be sealed, this responsibility lies with Ranbaxy.
However, the recall from Ranbaxy’s Ohm facility in the US is a cause for concern, as four of the company’s Indian plants have already been banned from selling in the US due to regulatory issues.
The latest development will be watched by both Ranbaxy and its prospective buyer, Sun Pharma.