Drugmaker Sun Pharma has confirmed that its Ireland facility is on the block. The facility was part of the Ranbaxy legacy.
Sun had completed its $4-billion acquisition of troubled drugmaker Ranbaxy earlier this year.
The Ireland development, though, is not entirely unexpected as Sun chief Dilip Shanghvi had said a little over a month ago that it would divest non-strategic businesses with little or no long-term strategic value.
Commenting on the Ireland decision, Sun said: “In March this year, Sun Pharma successfully completed the merger of Ranbaxy.
“This has provided an opportunity to optimise overall manufacturing network in terms of capacity, costs and efficiencies. As a result of this, decisions are being made to either close or divest some of our manufacturing facilities. Currently, the Ireland facility has been identified for divestment.”
It will be premature to discuss specific details on this matter, a Sun spokesperson said without giving details on the number or people employed at the plant or its products and revenues.
An analyst tracking the company said Ranbaxy’s Ireland plant was a major supplier of cholesterol drug Atorvastatin in the European Union.
For 2013-14, it had garnered profits of ₹45 crore. The Ranbaxy plant was dedicated to making statins, but its opportunity had reduced and that could be a reason why Sun did not see value in keeping it, the analyst added. Last year, Sun had closed its Detroit production facility (in Michigan), as part of its consolidation of manufacturing facilities.
The plant, part of its Caraco subsidiary in the US, had been a problem area for Sun as it faced regulatory action from the US Food and Drug Administration (FDA). In fact, Sun presently faces a class action suit in the US involving this plant over alleged procedural violations during an earlier shutdown.
In addition to Sun’s own tryst with the FDA on its Halol plant, the Mumbai-based drugmaker has also inherited troubled facilities from Ranbaxy that have bans on their products in the US.
Integration costs Sun’s management had warned of integration costs, and last month the company’s financial performance in the three months to June recorded a one-time exceptional charge of ₹685 crore on Ranbaxy integration costs.