More jobs cuts at BASF as Asian API market closes in
succumbs to growing pressure from the Asian generic active
pharmaceutical ingredient (API) market.
The company announced its plans to restructure and downscale production at the German site in September this year, and yesterday released details of the compromise agreement between the employees' committee and management of BASF PharmaChemikalien GmbH.
The move follows increased competition in the generic API market caused by pressure from Asian suppliers which are driving down prices. The situation at BASF was further aggravated by the drop in demand for the key active ingredients produced at the site, pseudoephedrine and caffeine. A change in over-the-counter drug regulations restricted the sale of pseudoephedrine in the US, the largest market for the ingredient, and demand for caffeine from the drinks sector has become somewhat volatile, both factors contributing to the situation at the Minden site.
In October 2005 BASF was forced to cut the workforce at Minden by 95 in an attempt to improve the international competitiveness of the site. On top of the 130 jobs that are due to go by July 2007, a further 60 are at risk as a result of plans to outsource service functions to external service providers. The company stated that it was simply impossible to operate the facilities in Minden profitably whilst employing a workforce on the current scale.
"A comprehensive strategic examination of the Minden site and the market environment has confirmed that the global business in generic pharmaceutical active ingredients continues to offer opportunities" a spokesperson from the company told In-PharmaTechnologist.
"However, this investigation also clearly revealed that additional measures are necessary in order to ensure competitive cost conditions and render the Minden site profitable."
Although the global demand for APIs is forecast to increase at an average annual rate of 8.2 per cent over the next five years, reaching a value of $46bn (€35.8bn) by 2010, most European API producers seem unable to compete with their Asian counterparts which enjoy lower production costs.
With sales of $2bn in 2005, the Indian API manufacturing industry is the third largest in the world and is expected to make sales of $4.8bn by 2010, while Chinese API companies made sales of $4.4bn in 2005 and are expected to bring in $9.9bn by 2010.
