Biovail to close Puerto Rican plants
manufacturing plants and lay off 250 people as it attempts to cut
costs.
Operations will be closed down within 18 to 24 months, with some of the manufacturing processes being transferred to the company's facility in Steinbach, Canada. The restructuring plan was launched following a fall in first quarter profits of 40 per cent and will cost Biovail $80m to $100m. However the company is expecting to make savings of $30m to $40m a year upon completion of the closures, enabling further investments. Biovail CEO Bill Wells said: "We intend to invest over $600m in research-and-development through 2012, exploring niche in-licensed and acquired late-stage new chemical entities, new indications and in-house reformulation opportunities." This positive outlook is despite disappointing first quarter results which have further added to Biovail's woes, following a difficult period for the company fraught with internal tensions. Concerns were raised earlier this year about possible contamination of Tiazac (diltiazem) from one of Biovail's Puerto Rico plants, which is now earmarked to close in the restructuring. This was followed by disappointing first quarter results in which the revenue generated from most of Biovail's pharmaceutical products fell, with the company's generics products suffering a dramatic fall of 52 per cent. A fall in prescription volumes and a decrease in the price of Biovail's generics were cited as the causes of the revenue fall, as an increasingly competitive market put pressure on the company's products. These difficulties have been compounded by the squabble between Biovail and its founder and former chairman Eugene Melnyk. Biovail will be hoping for a speedy resolution but with Melnyk promising to "hold the directors and management fully accountable and personally responsible for any inappropriate action" it seems that dispute is likely to drag on. However, the challenges facing Biovail seem relatively minor when compared to Puerto Rico's beleaguered pharmaceutical sector which has seen a flood of companies cut back operations on the island in recent years. This has resulted in the loss of over 3,000 jobs and although there is a movement to attract biotech companies the number setting up operations is not yet compensating for the pharmaceutical exodus. Puerto Rico will be hoping its efforts pay off soon, as will Biovail, but during these particularly challenging times for the industry their fates are far from certain.
