Par cuts workforce 30% and restructures generics division
The cuts will be made in the division’s manufacturing, R&D and administrative units and are expected to cost Par between $28m and $38m. The firm anticipates that the move to generate annual savings of between $45m and $55m when completed in June next year.
At present, the company has a workforce of 720 people at its manufacturing facility in Chestnut Ridge and R&D centres there and in Somerset, both of which are in its home state, New Jersey.
Par also plans to scale back its R&D investment which has, in recent years, generated a very large number of generic product candidates. The firm now intends to abandon this strategy and instead focus on completing the development of drugs that are already in its pipeline.
Revenue from generic drugs fell 36 per cent to $93m (€68m) for the second quarter as increased competition hurt sales of key products like fluticasone, ranitidine HCl syrup and cabergoline
In a statement, CEO Patrick Lepore explained that: “after careful examination of Par’s businesses, we concluded that to improve profitability we needed to align the company’s cost structure with the size of its operations and development pipeline.
He also said that the cutbacks will result in a smaller, more profitable business model and accelerate Par’s ability to invest in its proprietary products subsidiary, Strativa Pharmaceuticals.
Launch delays hit second quarter
The decision to restructure is in keeping with comments made at Par’s second quarter results presentation. Speaking in August, Lepore said that delays to the firm’s programme of product launches had significantly hurt its revenues.
He added that: “new product launches are the lifeline of the US generic business and are particularly critical to Par given our current operating model,” explaining “products we anticipated launching in Q2 either slipped into Q3 or have yet to launch.”
In a separate statement, Par announced that company chief operating officer (COO) Gerard Martino has handed in his resignation. Mr Martino will stay on until restructuring of the firm’s generic division is completed.
