Rhodia, which had been the world’s second largest producer of the painkiller sold under the Panadol and Tylenol brands, exited the $800m market as a result of increased competition from producers in China and India.
The move follows Rhodia’s 2004 decision to halt operations at its paracetamol unit at the Monsanto manufacturing complex in Luling, Louisiana, US. At the time the firm said that it would maintain a presence in the sector adding that it would split remaining production operations between Roussillon and a plant in Wuxi, China.
However, three years later lower-cost Asian competition had clearly taken its toll, forcing the firm to outsource the manufacture of the drug's intermediates and scale-up production capacity in Roussillon and Wuxi in a bid to fight back.
The decision to shut Rousillion and seek a buyer for its Wuxi plant is Rhodia’s admission that its efforts to adapt to the changing global market have failed.
China has become the largest supplier of paracetamol to the drug industry, largely because lower production costs in the country allow manufacturers to sell the active pharmaceutical ingredient (API) at a fraction of price of European versions.
Together, China and India-based manufacturers produce about 115,000 tonnes of paracetamol per year, equivalent to about 70 per cent of the global market.
Jacques Gallucci, director of the Roussillion plant, told Bloomberg that: “There hasn’t been a major issue with imported paracetamol and drug makers are no longer willing to pay a premium for the decades-long record of contamination-free shipments provided by European manufacturers.”
Rhodia’s move leaves US firm Covidien as the only non-Asian paracetamol producer. The company manufactures around 30,000 tonnes of the drug a year at its facility in Massachusetts.