The two manufacturing operations in Puerto Rico have underperformed for Patheon since the firm acquired them from Mova Pharmaceutical in 2004.
In recent months these difficulties have continued, particularly in Q3 when process optimisation problems that impacted on batch release were deemed to have played a large part in a 45 per cent drop in the firm’s EBITDA.
Nevertheless, prior to the latest announcement all the indications were that the Canadian contract manufacturing organisation (CMO) had resolved the problems and that both plants were back on track under the leadership of new VP of operations, Francisco Negron.
Now however, the situation seems to have changed. CEO Wes Wheeler said that, despite continued demand for contract pharmaceutical manufacture in Puerto Rico, for Patheon it is no longer practical to operate two plants within close proximity of one another.
He added that, therefore, the firm “will consolidate our people, resources and investments at Manati and therefore concentrate on growing one 'flagship' site” and that available positions would be offered to staff at Caguas.
Luis Fortuno, Governor of Puerto Rico said: "We appreciate Patheon's contribution to the continued economic growth of the northern most region of the island, as well as its efforts to maintain its operations as the sole provider in Puerto Rico of contract development and manufacturing services to the global pharmaceutical industry."
Patheon did not respond to Outsourcing-pharma’s request for information on likely job losses, capacity reduction or whether manufacturing would be transferred to any of its other facilities.
The firm expects the consolidation process will cost $7m (€4.7m) on its completion at the end of 2011 and will result in the accelerated depreciation of Caguas assets of another $7.0 million during the 2010-2011 period.